Answer:
es la coma estate should be your answer
Any help 75 points
Quantity supplied varies positively (directly) with price, other things constant, as price rises, the quantity supplied rises; as price falls, the quantity supplied decreases
Answer:
law of supply
Explanation:
this is the law of supply
A restaurant offers a 20% discount on all meals for people aged 60 and older. This restaurant is practicing:_________
a. monopolistic competition.
b. efficient pricing.
c. reservation pricing.
d. price discrimination.
e. price retention.
Answer:
d
Explanation:
Price discrimination is when the same product is sold at different prices to customers in different markets
types of price discrimination
1. first degree price discrimination : here sellers charge each consumer at their willingness to pay in order to eliminate consumer surplus.
2. second degree price discrimination : here firms offer different prices depending on the quantity purchased. e.g. giving discounts for bulk purchases.
3, third degree price discrimination : firms charge different prices to different groups of customers. e.g. having a certain price for senior citizens, students
Requirements to practice successful price discrimination
1. The firm must have market power. If the firm does not have market power and attempts to price discriminate they would lose customers
2. The firm must have different elasticities of demand for their product in different markets
3. The firm must be able to segment the market for their products
The restaurant who offers a 20% discount on all meals for people aged 60 years and above is practicing price discrimination.
Price discrimination can be defined as a situation in which the producer charges different prices for different groups of customers buying the same product.This means, all customers be are purchasing the bc same commodity but are charged differently by the producer.Therefore, the restaurant is practicing price discrimination system
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Exercise 9-15A (Static) Using the current ratio to make comparisons LO 9-7 The following information was drawn from the balance sheets of the Kansas and Montana companies: Kansas Montana Current assets $ 59,000 $ 78,000 Current liabilities 40,000 43,000 Required a. Compute the current ratio for each company. b. Which company has the greater likelihood of being able to pay its bills
Answer:
a. 1.5 and 1.8
b. Montana
Explanation:
Below is the calculation for the current ratio:
a. Formula used, Current ratio = Current assets / Current liabilities
Current ratio of Kansas = 59000 / 40000 = 1.5
Current ratio of Montana = 78000 / 43000 = 1.8
b. The company that has a higher current ratio will have a greater likelihood to pay bills so Montana is the correct answer.
Oi boa tarde , onde consigo um curso online de aprimoramento de laticinios
Explanation:
aqui neste APP...............
Define the term creativity
Answer:
Creativity is defined as the tendency to generate or recognize ideas, alternatives, or possibilities that may be useful in solving problems, communicating with others, and entertaining ourselves and others.
Answer:
Creativeness is defined as the tendency to generate or recognize ideas, alternatives, or opportunities which can be useful for problem-solving, communication, and for fun with others.
Explanation:
Examples include creative thinking: problem-solving, writing, visual art, communication skills, and openness.
In 2019, website and moving development, web production, user interface, and interaction design as well as design and visual design will be the main fields for creative grabbing.
Waggoner Company has a cash balance of $44,000 on April 1. The company is required to maintain a cash balance of $25,000. During April expected cash receipts are $174,000. Expected cash disbursements during the month total $200,800. During April the company will need to borrow:____.
a. $2,500.b. $3,500.c. $4,000.d. $6,000.
Answer: $7,800
Explanation:
The amount that the company needs to borrow can be found using the formula:
= Opening balance + Cash receipts - Cash to be maintained - Cash disbursement
= 44,000 + 174,000 - 25,000 - 200,800
= -$7,800
Amount to be borrowed is the shortfall of $7,800
please someone should help me.....how do we solve the square root of x +8 plus the square root of x+1 equals 7.....note the question is a surd question
The solution to the surd equation here is x = 449/49
How to solve for the value of the surd[tex]\sqrt{x+8} +\sqrt{x-1} = 7[/tex]
We have to isolate the surds
[tex]\sqrt{x+8} =\sqrt{x-1} +7[/tex]
Square the both sides of the equation
x+8 = x-1+49-14√x-1
Separate the equations on the left and the right hand side
14√x-1 = -x-8+x-1+49
Rearrange the equation
14√x-1 = 40
square the both sides of the equation such that
196x -1796 = 0
Divide through by 196
x = 1796/196
x = 449/49
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Compute straight-line depreciation on the building at the end of one year, assuming an estimated 10-year useful life and a $16,000 estimated residual value. (Do not round intermediate calculations.)What should be the book value of (a) the land and (b) the building at the end of year 2
Answer:
Missing word "Bridge City Consulting bought a building and the land on which it is located for $120,000 cash. The land is estimated to represent 70 percent of the purchase price. The company paid $10,000 for building renovations before it was ready for use."
