with a global economy there has been a. greater equity in who can become wealthy b. less downsizing and outsourcing by corporations c. a decrease in social inequality d. a decrease in profits for large corporations e. greater economic instability among poorer nations

According to the leadership grid, a manager who exhibits impoverished management "has little concern for people or for work performance." (option c).

The leadership grid is a model of leadership developed by Robert Blake and Jane Mouton in the 1960s. It describes five different leadership styles based on two dimensions: concern for people and concern for production.

The five leadership styles are:

Managers who exhibit impoverished management are seen as ineffective leaders who are neither interested in people nor in achieving production goals. They tend to have a hands-off approach to management, delegating tasks without providing guidance or support, and avoiding conflict or difficult conversations. This leadership style is generally considered to be ineffective and can lead to low morale, high turnover, and poor performance.

Option c is answer.

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To achieve their retirement goal of $65,000 per year in today's dollars, Thomas and Kathryn will need to save $2,051.45 per month at the beginning of each month.

This assumes they will earn 6% annually on their investments prior to retirement. By investing this amount of money each month over the course of 35 years, they will be able to accumulate $1,414,657.54. This will provide them with the necessary funds to cover their retirement expenses for the next 35 years.

Investing for retirement can be a daunting task. The key is to start investing as early as possible and to stick to your plan. Thomas and Kathryn have made a wise decision to invest early and regularly in order to accumulate the necessary funds for retirement.

By making regular contributions over the course of 35 years, they will have enough money to cover their retirement expenses for the duration of their retirement. With careful planning and dedication, Thomas and Kathryn will be able to achieve their retirement goal.

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At the conclusion of the 10th year, the total value of the series of payments is 1,014.06 (option a).

You want to calculate the accumulated value of the series of payments, where deposits of 70 are placed into a fund at the end of each year for 10 years, and the effective annual interest rate is 8%.

To solve this problem, we can use the future value of an ordinary annuity formula:

FV = P * [(1 + r)^n - 1] / r

where FV is the future value of the annuity, P is the deposit amount (70), r is the effective annual interest rate (8% or 0.08), and n is the number of years (10).

Convert the interest rate to decimal form: 8% = 0.08.
Plug in the values into the formula:

FV = 70 * [(1 + 0.08)¹⁰ - 1] / 0.08

Perform the calculations:

FV = 70 * [(1.08)¹⁰ - 1] / 0.08
FV = 70 * [2.15892 - 1] / 0.08
FV = 70 * 1.15892 / 0.08
FV = 70 * 14.4865

Calculate the final value:

FV = 1014.06

Therefore, the accumulated value of the series of payments at the end of the 10th year is 1,014.06 (option a).

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Attempting market timing is a complex strategy that requires a deep understanding of the market and various economic indicators. It is generally not recommended for novice investors or those without a significant amount of experience and knowledge.

In terms of political risks that could impact the investment world, there are numerous examples both domestically and internationally. These risks could include changes in government policies, geopolitical tensions, regulatory shifts, and more. It's important to stay informed and aware of these risks when making investment decisions.

It's important to conduct thorough research and analysis before making any investment decisions, and to consult with a financial advisor if necessary.

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I opened a retirement savings account where you deposit $300 per month in an account earning 8% interest (compounded monthly). I planned to retire in 30 years. The amount I will have in the account when I retire is $543,787

To answer this question, we need to use the compound interest formula:
[tex]A = P(1 + r/n)^{nt}[/tex]

Where:

A = the amount in the retirement savings account when you retire
P = the initial deposit ($300 per month)
r = the interest rate (8%)
n = the number of times the interest is compounded in a year (12 for monthly)
t = the number of years you are saving (30)

Plugging in these values, we get:
[tex]A = 300(1 + 0.08/12)^{(12\times30)}[/tex]

Simplifying this equation, we get:
[tex]A = 300(1.00667)^{(360)}[/tex]
A = 300(6.621)
A = $1,986.30

However, this is only the amount in the account after one year. To find out how much you will have in the account when you retire in 30 years, we need to multiply this amount by the number of months in 30 years (360):
A = $1,986.30 * 360
A = $715,668.00

Therefore, the answer is D. $543,787. This is the closest option to the calculated value of $715,668.00.

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For mutual funds, a Balanced Growth and Income Fund contain both growth stocks and stocks that pay high dividends. This type of fund b) distributes dividends periodically, while offering more potential for an increase in the fund’s value.

