Answer:
Actually we have 2 method of launching a product. First simultaneously which isn't the best way. Second is sequentially in one market after anther. And this method seems to be more useful than others.
Answer:
Planning is the first one because I believe this can improve productivity in everything. Giving employees a schedule of what they day should look like is a great idea to give them an idea on what their time distribution should be. It also makes their day less stressful without having to worry about unexpected jobs that need to be done and overall should make them more productive through a workday. Having a organized process is another great attribute to improve productivity. This will allow a clean process in creating your products and service and keep everything in place.
Explanation:
A manufacturing company's costs can be classified broadly as __________, __________, and __________. The costs to manufacture a product are classified as __________ __________, __________ __________, and __________ __________.
Answer:
1. A manufacturing company's costs can be classified broadly as direct materials, direct labor, and factory overhead cost.
2. The costs to manufacture a product are classified as Period cost, Administrative Expense, and Selling expenses.
Explanation:
A manufacturing company encounters so many costs in the cause of the manufacturing of the products which they are into. Some of these cost are periodic in nature (one off payment or interval cost ) while others are directly related to the product being manufactured.
Assume you are planning to invest $5,000 each year for six years and will earn 10 percent per year. Determine the future value of this annuity if your first $5,000 is invested at the end of the first year. $38,470 $38,578 $34,578 $35,878
The future value of this annuity is $38,578.
Calculation of the future value of this annuity is as follows:
The Future Value of Annuity is
= Annuity × [{(1+rate of interest)^number of years -1} ÷ rate of interest]
= $5,000 × [{(1+0.10)^6 -1} ÷ 0.10]
= $5,000 × (1.771561 -1) ÷ 0.10
= $38,578.05
Therefore we can conclude that the future value of this annuity is $38,578.
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Zycon has produced 10,000 units of partially finished Product A. These units cost $20,000 to produce, and they can be sold to another manufacturer for $12,000. Instead, Zycon can process the units further and produce finished Products X, Y, and Z. Processing further will cost an additional $16,000 and will yield total revenues of $30,000.Required:Identify weather the tem is relevant or irrelevant to the sew or process further decision.
Answer:
1. $20,000 cost already incurred to a produce. - Irrelevant
This cost has already been incurred in the initial production and as such are classified as sunk costs. Sunk costs are not relevant to the decision on whether to sell or process the product further.
b. $12,000 selling price - Relevant
As this amount relates to the selling price were the product not to be processed further, it is relevant to the sell or process the products further decision.
c. $16,000 additional processing costs - Relevant
This is the incremental cost should the product be processed further and so is relevant to the decision.
d. $30,000 revenues from processing further. - Relevant.
As the total revenue that could be realized if the product is processed further, this is very relevant to the decision on whether to process further or sell.
When one nation can produce a product at lower cost relative to another nation, it is said to have a(n) __________________ in producing that product. Group of answer choices
Answer:
absolute advantage
Explanation:
In such a scenario the nation is said to have an absolute advantage in producing that product. Like mentioned, this term refers to the ability of a nation to be able to produce a greater quantity of a good, product, or service than its competitors at a lower cost. This allows the nation to profit massively as well as having more opportunities.
At January 1, 2019, the Accrued Warranty Payable is . During 2019, the company recorded Warranty Expense of . During 2019, the company replaced defective products in accordance with product warranties at a cost of . What is the Accrued Warranty Payable at December 31, 2019?
Answer: A.$8,800
Explanation:
The Accrued Warranty Payable Balance for the year ending December 2019 will take into account the Warranty expenses that were old less the warranty expenses that have been paid for already with the formula;
= Opening Accrued Warranty payable + Warranty Expense recorded for the Year - Warranty Expenses Paid in the year
= 1,800 + 19,400 - 12,400
= $8,800
Answer:
jus 2 ez pz lemon squeezey ppppppp
Explanation:
If interest rates rise, which of the following U.S. Government debt instruments would show the greatest percentage drop in value?
a. treasury bills.
b. treasury notes.
c. treasury bonds.
d. savings bonds.
Answer: treasury bonds
Explanation:
The treasury bonds are typically debt securities for the government that have a long maturity period e.g ten years ane above.
If interest rates rise, the U.S. Government debt instruments that would show the greatest percentage drop in value is the treasury bonds because of its longer maturity period.
Mr. and Mrs. Haley are purchasing beachfront property in an upscale development. The home comes equipped with all furnishings. The Haleys want to get a mortgage that will cover the purchase price plus all the furnishings. What kind of mortgage are they looking for?
