You are faced with making a decision on a large capital investment proposal. The capital investment amount is $640,000. Estimated annual revenue at the end of each year in the eight year study period is $180,000. The estimated annual year-end expenses are $42,000 starting in year one. These expenses begin decreasing by $4,000 per year at the end of year four and continue decreasing through the end of year eight. Assuming a $20,000 market value at the end of year eight and a MARR = ɛ =12% per year, answer the following questions. a). Using AW, determine whether this proposal is acceptable.
Q: Explain the role of the classical dichotomy in modern thinking about the neutrality of money. Make…
A: In macroeconomics, the classical dichotomy is that the plan, attributed to classical and…
Q: The model predicts that the price of a residential property with a size of 2400 square feet would be…
A: The estimated model in simple terms is: Price (y) = Intercept(b0) + b1x Where b1 is coefficient of x…
Q: A coupon bond has two years to maturity, a face value of $1000 and a coupon rate of 2%. The yield to…
A: Given, Par value of bond =$1000 Number of years to maturity = 2 Annual coupon of bond = 2% *1,000…
Q: MC ATC AVC B A Q2 Which part of the MC curve is also referred to as the supply curve of the firm?…
A: MC intersects average variable cost where average variable cost is minimized
Q: private domestic savings = $1220, the trade deficit = $90. Find private %3D %3D
A: Gross private domestic investment, or GPDI, is a measure of the amount of money that domestic…
Q: When the price changes, the change in producers’ total revenue depends on the elasticity of demand.…
A: Total revenue refers were total amount of money earned by the firm by selling of specific unit of…
Q: What strategy/ies you can use/apply to help small-hold farmers and fisherfolks to increase their…
A: Answer) Small-hold farmers and fisherfolks earn a nominal amount when compared to their services…
Q: 2a) Self-regulation, regulation by the government and regulation by a governmental agency are three…
A: Financial regulation is a kind of regulation or supervision that enforces particular rules, limits,…
Q: se the following graph to answer the questions that follow. 325 Domestic supply 275 225 ice of 175…
A: The equilibrium is established where the demand and supply are equal.
Q: Some of the following future cash flows have been expressed in then-current (future) dollars and…
A: Year Cash Flow Expressed as 0 17500 CV 3 45500 Then - Current 4 13500 Then - Current 7 27500…
Q: What is the relationship between revenue cost and profit?
A:
Q: A perfectly competitive firm faces the short-run cost schedule shown in Table 1.
A: Perfect competition is the market structure where there are large no of buyers and sellers selling…
Q: solve 30-40 minutes hand written asap..i'll rate
A: Production means the goods and services are produced by converting the raw material into the…
Q: Spot exchange rates 1-year Forward Rates Contract size $ 1.00 Rs. 100 $ 1.00 Rs. 120 Rs. 12,500,000…
A: Exchange rate risk refers to the risk that a company's operations and profitability may be affected…
Q: In the short run, a tool manufacturer has a fixed amount of capital. Labor is a variable input. The…
A: Marginal revenue product is the additional output produced from employing an additional unit of…
Q: Question 6 Among all the for-hire transportation modes, which one contributes the least to GDP? O…
A: To make economic transactions on a widespread area, there is a need to transport goods from…
Q: 6. The Market for Chicken Meat in Davao City a. Fill in the missing algebraic signs (+ or-) of the…
A: Hi! Thank you for the question. As per the honor code, We’ll answer the first question since the…
Q: Which of the following would cause the money supply curve to shift to the left? Select one: a. A…
A: Federal Reserve is the organization that is responsible for managing money supply in the economy
Q: Economics of Education. The issue of education is quite critical. The demand for education by…
A: The issue of education is really important. Society has a great demand for education. On the other…
Q: Monopsonistic Markets haaia tr cot ofer (MPC tater (MAeee ofer ( T e inareno t Wagr rd MRP Qy ef m…
A: A monopsnist is a sole employer of a labor and decides how much labor it wants to employ.
Q: Suppose a government has no debt and a balanced budget. Suddenly it decides to spend $5 trillion…
A: Since the question you have posted consists of multiple parts, we will answer the first three parts…
Q: 22. In order for a set of strategies to constitute a Nash Equilibrium a. Each player must adopt a…
A: The Nash equilibrium is thr concept under game theory when two or more people are trying to…
Q: Real GDP is $16 trillion and aggregate planned expenditure is $17 trillion. As a result, unplanned…
A: Real GDP is the value of final goods and services produced in the economy within a given period of…
Q: When conducting a hypothesis test for a given sample size, if a is increased from 0.05 to 0.10, then…
A: When the hypothesis are settled, Type I error will be said as the probability to reject the true…
Q: What is meant by the concentration of an industry? How is concentration measured? What are likely…
A: In an industry, there is a number of small and large firms that operate together in a competition.
