Define internal rate of return. What is the advantage of using internal rate of return as compared to net
present value?
What will be an ideal response?
The internal rate of return (IRR) analysis, calculates the rate of return based on the plan's discounted cash flows and
compares it to the company's required rate of return (sometimes called the hurdle rate). Some companies prefer the
IRR technique to that of NPV, because IRR provides the actual expected rate of return, whereas NPV only indicates
a go/no-go decision of a single project, or the relative attractiveness of multiple projects compared with their
respective NPVs.
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Riener Hospital has an x-ray machine with a book value of $60,000 and a remaining useful life of three years. At the end of the three years the equipment will have a zero salvage value. The market value of the equipment is currently $32,000. Riener can purchase a new machine for $145,000 and receive $28,000 in return for trading in its old machine. The new machine will reduce variable manufacturing costs by $27,000 per year over the three-year life of the new machine. The total increase or decrease in net income by replacing the current machine with the new machine (ignoring the time value of money) is:
A. $22,000 decrease B. $22,000 increase C. $18,000 decrease D. $76,000 increase E. $52,000 increase
Seidner, Inc provides the following data
2017 2016 Assets Current Assets: Cash and Cash Equivalents $40,000 $25,000 Accounts Receivable, Net 37,000 62,000 Merchandise Inventory 60,000 50,000 Total Current Assets $137,000 137,000 Property, Plant, and Equipment, Net $121,000 120,000 Total Assets $258,000 $257,000 Net Credit Sales $550,000 Cost of Goods Sold (155,000 ) Gross Profit $395,000 Calculate the asset turnover ratio for 2017. (Round your answer to two decimal places.) A) 4.01 times B) 1.07 times C) 0.60 times D) 2.14 times
Armed only with his fingers, the owner decides that the safest forecasting approach is a linear trend line. Generate a forecast for the year using this technique and then calculate forecast errors using MSE
What is the mean squared error for this forecasting approach? A) 1033 B) 1217 C) 1282 D) 1148
What are some of the disadvantages of long-term supply contracts?
What will be an ideal response?