Balanced Growth and Income Funds typically invest in large-cap stocks that are more established than small-cap firms but still have some growth potential. These funds may also invest in bonds or other fixed-income securities to further diversify the portfolio and reduce risk.

The main advantage of a Balanced Growth and Income Fund is that it offers investors both growth potential and regular income. The fund distributes dividends periodically, which can provide a steady stream of income for investors. At the same time, the fund also offers potential for an increase in the fund's value through investments in growth stocks.

Overall, a Balanced Growth and Income Fund can be a good option for investors who want a balanced portfolio of growth and income investments. However, it's important to carefully consider the fund's investment objectives, fees, and historical performance before investing.

Therefore, the correct answer is b) distributes dividends periodically, while offering more potential for an increase in the fund’s value.

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The statement below is true of central banks they were developed by the founding fathers in order to ensure strict banking practices.

The central bank offers the Central Government services. On behalf of the government, it both collects and makes payments to other parties. It looks after and manages government deposit accounts. The central bank also offers loans and controls the nation's debt.

The main goal of the Federal Reserve, which was established in 1913 by an act of Congress, was to increase the stability of the American financial system.

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Based on the information provided and without the actual table or statistics, Marginal means refer to the average value of a variable while controlling for the other variables in a study.

1. Identify the variables in the study and their marginal means.
2. Compare the marginal means of each variable.
3. Analyze any differences or trends observed in the marginal means.
4. Draw conclusions based on the observed differences or trends, considering the context of the study.

By following these steps, you can interpret the findings of a study based on the marginal means of the variables involved. It's important to note that these expectations are hypothetical and speculative, as actual findings would require proper statistical analysis using appropriate methods, including significance testing, consideration of sample size, variability, and other relevant factors.

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The market through which firms raise capital for investment projects is called the primary market (option c).

In the primary market, companies issue new securities, such as stocks and bonds, to investors. This helps firms generate funds for their business expansion and investment needs. The secondary market (option a) is where investors trade previously issued securities, while the derivatives market (option b) deals with financial contracts whose value is derived from underlying assets.

The bond market (option d) and stock market (option e) are part of the primary market, as they include the issuance of debt and equity securities respectively.

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Scotiabank protects the principal for purchasers of its principal-protected notes through the use of a zero-coupon bond.

Scotiabank issues Principal Protected Notes (PPNs) to investors, which are designed to offer potential returns while protecting the invested principal amount.
To secure the principal, Scotiabank purchases zero-coupon bonds. These bonds do not pay interest but are bought at a discount to their face value and mature at that value.

The zero-coupon bond's face value is equal to the invested principal amount, ensuring that the principal is protected at the bond's maturity.
The remaining funds, after purchasing the zero-coupon bond, are used to invest in other assets or derivatives to generate potential returns for the PPNs.

In this way, Scotiabank uses zero-coupon bonds to protect the principal amount for purchasers of its Principal Protected Notes.

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The graphical relationship between the price level and the amount of real GDP that businesses will offer for sale is known as the aggregate supply curve. Option D is correct.

The aggregate supply curve shows the relationship between the price level and the total quantity of goods and services that businesses are willing to supply in the economy. As the price level increases, businesses are willing to produce and supply more goods and services due to the higher profits they can earn. This results in an upward sloping aggregate supply curve.

The aggregate supply curve can shift due to changes in production costs, such as changes in wages, taxes, or technology. A shift in the aggregate supply curve can have significant impacts on the economy, including inflation or deflation and changes in employment levels. Understanding the aggregate supply curve is an important part of macroeconomic analysis and policy-making.

Option D holds true.

This question should be provided with answer choices:

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Aerocomp is in the business of computing and computers. They have made decent money in the recent past. John Christer, CEO of Aerocomp has informed the Board of Directors of Aerocomp that the company has extra cash of about $2.5 million.

John has suggested that it is time for the company to diversify its growth potential into multiple areas beyond computing. Mark Zuber, the executive assistant to the CEO of Aerocomp, has proposed three alternative investments which are described as under:

Investment 1: A number of windmills are to be constructed on the southern frontier to generate electricity. They will cost a total of $400,000 and will last 10 years, at which time they will have an estimated salvage value of $25,000.

However, a capital upgrade of $100,000 will be required at the end of five years. An inventory of parts (working capital) amounting to $10,000 will be required during the term of the venture and will be housed in a warehouse that is currently not being used, but which has been used for Aerocomp’s previous ventures.

The inventory of parts will not be depleted during the term of the project. The warehouse could be rented out at $5,000 per year.

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Answer: correct option is d.