Q: Carld crypto have been the Best curency to use during the panoemic
A: Cryptographic currency is progressed currency, which is an elective kind of portion made using…
Q: A housecleaning company receives $25 for each house cleaned. The table below gives the relation…
A: A firm will hire labor as long as wage rate is equal to value of marginal product of labor.
Q: Individual Problems 14-6 At a student café, there are equal numbers of two types of customers with…
A: Price discrimination is the act of charging different prices for the same good or service based on…
Q: Table 1. Unit Labor Requirements Vietnam Indonesia Coffee 70 40…
A: A country or an individual is set to have an absolute advantage if it can produce more of a good…
Q: What are the principal causes of income inequality and what are popular and conventional measures to…
A: The measure that depicts the uneven distribution of income throughout a population is being known as…
Q: MULTIPLE CHOICE (identify the one best answer and provide explanations): Consider an economy in…
A: Growth is the rise in a country's production per capita over a lengthy period of time. Technological…
Q: Title: Profit-maximizing behavior in perfectly competitive factor markets The value of a firm’s…
A: Value of Marginal Product of Labor is equal to Marginal Revenue Product of Labor in a certain market…
Q: Question 3 (Equilibrium) 200 Suppose the market demand is Qp firms in the market. Suppose N = 25.…
A: Supply of the good is a function of number of firms in the market.
Q: What would be the effect of a decrease in government taxes on a good's supply curve, ceteris…
A: Answer: A decrease in tax will lead to a decrease in the cost of production. As a result, the supply…
Q: A manufacturer has $600 to spend on the production of a certain product and knows that if "x" units…
A: We have cost of production = 600 and cost of X and y are $3 and $5 respectively.
Q: O both the noncompetitive firm and the purely competitive firm.
A:
Q: MC MC ATC ATC Quantity MR (A) Quantity MR (B) MC MC ATC ATC D= MR Quantity (C) Quantity (D) MR 25.…
A: A firm will maximise profit at a point where marginal revenue is equal to marginal cost and price is…
Q: 1. Market demand for a commodity is QD = 12 - P and the short-run cost function for the firm is…
A: Consumer surplus is the area above the market price and below the demand curve. Producer surplus is…
Q: The two machines shown are being considered for a chip manufacturing operation. Assume the MARR is a…
A: Calculating annual worth when there is constant-value dollar : While calculating with…
Q: Ron Go to Bed Adventure Go to Bed 40, 40 10, 20 Adventure 20, 10 60, 60 Harry and Ron were forced to…
A: Hi! Thank you for the question. As per the honor code, We’ll answer the first question since the…
Q: Using demand and supply diagram, describe and discuss positive externality in production of a…
A: Positive externality is a situation where a third party is benefitted from the…
Q: According to author Eric Foner, what was a key component of the dominant definition of freedom in…
A: Eric Foner has written the book 'The Story of American Freedom' comprising all of American history…
Q: Assume a government starts with zero debt. This government then runs an annual deficit for 28 years…
A: The financial liabilities of the government sector are referred to as gross government debt (also…
Q: 6) When United States residents acquire assets abroad, they A) borrowing money, and foreign debts to…
A: Given information: United States residents acquire assets abroad.
Q: I. Imports are flows of payments to domestic households from foreign firms in exchange for goods and…
A: The Export is the flow of goods and services to other countries and import refers to flow of goods…
Q: In the short run, a tool manufacturer has a fixed amount of capital. Labor is a variable input. The…
A: a. Marginal revenue product of labor = =marginal product * price MRPL(11)=16*6=96 and so on…
Q: f the cost of producing 100 pies is $274 the average total cost is?
A: Average total cost refers to total cost per unit of output. It is the sum of average fixed cost and…
Q: how can immigration affect economic growth in the home country, both in the short and long run.…
A: Immigration is described as individuals moving from their home nation or area to reside in a country…
Q: The manager of a firm in a monopolistically competitive industry is giving some thought to two…
A: Given information Own price elasticity=-2.5 Advertisement elasticity=0.7 Marginal cost =$30 Annual…
Q: Essay: How important voting is for youth?