Total Cost of Land and Building (100%) = $120,000
Cost of Land (70%) = $84,000
Cost of Building (30%) = $36,000
Cost of Building Renovations = $10,000
Total Cost of Building = $36,000 + $10,000
Total Cost of Building = $46,000
1. Annual Depreciation(Year End Depreciation) = (Cost of Building - Residual Value)/ Number of Year
Annual Depreciation = $46,000 - $16,000 / 10
Annual Depreciation = $30,000 / 10
Annual Depreciation = $3,000
2. Book Value of Land at the end of two years = $84,000
Book Value of Building at the end of two years = $46,000 - ($3,000*2 year) = $46,000 - $6,000 = $40,000
Hence, Book Value of Land and Building at the end of two year is = $84,000 + $40,000 = $124,000
Tori Inc. has some material that originally cost $68,800. The material has a scrap value of $30,300 as is, but if reworked at a cost of $1,500, it could be sold for $31,600. What would be the incremental effect on the company's overall profit of reworking and selling the material rather than selling it as scrap? (CIMA adapted)
a. $(71,100)
b. $(1,100)
c. $29,800
d. $(40,200)
Answer:
($200)
Explanation:
Calculation to determine What would be the incremental effect on the company's overall profit of reworking and selling the material rather than selling it as scrap
Sales value of reworked material: $31,600
Less: Cost to rework material: $1,500
Net Sales Value: $30,100
Current Scrap Value: $30,300
Net Disadvantage: ($200)
($30,100-$30,300)
Therefore What would be the incremental effect on the company's overall profit of reworking and selling the material rather than selling it as scrap is ($200)
Economists look at any situation in terms of its component parts: the people making decisions, the environment in which they're making those decisions, and the goods or services being exchanged. For example, think about doing your laundry. Which of the following laundry-related items are nondurable goods?
a. A washing machine
b. Having a pair of pants dry-cleaned
c. A T-shirt
d. A clothes dryer
The first step in the control process is ________. A) setting the desired morals
B) measuring actual performance
C) comparing performance against expectations D) applying managerial control
Answer:
comparing performance against expectations
Why irish lions rugby playing with Japan?
Answer:
I expect the answer in the following form
Explanation:
Irish lions play with Japan to get better and learn new things
Your mayor just announced that the local unemployment rate dropped from 10.5% to 10.4% from the prior month. Evaluate the unemployment rate drop and discuss whether there is enough information to determine significance. Support your response with specific examples. In replies to peers, discuss whether you agree or disagree with their assessments and justify your response
Answer:
Not enough information
Explanation:
from this question, this mayor has only given us the estimated proportion of the rate of unemployment for these months. In order to know if it is significant or not, we have to carry out other tests such as the hypothesis testing for the population proportion. But here we do not have any sample data or population data with which we can use to test this significance. The sample size is unknown so we cannot proceed to test if the claim is significant or not.
Prepare journal entries to record each of the following transactions. The company records purchases using the gross method and a perpetual inventory system.
Sept. 15 Purchased merchandise with an invoice price of $77,500 and credit terms of 3/5, n/15.
Sept. 29 Paid supplier the amount owed on the September 15 purchase.
Answer and Explanation:
The journal entries are shown below;
On Sept 15
Merchandise inventory $77,500
To Accounts payable $77,500
(Being purchase of inventory is recorded)
On Sep 29
Accounts payable $77,500
To Cash $75,175
To Merchandise inventory (3% of $77,500 ) $2,325
(Being payment to suppliers after discount is recorded)
On January 7, stockholders invest $45,000 in JumpStart in exchange for common stock. Provide the journal entry for this transaction.
Answer:
Dr Cash $45,000
Cr Common stock $45,000
Explanation:
Preparation of the journal entry
Based on the information given the appropriate Journal entry On January 7 since the stockholders invest the amount of$45,000 in JumpStart in exchange for common stock will be:
January 7
Dr Cash $45,000
Cr Common stock $45,000
(To record investment in JumpStart)
Mar. 1 CMS began operations by receiving $100,000 in cash. The business issued shares of common stock in exchange for this contribution. Mar. 1 CMS paid $1,200 for a 12 month insurance policy. The policy begins Mar. 1. Mar. 4 CMS guided a small rock climbing trip, receiving $20,000 payment in cash. Mar. 22 Collected $3,000 cash from customer on account. Mar. 24 Paid rent on their property, $4,000 cash. Mar. 27 Paid $1,000 cash on account. Mar. 31 Cash dividends of $2,500 were paid to stockholders.Prepare the bank reconciliation at March 31, 2021.
