Sam is planning to start a new business. If he invests all his personal savings in the business, the interest that he could have earned on those savings is considered a(n) Blank______. Multiple choice question. opportunity cost sunk cost financing cost irrelevant cost
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Sam is planning to start a new business. If he invests all his personal savings in the business, the interest that he could have earned on those savings is considered a(n) Blank______.
sunk cost
financing cost
irrelevant cost
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- An implication of the life cycle theory is that: Multiple Choice Households are planners whose actions extend beyond their current resources and pleasurable activities today to future needs and assets to meet them. Utility can be measured in money terms. Household spending decisions are based on the amount of income they earn currently. All of the choices are correct. None of the choices are correct.Based on Poleskis current situation, will it earn its target net income? If not, how many units need to be sold to achieve the target? Explain.You have two investments that have positive net present values and are financially feasible. Your boss wants you to make a recommendation on which one of the two to invest in given different useful lives? How do you account for this/make the decision?
- To take full advantage of compund interest you should start later in life, because you will be making more money that you can contribute. true or falseWhat is true about the way you should approach financial goals across different stages of your life? A.As you progress through life, your values and financial possibilities will gradually change, which leads to an evolution of your financial goals over time. b. Most people tend to make more money as they grow older and more experienced. After a certain point in your life you should have enough money to meet all of your financial goals, at which point you will no longer need to concern yourself with long-term goals. c. You need to be consistent and determined when it comes to financial goals. The financial goals you make as a young adult should stay in place for the rest of your life. d. Failure to meet a financial goal is a sign of personal weakness, so you should never alter a goal until you have completed it exactly as you imagined itA. Assume that you have completed your plans and proformas for the next year of operations. The upcoming year looks promising. What would you most likely do from the following list? a. From your proformas project your company’s weighted average cost of capital and return on assets, and compare the two b. Take a vacation because you have been working so hard c. Purchase a new house for your personal use because the future is looking so good d. Make sure that your company’s weighted average cost of capital exceeds your company’s return on assets, if not, rework your plans and proformas B. Assume that all sales are on account. If the average accounts receivable balance was $1,000,000 and accounts receivable turnover was 12 for the last year of operations, what was sales revenue? a. $10,000,000 b. $15,000,000 c. $12,000,000 d. $6,000,000
- What is the difference between a direct cost and an opportunity cost? Can you show the difference between these costs by sharing one (1) out-of-pocket cost and one (1) opportunity cost for something you did today?1. Now change all of the dollar amounts in the data area of your worksheet so that it looks like this: 1 2 3 Data 4 Sales Variable costs: 5 67 00 8 A Chapter 1: Applying Excel 9 10 11 Cost of goods sold Variable selling Variable administrative Fixed costs: Fixed selling Fixed administrative $ $ $ $ $ $ B 32,000 16,000 1,600 1,400 2,500 1,500You are considering investing in real estate—both for the short-term cash flows and the potential long-term capital gains—and are evaluating both a commercial lease property (such as a strip shopping center or an office building) and a residential rental property (such as several rental houses or a small apartment complex). It is likely that you will invest in only one of these properties at this time. The general data regarding these investments is as follows: propertytype price mortage rental income (per year) depreciationexpense (per year) Estimatedresalevalue small office $800,000 $448,000 $136,016 $7,692 $912,000 rental homes $650,000 $292,500 $91,281 $8,273 $685,100 The first potential investment consists of an office building with ten offices, which has a current market price of $800,000. Of this amount, $200,000 represents the cost of the land, and the balance, $600,000, is attributable to buildings on the property. The second possible investment, which…
- economic value added. EVA will be positive whenever ROC is positive and greater than the cost of capital. Explain why this is soSuppose you are a cashed-up real estate investor considering purchasing an investment property in Brisbane to buy and then rent out. a) Find a two-bedroom apartment that is advertised for sale (provide a web link to the example). Given the listed (or estimated) sale price of this apartment (use apartment with price of $670,000), what would be the minimum rental income that would make it profitable to invest in this apartment? Make and state your assumptions (e.g., interest/discount rates, maintenance costs). b) Suppose interest rates went up. Would you now be willing to pay more or less for the same property?Answer full question