A: It is important for the youth to vote because for us we can see around the world that there is so…
Write it on a paper with clear solutions. Thanks
Step by step
Solved in 2 steps
- A firm has the opportunity to invest in a project having an initial outlay of $20,000. Net cash inflows (before depreciation and taxes) are expected to be $5,000 per year for five years. The firm uses the straight-line depreciation method with a zero salvage value and has a (marginal) income tax rate of 40 percent. The firms cost of capital is 12 percent. Compute the IRR and the NPV. Should the firm accept or reject the project?A machine that costs $12,000 is expected to operate for 10 years. The estimated salvage value at the end of 10 years is $0. The machine is expected to save the company $2,331 per year before taxes and depreciation. The company depreciates its assets on a straight-line basis and has a marginal tax rate of 40 percent. The firm’s cost of capital is 14 percent. What is the internal rate of return (IRR) for the machine? Based on the IRR criterion, should this machine be purchased?You are considering the following project: It pays you $2,500 at the end of the first year, costs $8,500 by the end of the second year and brings $6,800 a year after. What is the project's internal rate of return(s), exact external rate of return and the approximate external rate of return it current MARR is 14%?
- You are faced with making a decision on a large capital investment proposal. The capital investment amount is $640,000. Estimated annual revenue at the end of each year in the eight year study period is $180,000. The estimated annual year-end expenses are $42,000 starting in year one. These expenses begin decreasing by $4,000 per year at the end of year four and continue decreasing through the end of year eight. Assuming a $20,000 market value at the end of year eight and a MARR = ε =12% per year, answer the following questions. Using AW, determine whether this proposal is acceptable. What is the ERR of this proposal? Is it acceptable? What is the IRR of this proposal? Is it acceptable? What is the simple and discounted payback period for this proposal?A proposed project will require the immediate investment of $50,000 and is estimated to have year-end revenues and costs as follows: Year Revenue Costs 1 2 3 4 5 $ 75,000 90,000 100,000 95,000 60,000 $ 60,000 77,500 75,000 80,000 47,500 An additional investment of $20,000 will be required at the end of the second year. The project would terminate at the end of the 5th year, and the assets are estimated to have a salvage value of $25,000 at the time. Solve for the IRR of the project by PW using 15% and 16% rates. A. 15.68% B. 15.28% C. 15.88% D. 15.48%Consider the following two mutually exclusive projects: (a) At an interest rate of 25%, which project would you recommend choosing?(b) Compute the area of negative project balance, discounted payback period, and area of positive project balance for each project. Which project isexposed to a higher risk of loss if either project terminates at the end ofyear 2?
- You are given the following financial data about a new system to be implemented at a company:(1) Investment cost at n = 0: $23,000(2) Investment cost at n = 1: $18,000(3) Useful life:10 years(4) Salvage value (at the end of 11 years): $7,000(5) Annual revenues: $19,000 per year(6) Annual expenses: $6,000 per year(7) MARR: 10%Note: The first revenues and expenses will occur at the end of year 2.(a) Determine the conventional-payback period.(b) Determine the discounted-payback period.Given the following cash flows for project X and project Y, Year Project X Project Y 0 -55000 -100000 1 20000 15000 2 13500 17000 3 11000 19000 4 10000 25000 5 9000 30000 6 7500 35000 Calculate the NPV, IRR, MIRR and traditional payback period for each project, assuming a required rate of return of 7 percent If the projects are independent, which project(s) should be selected? If they are mutually exclusive, which project should be selected?What process does the net present value method use to help management determine whether a project is acceptable to a company? Options : A. It discounts net cash flows to their present value and then compares that value to the capital outlay required by the project.B. It determines the interest rate that will cause the present value of the capital expenditure to equal the present value of the expected net cash flows.C. It divides the present value of net cash flows by the initial investment to determine the profitability index of the project.D. It identifies the time period required to recover the cost of the capital investment from the net annual cash flow produced by the project.
- Consider the following two mutually exclusive investment projects: Salvage values represent the net proceeds (after tax) from the disposal of assets if they are sold at the end of the year listed. Both projects will be available (and can be repeated) with the same costs and salvage values for an indefinite period.(a) With an infinite planning horizon, which project is a better choice atMARR= 12%?(b) With a 10-year planning horizon, which project is a better choice atMARR= 12%?Determine the capitalized cost of a research laboratory which requires Php 4,500,000 for original construction: Php 110,000 at the end of every year for the first 6 years and then Php 130,000 each year thereafter for operating expenses, and Php 600,000 every 7 years for replacement of equipment with interest at 12% per annum? CC = Php 5,996,693.866 CC = Php 8,123,567.369 CC = Php 7,876,854.896 CC = Php 6,987,693.311Consider the following two mutually exclusive service projects with projectlives of three years and two years, respectively. (The mutually exclusive service projects will have identical revenues for each year of service.) The interest rate is known to be 12%. Net Cash Flow End of Year Project A Project B 0 -$1,000 -$800 1 -400 -200 2 -400 -200+0 3 -400+200 If the required service period is six years and both projects can be repeated with the given costs and better service projects are unavailable in the future, which project is better and why? Choose from the following options:(a) Select Project B because it will save you $344 in present worth over the required service period.(b) Select Project A because it will cost $1,818…