Osprey Company is considering purchasing a new summer camp in the mountains of North Carolina for $3,000,000. The new facility will generate annual net cash inflows of $500,000 for ten years. Specialists estimate that the facility will remain useful for ten years and have no residual value. The company uses straight-line depreciation, and its stockholders demand an annual return of 10% on investments of this nature.
Requirements
1. Compute the payback, the ARR, the NPV, the IRR, and the profitability index of this investment.
2. Recommend whether the company should invest in this project.
Requirement 2: The company should make the investment. The payback period is less than the operating life, the net present value is positive, and the ARR and IRR are greater than the company's required rate of return.
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It is said that managers deal with status quo, while leaders change status quo. Explain what this means.
What will be an ideal response?
If a creditor owns a debt that is provable and nondischargeable, he or she ________.
A. may participate in the distribution of the debtor's estate B. must not enter into any voluntary agreement with the debtor for discharge of the debt C. needs court approval for reaffirmation of loans D. can recover only the money provided by the bankrupt's discharge
Materials used by Jefferson Company in producing Division C's product are currently purchased from outside suppliers at a cost of $10 per unit. However, the same materials are available from Division A. Division A has unused capacity and can produce the materials needed by Division C at a variable cost of $8.50 per unit. A transfer price of $9.50 per unit is negotiated and 30,000 units of
material are transferred, with no reduction in Division A's current sales. How much would Jefferson's total income from operations increase? A) $45,000 B) $120,000 C) $60,000 D) $150,000
Functional account expenses are reported by the names of the costs, not the purpose or activity for which expenditures are made
Indicate whether the statement is true or false