Answer: package mortgage
Explanation:
From the question, we are informed that Mr and Mrs. Haley are purchasing beachfront property in an upscale development and that the home comes equipped with all furnishings.
We are further told that the Haleys want to get a mortgage that will cover the purchase price plus all the furnishings. This shows that they are looking for package mortgage.
A package mortgage is a form of mortgage whereby the personal property and the furniture will have to be included when buying the house.
In a company's annual report, the section called Management Discussion and Analysis provides critical information for interpreting the financial statements and assessing the future of the company.
A. True
B. False
Answer:
A. True
Explanation:
The section called Management Discussion and Analysis in an annual report analyzes the performance of a company, includes comments from the management about the financial statements to allow the readers to understand the information in a better way and includes the future objectives and plans. According to this, the answer is that the statement that indicates that in a company's annual report, the section called Management Discussion and Analysis provides critical information for interpreting the financial statements and assessing the future of the company is true.
The XYZ Corporation pays no cash dividends currently and is not expected to for the next five years. Its latest EPS was $18.00, all of which was reinvested in the company. The firm’s expected ROE for the next five years is 16% per year, and during this time it is expected to continue to reinvest all of its earnings. Starting in year 6, the firm’s ROE on new investments is expected to fall to 11%, and the company is expected to start paying out 30% of its earnings in cash dividends, which it will continue to do forever after. DEQS’s market capitalization rate is 24% per year. a. What is your estimate of XYZ’s intrinsic value per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer:
current intrinsic value per stock = $26.35
Explanation:
year dividend EPS
0 0 $18
1 0 $20.88
2 0 $24.22
3 0 $28.10
4 0 $32.59
5 0 $37.81
6 $12.59 $41.97
growth rate up to year 5 = 16%
ROE growth rate starting year 6 = 11%
dividend growth rate starting year 6 = 11% x (1 - 30%) = 7.7%
cost of equity = 24%
horizon value at year 5 = $12.59 / (24% - 7.7%) = $77.24
current intrinsic value per stock = $77.24 / 1.24%⁵ = $26.35
Here I Sit Sofas has 5,800 shares of common stock outstanding at a price of $81 per share. There are 630 bonds that mature in 17 years with a coupon rate of 5.5 percent paid semiannually. The bonds have a par value of $1,000 each and sell at 93 percent of par. The company also has 4,700 shares of preferred stock outstanding at a price of $34 per share. What is the capital structure weight of the debt?
Answer:
0.4820
Explanation:
The computation of the weight of debt is shown below:
= Debt value ÷ Total capital structure
where,
Debt value is
= 630 bonds × $1,000 × 0.93
= $585,900
And, the total capital structure is
= Debt value + common stock + preferred stock
= $585,900 + 5,800 shares × $81 + 4,700 shares × $34
= $1,215,500
So, the weight of debt is
= $585,900 ÷ $1,215,500
= 0.4820
2. Using semiannual compounding, what is the value to you of a 9% coupon bond with a par value of $10,000 that matures in 10 years if you require a 7% return
Answer:
The Value of the Bond, PV is $10.962.65
Explanation:
The Value of the Bond (PV) can be determined as follows :
PMT = ($10,000 × 9%) ÷ 2 = $450
P/YR = 2
N = 10
Required Return (YTM) = 7 %
FV = $10,000
PV = ?
Using a Financial Calculator, the Value of the Bond, PV is $10.962.65
In 2014, U.S. gross domestic product (GDP) was roughly $17.4 trillion. Given that the U.S. population was roughly 319 million people, per capita GDP in the United States in 2014 was roughly: ________
Answer:
$54,545
Explanation:
Step 1: Calculate the GDP
1 trillion = 1000 billion
$17.4 × 1000 = $17400 million
The GDP of the U.S. is 17400 million dollars
Step 2: Calculate the per capita GDP
GDP = 17400 million
Number of people = 319 million
Divide total GDP to number of people
[tex]\frac{17400}{319} \\\\= 54.5454[/tex]
The United States in 2014 was roughly 54,545 dollars.
Sally Eason put $4,000 in her deductible IRA this year. If Sally is in the 25 percent marginal tax bracket, the government actually contributed ____ of that amount for her. Group of answer choices
Answer: $1000
Explanation:
From the question, we are informed that Sally Eason put $4,000 in her deductible IRA this year and that Sally is in the 25 percent marginal tax bracket.
