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1 year ago

Capital budgeting decisions are risky because all of the following are true except:

Business

1 answer:

storchak [24]1 year ago

4 0

Answer:

E. They rarely produce net cash flows.

Explanation:

When a company engages with <em>capital budgeting</em>, it assesses potential and planned investments. The goal of each investment is to produce a difference in cash inflows vs. cash outflows, which is the net cash flow.

Therefore, all investments have a tendency of producing a cash flow, since that is the reason why companies opt for capital budgeting (investments) in the start.

It is true that the outcome of capital budgeting is uncertain. Also, it requires significant financial resources, and is a long-term decision.

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Brad, an employee for a sports marketing firm, feels he has been treated unfairly by the organization. He helped three other emp

lubasha [3.4K]

Answer:

Brad would likely to react by reducing the efforts on future projects.

Explanation:

In accordance with the equity theory, it states that if an employee feels or perceive inequity, then they will try to create equitable exchanges of their rewards and their efforts. The common reaction in this situation would be is to reduce the efforts on further or future project.

6 0

2 years ago

Stone and brick are substitutes in home construction. consider the market for bricks depicted below. suppose the price of stone

sp2606 [1]

Answer: Price of bricks will increase

Explanation: Since Stone and bricks are substitutes to each other, a rise in the price of stone due to the new regulation will lead to a rise in the demand for bricks. Since bricks are now relatively cheaper as compared to stones after the price rise, people will use more bricks than stones. This will shift the demand for bricks to the right driving upwards the price for bricks and also increase the quantity of bricks being sold in the market.

8 0

1 year ago

Read 2 more answers

How do you feel about airlines mining your in-flight data? is there any difference from companies mining your credit card purcha

zaharov [31]

<span>If airlines are going to mine data from a captive audience several thousand feet in the air then they need to make a bigger deal of noting it. Much like the safety demonstration, before take off they should include a brief statement and have a Q & A sheet in the seat back. In this day and age protecting personal information is a touchy subject and not everyone is aware of that. You would think with the negative press for airlines these days and the huge debacles of cyber attacks and information leaks that airlines would be a bit more transparent on this practice.</span>

3 0

2 years ago

1. Sony has 12 core segments in its business. Is this too many or not enough? Are today’s companies diversified like they used t

mestny [16]

Answer:

1) This question is about whether diversification is good or bad for a large corporation. Whether diversification can be considered good or bad depends on the corporation itself, there is no one answer fits all. In this case, Sony is divided into 12 segments or divisions and each of them generates their own cash flows and offers their own products or services.

High tech companies generally tend to diversify a lot because they need to continuously produce innovative products or improve their existing ones. E.g. Google got so large and diversified that it turned into Alphabet which owns more than 200 companies (most of them through acquisitions). Sony's largest revenue sources are gaming services, financial services and home entertainment.

When we think about Sony we probably think about consumer electronics, the Playstation or even movies, but in order to be profitable, Sony had to expand and diversify. Sony's revenues are shifting from consumer electronics to services (including financial, gaming, network, music and movies), so that means that their diversification model actually worked.

2) Sony's goal with Future Lab is to create customer value and new lifestyles, whether they are able to do so depends on how well they work it out. Future Labs is based on San Francisco, and it should serve as a place where innovative prototypes should be tested by real users. The goal is that Sony can learn from actual real life user experiences in order to improve their products and services. The real life customers and users that want to participate in Sony's program must pay a fee for doing so, but they can also experience prototypes before anyone else.

7 0

2 years ago

Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $38

KATRIN_1 [288]

Answer:

Since the NPV is positive, then the company should buy and install the machine press.

Explanation:

We have to calculate the NPV of the project using the discount cash flow model:

the initial investment = $385,000 (depreciable machinery) + $20,000 spare parts + $3,100 = $408,100

depreciation expense (five year MACRS class)

$385,000 x 20% = $77,000
$385,000 x 32% = $123,200
$385,000 x 19.20% = $73,920
$385,000 x 11.52% = $44,352
$385,000 x 11.52% = $44,352
$385,000 x 5.76% = $22,176

Cash flow year 1 = [($145,000 - $77,000) x (1 - 22%)] + $77,000 = $130,040

Cash flow year 2 = [($145,000 - $123,200) x (1 - 22%)] + $123,200 = $140,204

Cash flow year 3 = [($145,000 - $73,920) x (1 - 22%)] + $73,920 = $129,362

Cash flow year 4 = {[($145,000 - $44,352) x (1 - 22%)] + $44,352} + $3,100 (recovered working capital) + $45,000 (salvage value) + $4,736 (tax credit on impairment loss*) = $175,693

*since the carrying value at the end of year 4 is $66,528 and the salvage value is $45,000, an impairment loss will = $21,528. This will result in lower taxes by $21,528 x 22% = $4,736

the NPV of the project = -$408,100 + $130,040/1.09 + $140,204/1.09² + $129,362/1.09³ + $175,693/1.09⁴ = -$408,100 + $119,303 + $118,007 + $99,891 + $124,465 = $53,566

Since the NPV is positive, then the company should buy and install the machine press.

4 0

2 years ago