Pharoah Inc. is contemplating a capital project with a cost of $149000. The project will generate net cash flows of $44000 for year 1,$60000 for year 2 and $59000 for year 3. The asset has a salvage value of $10000 and straight-line depreciation will be used. Thecompany's required rate of return is 10%.Year1230 0 0 0Present Valueof 1 at 10%0.9090.8260.751PV of an Annuityof 1 at 10%0.9091.7362.487acceptable because it has a positive NPV.unacceptable because it has a zero NPV.unacceptable because it earns a rate less than 10%.acceptable because it has a return of greater than 10%.SUPPO

Net present value is the balance when present value of cash outflows is deducted from the present…

Answered: acceptable because it has a positive…

acceptable because it has a positive NPV. O unacceptable because it has a zero NPV. O unacceptable because it earns a rate less than 10%. O acceptable because it has a return of greater than 10%.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Darius is the financial advisor for his company and is considering the purchase of excavation equipment which will cost $54,000. The purchase of this equipment is expected to save his company $5,802 at the end of every year for 10 years. At the end of the 10 years, he expects the excavation equipment to have a residual (inflow) value of $20,000. The company requires a 6% rate of return. Round PV to the nearest cent. Round NPV to the nearest whole number. 1) What is the Net Present Value (NPV) of this equipment investment? Cash Inflows Cash Inflows P/Y = C/Y = N = I/Y = PV = PMT= FV = Payments (Savings) A $ $ % Residual (Inflow) A GA A % (If the NPV is negative, enter it as a negative number. If the NPV is zero, enter 0.)
When the profitability index is equal to zero, the benefits equal the costs. True False
4. If Variable cost per unit decreases while selling price decreases, the new variable cost ratio in relation to the old variable cost ratio will be a. The same b. Not enough information provided c. Higher d. Higher
Consider a partial output from a minimization problem that has been solved to optimality. Final Shadow Constraint Allowable Allowable Name Value Price R.H. Side Increase Decrease Labor Time 300 -5 300 100 150 The Labor Time constraint is a resource availability constraint. If the right-hand-side for this constraint decreases to 180, which of
S1: A manufacturing cycle efficiency (MCE) ratio of less than 1.00 is desirable since this ratio measures the amount of non-value-added time to throughput time. S2: Only Financial measures are necessary and already sufficient, for they show the problems and enable the decision makers to react to the situation. Only S1 is correct Both statements are correct Both statements are incorrect Only S1 is incorrect
Which of the following performance measures will increase if inventory decreases and all else remains the same? Return on Investment Residual Income A) Yes Yes B) No Yes C) Yes No D) No No Multiple Choice Choice A Choice B Choice C Choice D
25.For a upward slope yield curve, ( )exists. I forward rate II zero rate III par yieldA.I>II>III B. III> II> I C. II > I >III
Which of the following statements about determining the breakeven point is FALSE? a) Breakeven revenues equal fixed costs divided by the variable cost per unit. b) Revenues equal fixed costs plus variable costs. c) Operating income is equal to zero. d) Contribution margin minus fixed costs is equal to zero.
Question 16?
1. If only the selling price per unit of a product increases (variable cost per unit and total fixed costs do not change), Using Break Even Analysis, provide a unique mathematical example to support the break even point decreasing
When comparing the lower of cost to market the appropriate market value is determined before comparing it to the cost the purpose of the ceiling is to ensure that the write-down is sufficient to cover all expected gains O the purpose of the floor is to prevent an excessive gain from being recognized in the future the process is consistent with the principle of conservatism because the goal is to limit excessive swings in gross margin O000
Holding all other factors constant, the break-even point will be decreased by increasing the fixed costs. decreasing the contribution margin. increasing the selling price. increasing the variable cost per unit. А. В. С. D.

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