Journalize any required entries from the bank reconciliation.
Prepare a cash t-account to verify the balance of the account matches the adjusted book balance from the bank.
Answer:
Reconciled Bank Balance $114,300.
Explanation:
Cash for operations $100,000
Less: Insurance policy subscription $1,200
Add: Fee for services $20,000
Add: Cash Collection $3,000
Less: Rent expense $4,000
Less: Payment on account $1,000
Less: Cash Dividends paid $2,500
Reconciled Balance $114,300
ne implication from the evidence on EI to date is that employers should consider it a factor in hiring employees, especially in jobs that demand ________. good mathematical skills good critical thinking skills good analytical skills the ability to work independently a high degree of social interaction
Answer:
a high degree of social interaction
Explanation:
Emotional intelligence can be regarded as "emotional quotient" It is been defined as the ability to understand as well as to use and manage one's emotions in positive ways so that individual can be relieve of stress or communicate effectively with others or express empathize with others. With Emotional intelligence individual can overcome challenges as well as defusing conflict. Emotional intelligence (EI) can be regarded as concept which is moderately correlated with job performance.
Components of Emotional intelligence are;
✓Social skills.
✓Self-awareness.
✓Motivation.
✓Empathy.
✓Self-regulation.
It should be noted that One implication from the evidence on EI to date is that employers should consider it a factor in hiring employees, especially in jobs that demand a high degree of social interaction.
Doug Allen has decided to go into the insect extermination business and to operate as Doug's Extermination Service. The following transactions were completed during the first month of operations, May, 20--.
1. Doug invested $35,000 cash in the business.
2. Purchased extermination equipment for $17,000 in cash.
3. Paid $700 rent for garage and office quarters.
4. Purchased chemicals (expense) for $1,100 from Low Glow Chem Co. on account.
5. Received $1,600 revenue for extermination service.
6. Paid telephone bill, $120
7. Paid assistant's salary, $700.
8. Earned $980 revenue for extermination service, on account.
9. Paid electric bill, $230.
10. Paid for truck repairs (expense), $145.
11. Paid $600 to Low Glow Chem Co., on account.
12. Paid $131 for gas and oil for truck (expense).
13. Received $1,400 revenue for extermination service.
14. Received $500 for services previously earned on account in transaction (8).
15. Paid assistant's salary, $900.
Required:
Write the transactions in the T accounts, then write the total of each column. If an account has entries on both sides, determine the balance and enter it on the side with the larger total.
Answer:
Doug's Extermination Service
T-accounts:
Cash
Account Titles Debit Credit
Common stock $35,000
Extermination equipment $17,000
Rent 700
Extermination Revenue 1,600
Utilities Expense 120
Salary Expense 700
Utilities Expense 230
Truck Expenses 145
Accounts Payable (Low Glow) 600
Truck Expense 131
Extermination service 1,400
Accounts Receivable 500
Salary Expense 900
Balance $17,974
Common Stock
Account Titles Debit Credit
Cash $35,000
Extermination equipment
Account Titles Debit Credit
Cash $17,000
Rent Expense
Account Titles Debit Credit
Cash $700
Supplies Expense
Account Titles Debit Credit
Accounts payable $1,100
Accounts Payable (Low Glow Chem Co.)