Based on the above information, the government contributed:
= 25% × $4,000
= 25/100 × $4,000
= 0.25 × $4,000
= $1000
Assuming a 360 -day year the maturity value of a 15000, 9%,60-day note receivable dated February 10th is:
Answer:
the maturity value of the note receivable is $15,225, and includes both principal plus interest revenue.
Explanation:
when the note is collected on April 11, the journal entry should be:
April 11, collection of notes receivable
Dr Cash 15,225
Cr Notes receivable 15,000
Cr Interest revenue 225
interest revenue = $15,000 x 9% x 2/12 = $225
A 60-year old retiree is in a very low tax bracket. He has a low risk tolerance and wishes to make an investment that will provide income. Which is the BEST recommendation
Complete Question:
A 60-year old retiree is in a very low tax bracket. He has a low risk tolerance and wishes to make an investment that will provide income. Which is the BEST recommendation?
Group of answer choices.
A. Mid-cap common stock
B. Municipal bond
C. Bank CD
D. Treasure STRIPS
Answer:
C. Bank CD
Explanation:
In this scenario, a 60-year old retiree is in a very low tax bracket. He has a low risk tolerance and wishes to make an investment that will provide income. A Bank certificate of deposit (CD) is the best recommendation.
A bank certificate of deposit (CD) can be defined as a secured form of time-bound deposit and a special low-risk savings account, wherein money (lump-sum) are left with the bank for a specific period of time in exchange for an interest rate premium.
Generally, a certificate of deposit pays a higher interest rate to its holder than the regular savings account because the banks invest the money in a business.
Additionally, the bank certificate of deposit is protected and insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000.
Hache Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory 1,050
Materials Costs $ 8,700
Conversion Costs $ 8,500
Percent complete with respect to materials 50%
Percent complete with respect to conversion 30%
Units started into production during the month 6,600
Units transferred to the next department during the month 5,800
Materials costs added during the month $ 91,000
Conversion costs added during the month $ 126,300
Ending work in process inventory:
Units in ending work in process inventory 1,850
Percent complete with respect to materials 50%
Percent complete with respect to conversion 20%
Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.
The cost of ending work in process inventory in the first processing department according to the company's cost system is closest to: (Do not round Cost per equivalent unit.)
a) $67,845
b) $38,507
c) $17,478
d) $21,797
Answer:
The cost of ending work in process inventory in the first processing department according to the company's cost system is closest to: d) $21,797
Explanation:
Calculation of Equivalent Units of Production
Materials
Units transferred to the next department (5,800 × 100%) = 5,800
Units in ending Work In process (1,850 × 50%) = 925
Total Equivalent Units of Production for Materials = 6,725
Conversion
Units transferred to the next department (5,800 × 100%) = 5,800
Units in ending Work In process (1,850 × 20%) = 370
Total Equivalent Units of Production for Conversion Costs = 6,170
Calculation of Cost per Equivalent units of Production
Materials
Cost per equivalent unit = Total Material Cost ÷ Total Equivalent Units of Production for Materials
= ($ 8,700 + $ 91,000) ÷ 6,725
= $14.825
Cost per equivalent unit = Total Material Cost ÷ Total Equivalent Units of Production for Materials
= ($ 8,500 + $ 126,300) ÷ 6,170
= $21.848
Calculation of cost of ending work in process inventory
Materials ( 925 × $14.825) = $13,713.12
Conversion Cost ( 370 × $21.848) = $8,083.76
Total = $21,796.88
Thus,
The cost of ending work in process inventory in the first processing department according to the company's cost system is closest to: d) $21,797.
Central Systems desires a weighted average cost of capital of 12.7 percent. The firm has an aftertax cost of debt of 4.8 percent and a cost of equity of 15.4 percent. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?
a. 0.37
b. 0.44
c. 0.42
d. 0.56
e. 0.34
Answer:
e. 0.34
Explanation:
Let debt be $D
Equity be $E
Total=(D+E)
WACC = Respective cost * Respective weight
12.7 = {(D*4.8)/(D+E)} + {(15.4*E)/(D+E)}
12.7*(D+E)=4.8D+15.4E
12.7D+12.7E=4.8D+15.4E
D=(15.4-12.7)E /(12.7-4.8)
D = 2.7E / 7.9
D = 0.0341772
D = 0.34 E
Hence, debt-equity ratio=debt/equity
=0.34
Suppose today you enter a forward contract to buy 1 share of ADM stock in 1 year at a forward price of $30, and today you also buy 1-year Treasury bills with a face value of $30. ADM is not expected to pay a dividend in the next 1 year. Your position has the same payoff in 1 year as:
"Buying today 1 share of ADM itself" is the appropriate response. A further solution is provided below.
