A small office building produces NOI of $8,995 per year. We intend to buy the property, if the price is right, and hold it for four years. At that time (EOY 4) we believe we can sell the property for $197,000. If we require an 8% ROA, what is the most we should pay now for this investment?A. The NPV is negative, so reject the investment.
B. The NPV is positive, so invest.
C. The NPV is greater than the NOI, so invest.
D. The GPI is greater than the NOI, so invest.
E. The NPV is greater than the OPX, so invest.

Answers

Answer 1
Answer:

Answer:

Option B is correct.

The NPV is positive, so invest.

Explanation:

Year Cash Flow

0          -160000

1            8995

2             8995

3             8995

4           205995

$13,512.46


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Suppose Juanita currently allocates 75% of her portfolio to a diversified group of stocks and 25% of her portfolio to risk-free bonds; that is, she chooses combination D. She wants to reduce the level of risk associated with her portfolio from a standard deviation of 15 to a standard deviation of 5. In order to do so, she must do which of the following? Check all that apply.a. Sell some of her stocks and use the proceeds to purchase bonds
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d.Place the entirety of her portfolio in bonds

Answers

Answer:

You didn´t post the complete information of the exercise, I searched the exercise online and tried to ask the most useful question.

Explanation:

There is a direct relationship between the risk of Juanita's portfolio and it's average annual return.

Note: Risk and return are directly proportional to each other.

Juanita currently earns a return of 4.5% that is currently she holds portfolio B and she wishes to earn a return of 9.5% that is portfolio D. Then

Sell some of her bonds and use proceeds to buy stocks

Accept more risk.

Suppose, Juanita modifies her portfolio to contain 75% diversified stock and 25% government risk free bond, that is she choose combination D. The average annual return of this type of portfolio is 9.5% but the standard deviation is 15%, the returns will typically (about 95% of the time) vary from a gain of 39.5% to a loss of - 20.5%.

95% confidence = 2 × SD = 2 × 15 = 30

Gain = 9.5 + 30 = 39.5

Loss = 9.5 - 30 = - 20.5

An Army Corps of Engineers project for improving navigation on the Ohio River will have an initial cost of $6,150,000 and annual maintenance of $115,000. Benefits for barges and paddle wheel touring boats are estimated at $775,000 per year. The project is assumed to be permanent, and the discount rate is 12% per year. Determine if the Corps should proceed with the project.What will be an ideal response?

Answers

Answer:

The project should be rejected because the costs are larger than the benefits.

Explanation:

EAW = equivalent annual worth = equivalent annual benefit - equivalent annual cost

equivalent annual cost = ($6,150,000 x 12%) + $115,000 = $853,000

equivalent annual benefit = $775,000

EAW = $775,000 - $853,000 = -$78,000

since the EAW is negative, then the project should not be carried out.

Another way to calculate this is by dividing benefits by costs. If the answer is 1 or higher, then the project should be accepted:

B/C = $775,000 / $853,000 = 0.9086 ≤ 1, project rejected

The Work-in-Process inventory account of a manufacturing firm shows a balance of $3,980 at the end of an accounting period. The job cost sheets of two uncompleted jobs show charges of $660 and $460 for materials, and charges of $560 and $740 for direct labor. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs, of:

Answers

Answer:

Predetermine overhead rate as a percentage of direct labor cost is 120%

Explanation:

To calculate the predetermined overhead rate, we first need to determine the total overheads under the balance of $3980 for two jobs.

The total cost of both jobs which are uncompleted equals,

Total cost both jobs = (660 + 560)   +   (460 + 740)

Total cost both jobs = 1220 + 1200  = $2420

Thus, the overhead cost involved in both jobs is,

Total Overhead cost = 3980 - 2420    = $1560

This total overhead of $1560 has been absorbed on the basis of a predetermine overhead rate based on the direct labor cost. The total direct labor cost involved under both uncompleted jobs is,

Total direct labor cost both jobs = 560 +740   = $1300

So, the predetermined overhead rate is,

Overhead rate = Total overheads / total direct labor cost

Overhead rate = 1560 / 1300    

Overhead rate = $1.2 per $1 of direct labor cost

Expressed as a percentage of direct labor cost, it is:

% Overhead rate = 1560 / 1300    * 100   =  120% of direct labor cost

Last year, DJ's Soda Fountains, Inc. reported an ROE = 27 percent. The firm's debt ratio was 50 percent, sales were $9 million, and the capital intensity ratio was 1.5 times. What is the net income for DJ's last year? Multiple Choice a. $1.22m b. $1.82m c. $2.43m d. $2.84m

Answers

Answer:

b. $1.82m

Explanation:

Capital Intensity ratio = Total aasets / sales

1.5 = Total Assets / 9m

Total Assets = 9m x 1.5 = 13.5

ROE = Total Income / Shareholders equity

27% = Total Income / (13.5 x 50%)

27% = Total Income / 6.75

Total Income = 27% x 6.75

Total Income = 1.8225

Total Income = 1.82 (Rounded)

The correct option is b. $1.82m.

The bottom-up approach for estimating times and costs that uses costs from past projects that were similar to the current project is known as

Answers

Answer: template method

Explanation:

The bottom-up approach for estimating times and costs that uses costs from past projects that were similar to the current project is known as template method.

It should be noted that estimating time and cost are vital because it helps schedule work, develop needs of cash flow and show progress of a project.

Final answer:

The bottom-up approach for estimating costs and times using information from similar past projects is called analogous estimating. This method, used in project management, relies on previous experience and expert judgment.

Explanation:

The method you're referring to is the analogous estimating. In project management, analogous estimating is a technique for estimating the duration or cost of an activity or a project using historical data from a similar activity or project. This bottom-up approach is most reliable when the previous activities are similar in fact and not just in appearance to the current activity. This technique relies heavily on experience, expert judgment, and the project history to predict costs and timelines for a new project.

Learn more about Analogous Estimating here:

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In the late 1930s management at Atalanta Industries agreed to hire only those workers who were already members of the Electrical Union. Atlanta agreed to a type of arrangement known as a(n)

Answers

Answer: closed shop

Explanation:

From the question, we are informed that in the late 1930s management at Atalanta Industries agreed to hire only those workers who were already members of the Electrical Union.

It should be noted that here, Atlanta agreed to a type of arrangement known as closed shop. This occurs when the workers have to belong to a particular union before they'll be employed. This was legal in 1930 but it was later declared illegal by Taft Hartley Act.