Account Titles Debit Credit
Supplies Expense $1,100
Cash $600
Balance $500
Extermination Service Revenue
Account Titles Debit Credit
Cash $1,600
Accounts Receivable 980
Cash 1,400
Balance $3,980
Utilities Expense
Account Titles Debit Credit
Cash $120
Cash 230
Balance $350
Salary Expense
Account Titles Debit Credit
Cash $700
Cash 900
Balance $1,600
Accounts Receivable
Account Titles Debit Credit
Extermination Service Revenue $980
Cash $500
Balance $480
Truck Expenses
Account Titles Debit Credit
Cash $145
Cash 131
Balance $276
Explanation:
a) Data and Analysis:
1. Cash $35,000 Common Stock $35,000
2. Extermination equipment $17,000 Cash $17,000
3. Rent $700 Cash $700
4. Supplies Expense $1,100 Accounts Payable (Low Glow Chem Co.) $1,100
5. Cash $1,600 Extermination Service Revenue $1,600
6. Utilities Expense $120 Cash $120
7. Salary Expense $700 Cash $700
8. Accounts Receivable $980 Extermination Service Revenue $980
9. Utilities Expense $230 Cash $230
10. Truck Expenses $145 Cash $145
11. Accounts Payable (Low Glow Chem Co.) $600 Cash $600
12. Truck Expense $131 Cash $131
13. Cash $1,400 Extermination Service Revenue $1,400
14. Cash $500 Accounts Receivable $500
15. Salary Expense $900 Cash $900
Better Corp. (BC) began operations on January 1, Year 1. During Year 1, BC experienced the following accounting events: 1. Acquired $7,000 cash from the issue of common stock. 2. Borrowed $12,000 cash from the State Bank. 3. Collected $47,000 cash as a result of providing services to customers. 4. Paid $30,000 for operating expenses. 5. Paid an $8,000 cash dividend to the stockholders. 6. Paid $20,000 cash to purchase land.Required:a. Record the events in an accounting equation like the one shown next. Record the ined Earnings column. Provide the appropriate titles for these accounts in the last column of the table. The first event is shown amounts of revenue, expense, and dividends in as an example.b. As of December 31, Year 1, determine the total amount of assets, liabilities, and stockholders’ equity and prepare a balance sheet.c. What is the amount of total assets, liabilities, and stockholders’ equity as of January 1, Year 2?d. Assume that the land has a market value of $22,000 as of December 31, Year 1. At what amount will the land be shown on the December 31, Year 1, balance sheet? Why is this amount used in the balance sheet?
Answer:
Better Corp. (BC)
a. Accounting Equation
Assets = Liabilities + Equity
1. Cash $7,000 Common stock $7,000
2. Cash $12,000 Bank loan payable $12,000
3. Cash $47,000 Service Revenue $47,000
4. Cash ($30,000) Op. expenses ($30,000)
5. Cash ($8,000) Cash dividend ($8,000)
6. Land $20,000 Cash ($20,000)
Assets $28,000 = Liabilities $12,000 + Equity $16,000
b. December 31, Year 1 Balances:
Total assets = $28,000
Total liabilities = $12,000
Stockholders' equity = $16,000
Balance Sheet as of December 31, Year 1
Assets:
Cash $8,000
Land $20,000
Total assets $28,000
Liabilities:
Bank loan $12,000
Equity:
Common stock $7,000
R/Earnings 9,000
Total equity $16,000
Liabilities and
Equity $28,000
c. January 1, Year 2 Balances:
Total assets = $28,000
Total liabilities = $12,000
Total equity = $16,000
d. The Land will be shown on the December 31, Year balance sheet at $20,000. The reason is that this is the acquisition cost and the land is not held for trading (no information provided).
Explanation:
a) Data and Analysis based on the Accounting Equation:
1. Cash $7,000 Common stock $7,000
2. Cash $12,000 Bank loan payable $12,000
3. Cash $47,000 Service Revenue $47,000
4. Cash ($30,000) Operating expenses ($30,000)
5. Cash ($8,000) Cash dividend ($8,000)
6. Land $20,000 Cash ($20,000)
Four fundamental factors affect the cost of money:
1. The return that borrowers expect to earn on their investments
2. The preference of savers to spend their income in the current period rather than delay their consumption until some future period
3. The risks associated with the investment
4. Expected inflation
Consider the following statements that address these factors, and indicate if you think each statement is true or false.
Statement
True
False
Investments providing cash flows that are more likely to equal their expected value are said to exhibit more risk.
The actual relationship between the risk-free rate of return (r*r*) and the expected future inflation rate or inflation premium (IP) is actually multiplicative—that is, [(1 + rRFrRF) x (1 + IP)] – 1—but it is often simplified to reflect an additive relationship.
All things being equal, rational savers and investors prefer to invest in an asset that provides a 12% return rather than one that provides an 8% return.
All things being equal, savers and investors prefer more risk to less risk and prefer lower risk premiums on projects exhibiting higher levels of risk.
On average and everything else held constant, an investment that can provide a 4% return should attract more investment capital from savers/investors than an otherwise identical investment that can generate a 12% return.
Answer:
True statement is:
All thing being equal, savers and investors prefer more risk to less risk and prefer lower risk premiums on projects exhibiting higher levels of risk.