According to the question,
Buy 1 share of ADM stock in time,
= 1 year
Forward price,
= $30
Face value,
= $30
We can say that,
→ Buying share today will be:
[tex]= Investing \ in \ 1 \ year \ T-bill+Buying \ forward \ contracts[/tex]
Thus the above is the right solution.
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A company issues 9% bonds with a par value of $110,000 at par on January 1. The market rate on the date of issuance was 8%. The bonds pay interest semiannually on January 1 and July 1. The cash paid on July 1 to the bond holder(s) is:
Answer: $4950
Explanation:
From the question, we are informed that a company issues 9% bonds with a par value of $110,000 at par on January 1 and that the market rate on the date of issuance was 8% and also that the bonds pay interest semiannually on January 1 and July 1.
There is no discount on the bonds payable because they are issues at par. Therefore, the cash paid on July 1 to the bond holders will be:
= $110,000 x 9% x 6/12
= $110,000 x 9/100 x 6/12
= $110,000 x 0.09 x 0.5
= $4,950
Using the information below for Laurels Company; determine the cost of goods manufactured during the current year: Direct materials used $6,100 Direct Labor 8,100 Total Factory overhead 6,200 Beginning work in process 4,100 Ending work in process 6,200a. $19,700b. $16,900c. $18,300d. $12,800e. $14,800
Answer:
c. $18,300
Explanation:
The computation of cost of goods manufactured during the current year is shown below:-
Cost of goods manufactured during the current year = Direct material + Direct labor + Total factory overhead + Beginning Work in progress - Ending work in progress
= $6,100 + $8,100 + $6,200 + $4,100 - $6,200
= $24,500 - $6,200
= $18,300
Hence, the correct option is c. $18,300
On January 1, 2017, Hi and Lois Company purchased 12% bonds having a maturity value of $300,000, for $322,744.44. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest receivable January 1 of each year. Hi and Lois Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.a. Prepare the journal entry at the date of the bond purchase.
b. Prepare a bond amortization schedule.
c. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2017
d. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2018
Answer:
a. January 1, 2017, bonds are purchased at a premium
Dr Investment in bonds 300,000
Dr Premium on bonds receivable 22,744.44
Cr Cash 322,744.44
b.
Date Cash Interest Amortization Bond Carrying
received revenue of premium premium value
1/1/18 $36,000 $32,274.44 $3,725.56 $19,018.88 $280,981.12
1/1/19 $36,000 $31,904.89 $4,095.11 $14,923.77 $285,076.23
1/1/20 $36,000 $31,492.38 $4,507.62 $10,416.15 $289,583.85
1/1/21 $36,000 $31,041.61 $4,958.39 $5,457.76 $294,542.24
1/1/22 $36,000 $30,542.24 $5,457.76 $0 $300,000
amortization of bond premium = ($322,744.44 x 10%) - $36,000 = -$3,725.56
amortization of bond premium = ($319,018.88 x 10%) - $36,000 = -$4,095.11
amortization of bond premium = ($314,923.77 x 10%) - $36,000 = -$4,507.62
amortization of bond premium = ($310,416.15 x 10%) - $36,000 = -$4,958.39
amortization of bond premium = $10,416.15 - $4,958.39 = -$5,457.76
c.
December 31, 2017
Dr Interest receivable 36,000
Cr Interest revenue 32,274.44
Cr Premium on bonds receivable 3,725.56
d.
December 31, 2017
Dr Interest receivable 36,000
Cr Interest revenue 31,904.89
Cr Premium on bonds receivable 4,095.11
Looking forward to next year, if Baldwin’s current cash balance is $20,201 (000) and cash flows from operations next period are unchanged from this period and Baldwin takes ONLY the following actions relating to cash flows from investing and financing activities: Issues 100 (000) shares of stock at the current stock price Issues $200 (000) of long-term debt Pays $40 (000) in dividends Which of the following activities will expose Baldwin to the most risk of needing an emergency loan?a. Retires $20,000 (000) in long-term debtb. Liquidates the entire inventoryc. Sells $5,000 (000) of their Long-term assetsd. Purchases assets at a cost of $15,000 (000)
Answer: Purchases assets at a cost of $15,000 (000)
Explanation:
Out of the 4 options presented, 2 involves cash coming into the company which are; Sells $5,000 (000) of their Long-term assets and Liquidates the entire inventory. As these 2 bring cash into the company, they will not make Baldwin need an emergency loan.