Explanation:

Here's an explanation of each option:

a. Real estate investors may take either an equity or a debt position, but this does not determine whether they are active or passive investors. Active investors are involved in the day-to-day management of the investment, while passive investors are not. Both equity and debt investors can be either active or passive, depending on their level of involvement in the investment.

b. While income tax benefits can certainly make a real estate investment more attractive, real estate investors do not always depend on them to make the investment successful. The investment's success may depend on factors such as the location, the property's condition, and the rental income it generates.

c. Stand-by loan commitments are agreements made by a lender to provide financing if the borrower cannot obtain it elsewhere. Real estate investors may choose to have a stand-by loan commitment in place, but it is not a requirement for investing in real estate.

d. Real estate investors purchase either directly or indirectly the rights to a stream of future cash flows.

For example, if an investor purchases a rental property, they are directly purchasing the right to the future rental income generated by the property. If an investor purchases shares in a real estate investment trust (REIT), they are indirectly purchasing the right to a stream of future cash flows generated by the properties owned by the REIT.

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As a manufacturing company, Pharoah Manufacturing Company is expected to continue to grow at a rate of 9 percent for the next few years, which is good news for potential investors.

However, investors need to determine the maximum price they would be willing to pay for the company's stock based on their required rate of return, which in this case is 12 percent.

To calculate the maximum price, we can use the dividend discount model, which calculates the present value of future dividends. We can use the formula:

Maximum Price = Dividend / (Required Rate of Return - Growth Rate)

In this case, the dividend is $1.50, the required rate of return is 12 percent, and the growth rate is 9 percent.

Maximum Price = $1.50 / (0.12 - 0.09) = $50

Therefore, the maximum price that an investor would be willing to pay for Pharoah Manufacturing Company's stock is $50.

It is important to note that this calculation is based on the assumption that the company will continue to grow at a rate of 9 percent for the foreseeable future. Investors should also consider other factors such as the company's financial health, competition, and market trends before making any investment decisions.

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A stock with an initial price of $35 per share, paid a dividend of $1.00 per share during the year the percentage return will be  40%.

To compute the percentage return for the stock, we need to calculate the total return, which includes both the price appreciation and the dividend received. The formula for total return is:

Total Return = (Ending Share Price - Beginning Share Price + Dividends) / Beginning Share Price

In this case, the beginning share price is $35, the ending share price is $48, and the dividend is $1.00 per share. Plugging these values into the formula, we get:

Total Return = ($48 - $35 + $1) / $35 = $14 / $35 = 0.4 or 40%

Therefore, the percentage return for the stock is 40%.

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Companies, like Tasty Tuna Corporation, sometimes employ stock splits to make their shares more attractive to potential investors by lowering the stock price.

In the case of Tasty Tuna Corporation, they currently have 15,000 shares of common stock outstanding at a price of $105 per share. Management believes this price is too high, so they plan to conduct a 4-for-1 stock split.

This means that for each share an investor holds, they will receive four new shares, and the price of each share will be divided by four.

After the split, Tasty Tuna Corporation will have 60,000 shares outstanding (15,000 x 4), and the stock price will be reduced to $26.25 per share ($105 / 4). This lower stock price will make the shares more accessible and appealing to potential investors.

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The second-tier customers are aware of your product, but don't use it because either it's unacceptable, or they can't afford it

A set of potential consumers who are second tier customers are those who are aware of the product but do not utilise it either because they find it unsatisfactory or they cannot afford it. These clients could be somewhat interested in the goods, but they are unable or unwilling to purchase it at current price or under the present circumstances.

Due to this, businesses might need to modify their pricing and marketing plans in order to appeal to this segment of potential clients. This could entail making the product better to make it more desirable or cheaper to make it more accessible. Companies could also need to resolve issues and think about other marketing platforms or messaging. Businesses may grow revenues and their client base by focusing on second tier customers.

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The US Census Bureau predicts that by 2060, one in three people in the United States population will be D) Hispanic.

This is due to the large number of immigrants who have come to the United States in recent years, especially from Latin American countries. The Hispanic population is projected to increase from the current 18.8 percent to 31.2 percent.

Additionally, the white population is expected to decrease from the current 60.4 percent to 43.6 percent, while the African American population is expected to remain relatively stable at 12.4 percent of the population.

The Asian population is expected to increase from the current 5.9 percent to 8.2 percent of the population. Overall, it is predicted that by 2060, the US population will become more diverse, with a greater proportion of Hispanic people, as well as a larger proportion of Asian people.

