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9. Mohammed Bayyoud corp. expects to earn $600,000 if the economy is good and only $200,000 if the economy is bad. Mohammed estimates a 65%
9. Mohammed Bayyoud corp. expects to earn $600,000 if the economy is good and only $200,000 if the economy is bad. Mohammed estimates a 65% probability of a good economy and a 35% probability of a bad economy. The NPV of the project with a discount rate of 20%? Can Mohammed accept the project?
a.
NPV - $16,666.67 No, Mohammed Should reject the project
b.
NPV -$19,181.82, No, Mohammed Should Accept the project
c.
NPV -$19,181.82, Yes, Mohammed Should Accept the project
d.
NPV - $16,666.67 yes, Mohammed should accept the projects
When you spend money for marketing analysis, is this considered a capital budgeting decision.
a.
TURE
b.
FALSE
6. Bethlehem corp. borrows $20,000 at 5% and invests in a new machine with a useful life of 5 years. The new Machine generates additional revenues of $10,000/year and additional cost of $2,000/year. The corporation tax rate is 30%. The NET ICOME IS
a.
3,100
b.
2,100
c.
3,000
d.
2, 000
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