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capital investment

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Question

A firm is considering 2 capital investment projects. Project A involves an initial cost of $125,000. The

discounted present value of all future cash flows is $145,000. Project B requires an initial expenditure of $85,000. The discounted present value of all future cash flows is $102,000.

Calculate the net present value of each of the 2 projects. Which would be preferred according to the net present value criterion?

Calculate the profitability index of each of the 2 projects. Which would be preferred according to the profitability index criterion?

 
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lower airline fares

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Question

(a) Are lower airline fares at midweek an example of third-degree price discrimination? (b) Under what

conditions would it not be useful to charge different prices in different markets (i.e., practive third-degree price discrimination) if even possible?

 
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Economists and Accountants treat costs differently

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Question

Economists and Accountants treat costs differently. Which one of the following statements represents the correct

distinction? Would it be:

1. accountants consider only explicit costs

2. accountants consider implicit costs

3. economists consider only implicit costs

4. accounts consider both explicit and or implicit costs

 
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On January 1, year 1, Frick, Inc. purchased equipment having an estimated salvage value equal to 20% of its originalcost at the end of a ten-year life.

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On January 1, year 1, Frick, Inc. purchased equipment having an estimated salvage value equal to 20% of its originalcost at the end of a ten-year life. The equipment was sold December 31, year 5, for 50% of its original cost. If theequipment’s disposition resulted in a reported loss, which of the following depreciation methods did Frick use? Question 1 options: Double-declining balance. Sum-of-the-years’ digits. Straight-line. Composite.

 
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