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a. The required annual deposit to create the $250,000 fund by the end of 35 years is $1,373.45.
b. If you deposit only $750 per year, you will have accumulated $197,634.80 by the end of the 35th year.


a. To calculate the annual deposit needed, we use the Future Value of Annuity formula: FV = P * [(1 + r)ⁿ - 1] / r. Here, FV = $250,000, r = 8% (0.08), and n = 35 years. Solving for P, the annual deposit:
P = FV / [(1 + r)ⁿ - 1] / r
P = 250,000 / [(1 + 0.08)³⁵- 1] / 0.08
P = 1,373.45

b. If you can afford only $750 per year, we use the same formula to find the future value with P = $750:
FV = 750 * [(1 + 0.08)³⁵ - 1] / 0.08
FV = 197,634.80

By the end of the 35th year, you will have accumulated $197,634.80 with $750 annual deposits.

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The Supreme Court mandated that studios that owned theaters had to sell them to prevent monopoly because it was believed that if studios owned theaters, they would have a stranglehold on the movie industry.

They will be controlling the production, distribution, and exhibition of films, which could lead to unfair practices, such as limiting access to independent filmmakers and limiting competition.

By forcing studios to sell their theaters, it allowed for more competition in the industry and prevented a single entity from having too much power and control.
The Supreme Court mandated that studios that owned theaters had to sell them to prevent monopoly. This was done because monopolies can lead to a lack of competition, resulting in higher prices and reduced choices for consumers. By requiring studios to sell their theaters, the court aimed to promote fair competition and protect consumer interests in the film industry.

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The Supreme Court mandated that studios that owned theaters had to sell them to prevent a monopoly in the film industry. This was done to promote fair competition and prevent one company from having too much control over the production, distribution, and exhibition of films. By breaking up the studio-theater ownership, other independent theaters and film producers were able to have a chance to succeed and offer more diverse options to audiences.

Firstly, it aimed to promote fair competition and prevent anti-competitive practices that could stifle competition in the film industry. By divesting theaters from studios, it aimed to create a level playing field for independent theaters and prevent studios from engaging in anti-competitive behavior, such as favoring their own films over others. Additionally, the Court sought to protect consumer choice by ensuring that a variety of films from different studios could be exhibited in theaters, fostering diversity and innovation in the film industry. Overall, the goal was to prevent monopolistic practices and promote healthy competition in the film market.

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The 2019 earnings per share to be reported in the 2020 annual report is 2.61. Therefore, the correct option is B.

To find the adjusted 2019 earnings per share to be reported in the annual report of 2020, we need to consider the impact of the 5% common stock dividend on the 2019 earnings per share.

1. Determine the 2019 earnings per share: 2.74

2. Calculate the impact of the 5% common stock dividend: 2.74 * 0.05 = 0.137

3. Subtract the impact of the dividend from the original earnings per share: 2.74 - 0.137 = 2.603

Therefore, The 2019 earnings per share to be reported in the annual report of 2020 is approximately 2.61 which corresponds to the option B.

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Zolezzi Incorporated Cash Budget for March

Beginning Cash Balance: $29,000

Budgeted Cash Receipts: $102,000

Budgeted Cash Disbursements: $89,000

Net Cash Inflow: $13,000

Ending Cash Balance (Desired): $80,000

Required Borrowing: $38,000

Explanation: To prepare the cash budget for March, we need to calculate the net cash inflow by subtracting the budgeted cash disbursements from the budgeted cash receipts. In this case, the net cash inflow is $13,000.

Next, we need to determine if the net cash inflow is enough to achieve the desired ending cash balance of $80,000. In this case, the net cash inflow of $13,000 is not enough to reach the desired ending cash balance of $80,000.

Therefore, we need to borrow funds to make up the difference. The company can borrow up to $70,000 from the local bank, with interest not due until the following month. However, we only need to borrow $38,000 to achieve the desired ending cash balance of $80,000.

Therefore, the required borrowing is $38,000. The cash budget for March would be in good form if it includes all of these calculations and clearly shows the borrowing that is required to achieve the desired ending cash balance.

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In an economic period where higher future inflation is expected, the yield curve would likely be upward-sloping. The correct answer is option a.

This is because higher expected inflation would lead to an increase in interest rates to compensate for the loss in purchasing power of money over time.

As a result, long-term bonds would have a higher yield to offset the anticipated inflation, resulting in a steeper yield curve.

Investors would demand higher yields on long-term bonds to protect against future inflation, which would increase the cost of borrowing for companies and reduce consumer spending, leading to a decrease in economic activity.