Explanation:
Investors wish to receive less risk and more return. They prefer from more risk to lesser risk and receive risk premium on project that exhibit higher level of risk and delayed compensation. A project with 12% return will be more riskier than a project with 8% return. Rate of return increases as the level of risk increases.
Alpha and Beta, two tiny islands in the Pacific, produce pearls and pineapples. The following production possibilities schedules describe their potential output in tons per year:
ATTACHMENT IS BELOW
Suppose Alpha and Beta agree that the terms of trade will be one for one and exchange 10 pearls for 10 pineapples.
a. If Alpha produced 6 pearls and 15 pineapples while Beta produced 30 pearls and 8 pineapples before they decided to trade, how many pearls would each be producing after trade? Assume that the two countries specialize according to their comparative advantage.
(i) Alpha: _____ pearls
(ii) Beta: _____ pearls
b. How much would the combined production of pineapples increase for the two islands due to specialization?
_____ pineapples
c. How much would the combined production of pearls increase?
_____ pearls
d. What is the post-trade consumption for each island?
Alpha consumes _____ pearls and ______ pineapples.
Beta consumes ______ pearls and ______pineapples.
Answer:
The opportunity cost of pearls for A is 2.5 pineapples and the opportunity cost of pearls for A is 0.27.
Explanation:
If Alpha produced 6 pearls and 15 pineapples, while B produced 30 pearls and 8 pineapples before the trade, we can calculate the opportunity cost for each island. For island Alpha, their opportunity cost will be:
6 pearls = 15 pineapples
1 pearl = 15/6 pineapples
1 pearl = 2.5 pineapples
Therefore, the opportunity cost of pearls for A is 2.5 pineapples
For island Beta, their opportunity cost will be:
30 pearls = 8 pineapples
1 pearl = 8/30 pineapples
1 pearl = 0.27 pineapples
Therefore, the opportunity cost of pearls for A is 0.27 pineapples
b)
It appears that A will increase production of pineapples from 15 pineapples to 25 pineapples, and due to their opportunity cost, will decrease pearl production from 6 pearls to 2 pearls
It appears that B will increase the production of pearls from 30 pearls to 40 pearls, and due to their opportunity cost, will decrease pineapple production from 8 pineapples to 4 pineapples.
On January 1, 2019, Sunland Company granted Sam Wine, an employee, an option to buy 1,000 shares of Sunland Co. stock for $30 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $5520. Wine exercised his option on October 1, 2021 and sold his 1,000 shares on December 1, 2021. Quoted market prices of Sunland Co. stock in 2021 were:
Using the fair value method, Sunland Company should recognize compensation expenses for 2019on its books in the amount of 2019 is $5,520.
What is a compensation expense?Compensation expenses are compensation-associated expenses used as a reward for exceptional job performance.
Examples of such compensation expense plans include bonuses, commissions, stock options, and profit-sharing.
Data and Calculations:Number of option shares granted = 1,000 shares
Grant price = $30
Exercise period = 5 years
Total compensation expense based on the fair value option pricing model = $5,520
The 2019 compensation expense = $6,000 ($30 x 1,000)/5
Question Completion:Quoted market prices of Sunland Co. stock in 2021 were:
July 1 = $30 per share
Oct 1 = $36 per share
Dec 1 = $40 per share
Required:
As a result of the option granted to Wine, using the fair value method, Sunland Company should recognize compensation expenses for 2019 on its books in the amount of 2019.
Thus, the 2019 compensation expense is $5,520.
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1. Describe how a global project can be more complex than a project performed within just one country. How might these elements affect the successful outcome of the global project
Answer:
Globalization alters the project's characteristics. Multinational and multilingual initiatives are possible in global projects. Managers must be able to communicate with individuals from diverse nations.
A manager requires a different set of skills to manage projects on a global scale. The following are things he should be aware of:
Cultural sensitivity
Learn about the other organizations' traditions.
ability to operate in a fast-paced, unpredictably changing workplace
Create a productive team.
Develop a sense of trust
All of these elements are equally crucial for the project's worldwide success.
The initiatives that are held at a worldwide level are more difficult.
You have just started a new job and plan to save $5,200 per year for 36 years until you retire. You will make your first deposit in one year. How much will you have when you retire if you earn an annual interest rate of 9.54 percent?
a. $1,331,411.17
b. $1,394,509.68
c. $1,346,423.14
d. $1,268,312.65
e. $1,333,878.83
Answer:
$1,394,509.68
Explanation:
Savings amount = $5200
Period = 36 years
Interest = 9.54 percent
We solve for the future value of the annuity
= $5200[(1+0.0954)³⁶-1/0.0954]
= 5200 x [1.0954³⁶-1/0.0954]
= 5200 x 268.1749
= 1,394,509.681 dollars
Therefore after retirement and at an interest rate of 9.54 percent, you would be earning 1,394,509.681 dollars.