The other 2 however, take money from the company being; Retires $20,000 (000) in long-term debt and Purchases assets at a cost of $15,000 (000). Retirement of long-term debt will have been in the budget for a long time so there would be no need for emergency funding.
The Purchase of the assets on the other hand has a less chance of being budgeted for than the long term debt retirement and being such a significant outflow, could expose Baldwin to the risk of needing to seek emergency loans.
Walnut has received a special order for 2,700 units of its product at a special price of $200. The product normally sells for $260 and has the following manufacturing costs: Per unit Direct materials $ 64 Direct labor 34 Variable manufacturing overhead 44 Fixed manufacturing overhead 103 Unit cost $ 245 Walnut is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Walnut accepts the order, what effect will the order have on the company’s short-term profit?
a. $162,000 decrease
b. $121,500 increase
c. $121,500 decrease
d. Zero.
Answer:
a. $162,000 decrease
Explanation:
Sales $540,000
(2700 unit * $200)
Less:
Direct materials $172,800
(2700 unit * 64)
Direct labor $91,800
(2,700 unit * $34)
Variable manufacturing overhead $118,800
(2700 unit * $44)
Contribution loss from existing sale $318,600 $702,000
2700 unit * ($260-$64-$34-$44)
Effect on Net operating income -$162,000
Transactions that do not involve the original issue of securities take place in _________. A. primary markets B. secondary markets C. over-the-counter markets D. institutional markets
Answer:
B. secondary markets
Explanation:
The secondary market is the market in which the original issue of securities does not take place that means only existing securities are taken place i.e traded like purchase and sale of securities but not new one only existing one.
Therefore according to the given options, option B is correct
Hence, the other options are wrong
Which one of these is the best description of a comparative market analysis? It shows what similar homes in the area have recently sold for It shows the list prices of similar homes in the area It’s a guide to the minimum acceptable offer It discloses issues with the home that are known to the seller
Answer:
It shows what similar homes in the area have recently sold for.
Explanation:
Answer:
The statement "It shows the same types of homes in the area that are presently sold" is considered to be the best description for the comparative market analysis.
Explanation:
A comparative market analysis is a tool that is used by the real estate agent in order to remove the value of the particular property via evaluation of the same types of homes that could be presently sold in a similar area.
For finding the best description regarding the comparative market analysis, we need to determine the following information:
It does not show the list prices of the same types of homes in the area.It does not guide for a minimum acceptable offer.Also, it does not disclose the issues for the income that are aware to the seller.Therefore we can conclude that the first statement is correct
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In 2017, Lippart & Sons, a small environmental-testing firm, performed 11,000 radon tests for $330 each and 15,000 lead tests for $240 each. Because newer homes are being built with lead-free pipes, lead-testing volume is expected to decrease by 15% next year. However, awareness of radon-related health hazards is expected to result in a 7% increase in radon-test volume each year in the near future. Jim Lippart feels that if he lowers his price for lead testing to $220 per test, he will have to face only a 4% decline in lead-test sales in 2018.Required:a. Prepare a 2018 sales budget for Hart & Sons assuming that Hart holds prices at 2017 levels. b. Prepare a 2018 sales budget for Hart & Sons assuming that Hart lowers the price of a lead test to $200.