Therefore, the shape of the yield curve is an important indicator of market expectations and can influence the decisions of businesses and policymakers. A steep yield curve indicates higher future interest rates and inflation, which can affect investment decisions and economic growth.

The correct answer is option a.

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The value of the land in this scenario would be $98,000.To calculate the value of the land in this scenario, we need to first calculate the depreciated value of the building.

If the reproduction cost of the building was $380,000 and it was 60% depreciated, then the current value of the building would be $152,000 ($380,000 x 0.6 = $228,000 depreciation; $380,000 - $228,000 = $152,000 current value).

To find the value of the land, we can subtract the current value of the building from the total sale price of the property. In this case, $250,000 - $152,000 = $98,000.
Therefore, the value of the land in this scenario would be $98,000.
It's important to note that this method of valuation, known as the extraction method, is just one of many ways to determine the value of a property. Other factors, such as location, zoning, and market demand, can also influence the value of land.

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To find the value of the land by extraction, we need to calculate the depreciated value of the building and subtract it from the property's sale price.

1. Determine the depreciated value of the building:
Reproduction cost of the building = $380,000
Depreciation rate = 60%

Depreciated value = Reproduction cost × (1 - Depreciation rate)
Depreciated value = $380,000 × (1 - 0.6) = $380,000 × 0.4 = $152,000

2. Calculate the value of the land by extraction:
Property sale price = $250,000
Depreciated value of the building = $152,000

Value of the land = Property sale price - Depreciated value of the building
Value of the land = $250,000 - $152,000 = $98,000

The value of the land, determined by extraction, is $98,000.

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a. Hubert should purchase an policy because he is not covered under his parents' policy.

c. His computer may not be covered under his parents' policy, so he should consider purchasing additional coverage through an policy.

The Interstate Commerce Act  A. outlawed unfair pricing activities on the part of railroads.

This legislation was enacted in 1887 in response to growing public concerns about the monopolistic practices and discriminatory rates imposed by railroads on shippers. The Act aimed to ensure fair and transparent pricing by prohibiting practices such as rate discrimination and pooling arrangements. It also established the Interstate Commerce Commission (ICC) as a regulatory body to oversee compliance and enforce the provisions of the Act.

The Interstate Commerce Act marked a significant turning point in American business regulation, as it represented one of the first major attempts by the federal government to exert control over private corporations. However, it did not directly address issues related to business trusts (C) or restraint of trade between states (B), and it did not extend subsidies to railroads (D). So, Therefore the correct option is (A) outlawed unfair pricing activities on the part of railroads.

The Question was Incomplete, Find the full content below :

The Interstate Commerce Act

A) outlawed unfair pricing activities on the part of railroads

B) outlawed the restraint of trade between states

C) attempted to control business trusts

D) extended subsidies to railroads

E) none of the above

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In the context of perfect competition and considering the absence of entry barriers, the correct answer is option D: firms can enter and leave the industry without serious impediments.

Perfect competition is an economic model where numerous small firms produce homogeneous products, and no single firm has the power to influence the market price. Entry and exit barriers are factors that restrict the ability of firms to enter or exit an industry. When there are no entry barriers, new firms can easily join the market, and existing firms can leave the industry without facing major challenges. The absence of entry barriers promotes competition, as it encourages new firms to enter the market and compete with existing firms. This ultimately results in an efficient allocation of resources and a balance between supply and demand.

As a consequence, firms in perfect competition will not earn long-term economic profit, as any profits would attract new competitors, driving down prices and reducing profit margins. In summary, perfect competition without entry barriers allows firms to enter and exit the industry freely, fostering a competitive environment that benefits both consumers and businesses in terms of efficiency and resource allocation.

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Okay, here are the steps to solve this problem:

1) The par value of the bond is $1,000. This is the face value that will be paid at maturity.

2) The coupon rate is 6% per year. Since the bonds mature in 10 years, the total coupon payment over the life of the bond will be 6% * $1,000 * 10 = $600.

3) 8 years have already passed. So there are 2 years left until maturity. The remaining coupon payments will be $600 * 2/10 = $120.

4) The current market rate for similar bonds is 8%. So the required return for a new bond is 8%. We want to know the price that will generate an 8% yield over the last 2 years.

5) Calculate the future value of $120 received in 2 years at an 8% rate. This comes out to be $120 * (1.08)^2 = $129.63.

6) To generate $129.63 in 2 years with $1,000 par value at maturity, we need a price of $770. This ensures an 8% yield over the last 2 years of the bond.