Option b.
Use this information for Mason Corporation to answer the question that follow. Mason Corporation had $1,114,000 in invested assets, sales of $1,281,000, income from operations amounting to $209,000, and a desired minimum return of 15%. Round your answer to two decimal places. The investment turnover for Mason Corporation is a.1.38 b.1.15 c.1.72 d.0.92
Answer:
b.1.15
Explanation:
The computation of the investment turnover is shown below:
= Sales ÷ average operating assets
= $1,281,000 ÷ $1,114,000
= 1.1499
= 1.15
hence, the investment turnover is 1.15
Therefore the option b is correct
The same should be considered and relevant
A rules-based monetary policy :_______.a. is advocated by activists. b. is advocated by nonactivists. c. could involve a predetermined steady growth rate in the money supply. d. b and c e. all of the above
Answer:
d. b and c
Explanation:
Monetary policy can be defined as the actions (macroeconomic policies) adopted and undertaken by the central bank of a particular country (Federal Reserve System in the United States of America) to control the money supply and interest rates so as to boost or enhance economic growth.
Basically, monetary policies are used by the central bank to manage inflation, economic growth through long-term interest rates and level of unemployment in a country. In order to boost economic growth, the national government through its central bank introduces monetary policy to increase money supply (liquidity). Also, a monetary policy can be used to prevent inflation through the reduction of money supply at a given period of time.
A rules-based monetary policy is advocated by non-activists and when it's adopted by the central bank of a country, it could involve a predetermined steady growth rate in the money supply because it's implemented based on specific indicator events existing in the economy.
A metal fabrication company is buying a CNC machine for $600,000. After 20 years of use, the machine should have a salvage value of $35,000.
Required:
a. Under 100% bonus depreciation, what depreciation can be claimed in year 1?
b. Under 100% bonus depreciation, what depreciation can be claimed in year 2?
Answer:
100% Bonus Depreciation:
a. Year 1 = $565,000
b. Year 2 = $0
Explanation:
a) Data and Calculations:
Cost of CNC Machine = $600,000
Salvage value = $35,000
Depreciable amount = $565,000 ($600,000 - $35,000)
100% Bonus Depreciation:
Year 1 = $565,000
Year 2 = $0
b) The 100% bonus depreciation is not limited to the firm's taxable income. The firm can carry back loss arising from 100% bonus depreciation to previous year's income and also carry any unused loss forward to deduct against future income.
What are derivatives? Different types of derivatives ? What are Forward contracts ?
What are Futures contracts ? Features and benefits of derivatives ?
Explanation:
The most common types of derivatives are forwards, futures, options, and swaps. The most common underlying assets include commodities, stocks, bonds, interest rates, and currencies. Derivatives allow investors to earn large returns from small movements in the underlying asset's price.
Perit Industries has $110,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are:
Project A Project B
Cost of equipment required $110,000 $0
Working capital investment required $0 $110,000
Annual cash inflows $20,000 $68,000
Salvage value of
equipment in six years $8,600 $0
Life of the project 6 years 6 years
The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries’ discount rate is 16%.
Required:
1. Compute the net present value of Project A.
2. Compute the net present value of Project B.
3. Which investment alternative (if either) would you recommend that the company accept?
Answer:
$-32,775.48
$185,710.69
Project B
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.
When choosing between positive NPV projects, choose the project with the highest NPV first because it is the most profitable.
Project A
Cash flow in year 0 = -$110,000
Cash flow in year 1 - 5 = $20,000
Cash flow in year 6 = $20,000 + $8,600 = 28,600
I = 16%
NPV = $-32775.48
Project B
Cash flow in year 0 = -$110,000
Cash flow in year 1 - 5 = $68,000
Cash flow in year 6 = $68,000 + $110,000 = $178,000
I = 16%
NPV = $185,710.69
Project B should be chosen because its NPV is positive
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
The Johnson Robot Company’s marketing managers estimate that the demand curve for the company’s robots in 2012 is P = 6,000 - 40Q where P is the price of a robot and Q is the number sold per month. If the firm wants to maximize its dollar sales volume, what price should it charge?