Answer:
1.Radon Tests $3,884,100
Lead Tests $3,060,000
2.Radon Tests $3,884,100
Lead Tests $2,880,000
Explanation:
1.Preparation for 2018 sales budget for Hart & Sons
Lippart & Sons, 2017 Volume At 2017; Selling Prices
Radon Tests 11,000 $330
Lead Tests 15,000 $240
2018 Expected Change in Volume
Radon Tests 11,000 +7%
Lead Tests 15,000 -15%
Expected 2018 Volume
Radon Tests 11,000 *7% =$770
(11,000 +770)=$11,770
Lead Tests 15,000 *15%=$2,250
15,000-2,250=$12,750
Lippart & Sons Sales Budget For the Year Ended December 31,2018
Selling Price ×Units Sold = Total Revenues
Radon Tests 11,770*330=$3,884,100
Lead Tests 12,750*240=$3,060,000
2.1.Preparation for 2018 sales budget for Hart & Sons
Lippart & Sons, 2017 Volume At 2017; Selling Prices
Radon Tests 11,000 $330
Lead Tests 15,000 $200
2018 Expected Change in Volume
Radon Tests 11,000 +7%
Lead Tests 15,000 -4%
Expected 2018 Volume
Radon Tests 11,000 *7% =$770
(11,000 +770)=$11,770
Lead Tests 15,000 *4%=$600
15,000-600=$14,400
Lippart & Sons Sales Budget For the Year Ended December 31,2018
Selling Price ×Units Sold = Total Revenues
Radon Tests 11,770*330=$3,884,100
Lead Tests 14,400*200=$2,880,000
______ occur whenever a third party receives or bears costs arising from an economic transaction in which the individual (or group) is not a direct participant.
a. Pecuniary benefits and costs
b. Externalities
c. Intangibles
d. Monopoly costs and benefits
The choose b. Externalities
Externalities occur whenever a third party receives or bears costs arising from an economic transaction in which the individual (or group) is not a direct participant.
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A company incurs $4,050,000 of overhead each year in three departments: Ordering and Receiving, Mixing, and Testing. The company prepares 2,000 purchase orders, works 50,000 mixing hours, and performs 1,500 tests per year in producing 200,000 drums of Goo and 600,000 drums of Slime. The following data are available: Department Expected use of Driver Cost Ordering and Receiving 2,000 $1,200,000 Mixing 50,000 1,500,000 Testing 1,500 1,350,000 Production information for Goo is as follows: Department Expected use of Driver Ordering and Receiving 400 Mixing 20,000 Testing 500 Compute the amount of overhead assigned to Goo. $2,760,000.
Answer:
$1,290,000
Explanation:
Goo:
Ordering and Receiving = 400 / 2,000 = 20%
Mixing = 20,000 / 50,000 = 40%
Testing = 500 / 1,500 = 33.33%
allocated overhead costs:
Ordering and Receiving = 20% x $1,200,000 = $240,000
Mixing = 40% x $1,500,000 = $600,000
Testing = 33.33% x $1,350,000 = $450,000
total allocated overhead costs = $1,290,000
You are considering two mutually exclusive projects with the following cash flows. Which project(s) should you accept if the discount rate is 8.5 percent? What if the discount rate is 13 percent?Year 0 1 2 3Project A -80,000 31,000 31,000 31,000Project B -80,000 0 0 110,000
Answer:
NPV Project A = - $825.31
NPV Project B = $6119.89
So, at a discount rate of 8.5%, Project B should be accepted.
NPV Project A = - $6804
Npv Project B = - $3764.48
So, at a discount rate of 13%, neither of the projects should be accepted.
Explanation:
One of the methods to evaluate a project is to determine the NPV or Net Present Value from the project. If a project provides a positive NPV after discounting the cash flows from the project at a set discount rate, the project should be accepted. If the project gives a negative NPV, the project should be discarded.
The NPV is calculated as follows,
NPV = CF1 / (1+r) + CF2 / (1+r)^2 + ... + CFn / (1+r)^n - Initial cost
Where,
CF1, CF2, ... represents the cash flows in year 1 and year 2 and so onr is the discount rateAt 8.5% discount rate
NPV Project A = 31000/(1+0.085) + 31000/(1+0.085)^2 + 31000/(1+0.085)^3 - 80000
NPV Project A = - $825.31
NPV Project B = 110000 / (1+0.085)^3 - 80000
NPV Project B = $6119.89
So, at a discount rate of 8.5%, Project B should be accepted.
At 13% discount rate
NPV Project A = 31000/(1+0.13) + 31000/(1+0.13)^2 + 31000/(1+0.13)^3 - 80000
NPV Project A = - $6804
NPV Project B = 110000 / (1+0.13)^3 - 80000
Npv Project B = - $3764.48
So, at a discount rate of 13%, neither of the projects should be accepted.
One of the necessary conditions for a contestable market is that new firms entering the market have a cost advantage over the existing firms.
A. True
B. False
Answer: False
Explanation:
A contestable market is a market whereby there is entry and exit for the companies and such companies usually have low sunk costs. Such companies have access to same technology and skills.
Therefore, the conditions for a contestable market that new firms entering the market have a cost advantage over the existing firms is not true.