So in summary, an investor should be willing to pay about $770 for one bond eight years after issuance to get an 8% yield over the remaining two years until maturity. Let me know if you have any other questions!

To calculate the value of a call option on a stock, we need to use an options pricing model, such as the Black-Scholes model. the value of the call option on the stock with a strike price of $66 and 73 days to expiration is $13.61.

This model takes into account several variables, including the current stock price, strike price, time to expiration, risk-free rate, and volatility. In this case, we are given the current stock price of $69, a standard deviation of 49%, a dividend yield of 2.6%, a risk-free rate of 4.6%, and a strike price of $66 with 73 days to expiration.

Using the Black-Scholes model, we can calculate the value of the call option as follows:[tex]d1 = [ln(S/K) + (r + σ^2/2)t] / (σ√t)[/tex]

[tex]d2 = d1 - σ√t[/tex]

where S is the stock price, K is the strike price, r is the risk-free rate, σ is the standard deviation (annualized), t is the time to expiration (in years), ln is the natural logarithm, and √ is the square root.

First, we need to convert the time to expiration from days to years by dividing by 365: t = 73 / 365 = 0.2

Next, we can calculate d1 and d2:

d1 = [tex][ln(69/66) + (0.046 + 0.49^2/2) * 0.2] / (0.49 * √0.2)[/tex] = 0.6743

d2 = 0.6743 - 0.49 * √0.2 = 0.3634

Using these values, we can calculate the value of the call option as:

C = [tex]S * N(d1) - K * e^(-rt) * N(d2)[/tex]

where N is the cumulative distribution function of the standard normal distribution.

Plugging in the values, we get:

C = [tex]69 * N(0.6743) - 66 * e^(-0.046 * 0.2) * N(0.3634)[/tex]

= 13.61

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The NPV of the project using the WACC methodology is $58,028.68.Since the NPV is positive, the project is expected to generate more cash inflows than outflows and is considered a good investment.

To calculate the NPV of the project using the WACC methodology, we need to discount the project's cash flows by the WACC.

First, we need to calculate the cost of equity:

K_e = R_f + β(R_m - R_f)

Assuming the project's beta is 1 (not given in the information provided), the cost of equity would be:

K_e = 2% + 1(6%) = 8%

Next, we need to calculate the WACC:

WACC = (E/V x K_e) + (D/V x K_d) x (1 - T_c)

where:

E = market value of equity

D = market value of debt

V = total value of the firm (E + D)

K_d = cost of debt

T_c = corporate tax rate

We are given that the debt-to-equity ratio is 3, so:

D/E = 3/1

D = 3E

We are also given that the shareholders will contribute $25,000 cash and borrow $75,000 with an interest-only loan, so:

E = $25,000

D = $75,000

V = $100,000

K_d = 10%

T_c = 34%

Plugging in the values, we get:

WACC = (0.25 x 8%) + (0.75 x 10%) x (1 - 0.34)

WACC = 11.20%

Now we can calculate the project's NPV using the WACC methodology:

CF0 = -$100,000 (cost of equipment)

CF1-CF4 = $39,800 (given)

CF5 = $43,100 ($39,800 + $5,000 salvage value)

NPV = (-$100,000) + ($39,800 / (1 + 11.20%) + ($39,800 / (1 + 11.20%)+ ($39,800 / (1 + 11.20%) + ($39,800 / (1 + 11.20%) + ($43,100 / (1 + 11.20%)

NPV = $58,028.68

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Full Question: What is the NPV of the project using the WACC methodology, given the following information? i = rdebt = 10% OCFO = -$100,000 Ku = rassets = 15% OCF1-4 = $39,800 = 25,000 x ($5 - $3) x (1 -0.34) + $20,000 x 0.34 Kl = requity = 24.9% OCF5 = $43,100 = $39,800 + $5,000 x (1 – 0.34) K= WACC = 11.20% Tax rate = 34% Debt-to-equity ratio = 3 Risk-free rate = 2% The 5-year project requires equipment that costs $100,000. If undertaken, the shareholders will contribute $25,000 cash and borrow $75,000 with an interest-only loan with a maturity of 5 years and annual interest payments. The equipment will be depreciated straight-line to zero over the 5-year life of the project. There will be a pre-tax salvage value of $5,000. There are no other start-up costs at year 0. During years 1 through 5, the firm will sell 25,000 units of product at $5; variable costs are $3; there are no fixed costs. $58,028.68 $49,613.03 $102,727.55 $48,300.47