BUSINESS COLLEGE

Alpha Industries is considering a project with an initial cost of $7.9 million. The project will produce cash inflows of $1.63 million per year for 7 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.58 percent and a cost of equity of 11.25 percent. The debt–equity ratio is .59 and the tax rate is 40 percent. What is the net present value of the project?

Answers

Answer 1

Answer:

Answer:

$494,918

Explanation:

For computation of net present value we need to follow some steps which is shown below:-

After tax cost of debt = Pretax cost of debt × (1 - tax rate)

=5.58% × (1 - 0.4)

= 3.348%

debt ÷ equity

= Debt - equity ratio

Hence debt = 0.59 equity

Assume the equity be $x

Debt = $0.59x

Total = $1.59x

WACC = Respective costs × Respective weights

= (x ÷ 1.59x × 11.25%) + (0.59x ÷ 1.59x × 3.348)

= 8.318%

Present value of annuity = Annuity × (1 - (1 + interest rate)^ - time period] ÷ Rate

=1.63 × [1 - (1.08317811321)^-7]÷ 0.08317811321

= $1.63 × 5.150256501

=$8,394,918.10

Net present value = Present value of cash inflows - Present value of cash outflows

= $8,394,918.10 - $7,900,000

= $494,918

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Answer:

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Segment management is best suited for: _____________ a. small-to-medium businesses
b. large businesses
c. businesses who already identify customers individually and differentiate them by value
d. businesses who do not yet identify or differentiate their customers individually
e. a, b, and c
f. a, b, and d

Answers

Answer:

Segment management is best suited for: _____________

d. businesses who do not yet identify or differentiate their customers individually

Explanation:

Segment management is aimed at grouping customers according to their individual characteristics and value so that maximum benefits can be derived by the customers and the profitability of the company will be impacted positively in the long-term. A business that can identify customers individually and differentiate them by value is already doing segment management. It is the business that does not yet identify or differentiate their customers that should embrace segment management.

Brady is hired in 2018 to be the accountant for Anderson Manufacturing, a private company. At the end of 2018, the balance of Accounts Receivable is $23,000. In the past, Anderson has used only the direct write-off method to account for bad debts. Based on a detailed analysis of amounts owed, Brady believes the best estimate of future bad debts is $7,800. 1. If Anderson continues to use the direct write-off method to account for uncollectible accounts, what adjustment, if any, would Brady record at the end of 2018?

Answers

Answer:

No journal entry is required

Explanation:

In the case of Direct write-off method, for recording the estimating future debts, no journal entry is required as in this method only bad debt expense is recorded which is shown below:

Bad debt expense A/c Dr XXXXX

To Account receivable A/c XXXXX

(Being the bad debt expense is recorded)

So, no journal entry is required for estimated amount or Allowance for doubtful Accounts

Alice, Betty, and Cathy are interested in forming a business venture. Alice is quite wealthy and is ready to contribute money to the venture. Betty has a degree in business from an excellent university, worked for five years as a manager in a major corporation, and currently is a leadership/management consultant. Cathy is a scientist who has developed a process that will, according to her, "revolutionize cancer treatment throughout the world." Alice, Betty, and Cathy believe it is in their best interest to form a general partnership. Do you agree? Is there a more appropriate form of business you might recommend?

Answers

Answer:

I agree with that, because all of them have good bussiness ideas.

Final answer:

Even though a general partnership might work for Alice, Betty, and Cathy, a limited liability company (LLC) or a corporation might be more appropriate due to Alice's wealth, Betty's business knowledge, and Cathy's valuable scientific process. This way, they can better protect their individual assets, as well as the venture's funding and potential expansion.

Explanation:

While a general partnership might seem like a viable solution for Alice, Betty, and Cathy, it may not be the most optimal choice considering their individual circumstances and contributions. In a general partnership, every partner shares liability and financial commitment equally or according to their investment. Although this may initially seem fair, it might put Alice at risk since she's contributing the most financially. Instead, I'd recommend considering a limited liability company (LLC) or corporation.

In an LLC, Alice, Betty, and Cathy can limit their personal liabilities. This would allow Alice to protect her wealth while still contributing to the venture. In a corporation, the company is considered a separate legal entity. This structure can also be beneficial if they plan on seeking outside venture capital or looking into other ambitious expansion.

Remember, the final decision depends on various factors including tax considerations, business goals, and the level of desired legal protection. It is advisable to consult with a business advisor or attorney before deciding.

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Changes in real GDP reflect Group of answer choices only changes in prices. only changes in the amounts being produced. both changes in prices and changes in the amounts being produced. neither changes in prices nor changes in the amounts being produced.

Answers

Answer:

Only changes in the amounts being produced is the correct answer to this question.

Explanation:

Real GDP is the value of goods and services at base year prices so real GDP changes reflect changes in the amounts produced in the economy.

Effective gross domestic product ( GDP) is an inflation-adjusted indicator representing the cost of the goods and economic resources by a nation in a given year (demonstrated in foundation-year prices) and is often referred to as "current prices," "corrected deflation," or "constant currency" GDP.

Final answer:

Changes in real GDP reflect both changes in prices and changes in the amounts being produced.

Explanation:

Changes in real GDP reflect both changes in prices and changes in the amounts being produced. Real GDP is a measure of the total value of goods and services produced in an economy adjusted for inflation. As prices increase, the value of goods and services produced will also increase, resulting in a higher real GDP. Similarly, when more goods and services are produced, real GDP increases as well.

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At the beginning of the period, the Cutting Department budgeted direct labor of $136,000, direct materials of $150,000 and fixed factory overhead of $11,900 for 8,000 hours of production. The department actually completed 10,600 hours of production. The appropriate total budget for the department, assuming it uses flexible budgeting, is Round your final answer to the nearest dollar. Do not round interim calculations.