Bob Jensen, Inc., purchased a $650,000 machine to manufacture specialty taps for electrical equipment. Jensen expects to sell all it can manufacture in the next 10 years. The government has exempted taxes on profits from new investments to encourage capital investments. This legislation is to be in effect in the foreseeable future. The machine is expected to have 10 years useful life with no salvage value. Jensen uses straight-line depreciation. The net cash inflow is expected to be $150,000 each year for 10 years. Jensen uses 12 percent in evaluating capital investments. Data
Purchase price of machine 650000
Expected useful life in years 10
Expected net cash inflow per year 150000
Discount rate 0.12
1. Payback period
2. Accounting (book) rate of return based on (a) initial investment, and (b) average investment
3. Net present value (NPV)
4. Present value payback period
5. Internal rate of return (IRR)
6. Modified internal rate of return (MIRR)

Alex is a working professional and has managed to save a small amount of money from his earnings. he wants to invest in something that is customized to his risk appetite. which financial institution should he choose? a. hedge funds b. mutual funds c. life insurance companies d. credit unions e. pension funds

The impact fiscal multiplier is a. usually estimated to have an average value of 2. b. usually estimated to have an average value of 0. c. the actual immediate multiplier effect of a fiscal policy action after taking into consideration direct fiscal offsets and other short-term crowding out of private spending. d. the multiplier effect of a fiscal policy action that applies to a long-run period after all influences on equilibrium real gdp have been taken into account.

You are the manager in charge of global operations at bankglobal – a large commercial bank that operates in a number of countries around the world. you must decide whether or not to launch a new advertising campaign in the u.s. market. your accounting department has provided the accompanying statement, which summarizes the financial impact of the advertising campaign on u.s. operations. in addition, you recently received a call from a colleague in charge of foreign operations, and she indicated that her unit would lose $8 million if the u.s. advertising campaign were launched. your goal is to maximize bankglobal’s value. should you launch the new campaign? explain. pre-advertising campaign post-advertising campaign total revenues $18,610,900 $31,980,200 variable cost tv airtime 5,750,350 8,610,400 ad development labor 1,960,580 3,102,450 total variable costs 7,710,930 11,712,850 direct fixed cost depreciation – computer equipment 1,500,000 1,500,000 total direct fixed cost 1,500,000 1,500,000 indirect fixed cost managerial salaries 8,458,100 8,458,100 office supplies 2,003,500 2,003,500 total indirect fixed cost $10,461,600 $10,461,600