Answer:
The rate is 16%.
Explanation:
We need to note that the internal rate of return (IRR) is what makes the net present value (NPV) equal to zero.
In this scenario, we have an annuity of 9,000 for six years.
C 9,000.00
time 6.00
rate IRR
Where the present value is equal to the investment:
We can refer to the annuity factor table to find the closest value.
33165 / 9000 = 3.685
By looking up values for n = 6, we find the nearest match.
Then we can perform trial and error until we identify the correct one.
In this case, the IRR can be estimated just by consulting the table.
For n = 9 and a 16% rate, the factor is 3.685.
This figure corresponds to our annuity factor, hence it indicates the rate.
Answer:
The solution is a. 14.33.
Explanation:
We employ the net present value (NPV) analysis to evaluate the two scenarios.
+ The NPV for the lifetime subscription is $(850)
+ The annual subscription has an NPV calculated as - 85 - [ 85/6% * [ 1 - 1.06^(-n) ], where n represents the years the subscriber is expected to live.
In order for the lifetime subscription to be more advantageous, its NPV must exceed that of the annual subscription, which gives us:
85 + [ 85/6% * [ 1 - 1.06^(-n) ] > 850 <=> 1 - 1.06^(-n) > 0.54 <=> 1.06^(-n) < 0.46 <=> -n < -13.33 <=> n > 13.33.
This indicates that the subscriber needs to live beyond 14.33 years (13.33 + 1 additional year for the next subscription) for the lifetime subscription to be the wiser choice.
Thus, option a is correct.
Answer:
C) $88,000
Explanation:
A period cost refers to expenses that cannot be capitalized through inventory or other assets.
Under the variable costing method, fixed costs are classified as period costs.
Fixed costs:
Fixed manufacturing overhead: $60,000
Fixed selling and administrative expense: $28,000
A company earned a profit of $25,000 over 5 years from an initial investment of $10,000. What is the annualized ROI?
The correct answer from the provided choices that best indicates the annualized ROI is option C) 30%. To determine this, you need to know a few key figures: the initial investment of $10,000, the total profit amounting to $25,000, and the investment duration of 5 years. We can then apply this formula: Return on Investment = (Gain from Investment - Cost of Investment) / Cost of Investment. Multiply the outcome by 100%, then divide by 5, the total years.
I hope this is useful, best wishes.
