Falcon freight is evaluating a proposed capital budgeting project (project sigma) that will require an initial investment of $900,000. falcon freight has been basing capital budgeting decisions on a project's npv; however, its new cfo wants to start using the irr method for capital budgeting decisions. the cfo says that the irr is a better method because returns in percentage form are easier to understand and compare to required returns. falcon freight's wacc is 9%, and project sigma has the same risk as the firm's average project. the project is expected to generate the following net cash flows: col1 year year 1 year 2 year 3 year 4col2 cash flow $325,000 $450,000 $425,000 $450,0001. which of the following is the correct calculation of project sigma's irr? a. 26.53% b. 27.93% c. 22.34% d. 23.74% 2. if this is an independent project, the irr method states that the firm should if the project's cost of capital were to increase, how would that affect the irr? a. the irr would decrease. b. the irr would increase. c. the irr would not change.

Amathematical approximation called the rule of 70 tells us that the number of years that it will take something that is growing to double in size is approximately equal to the number 70 divided by its percentage rate of growth. thus, if mexico's real gdp per person is growing at 7 percent per year, it will take about 10 years(=70/7) to double. apply the rule of 70 to solve the following problem. real gdp per person in mexico in 2005 was about $11,000 per person, while it was about $44,000 per person in the u.s. if real gdp per person in mexico grows at the rate of 5 percent per year: how long will it take mexico's real gdp per person to reach the level that the united states was at in 2005? (hint: how many times would mexico's 2005 real gdp per person have to double to reach the u.s.'s 2005 real gdp per person?

Daniel owns 100 shares of abc corporation's common stock. abc uses the fair value option, and recent declines in the firm's credit rating have caused the value of the firm's outstanding bonds payable to drop by 10%. daniel feels this is good news, but he wants to know what you think about the situation. which of the following represents your best response? a : "this situation may be positive for you in that the change in abc's credit standing indicates that the value of the firm's assets is likely increasing. however, the drop in bond value may negate any positive effects on your bottom line, because it means your claim on the firm's assets is simultaneously decreasing." b : "actually, this is bad news all around. the drop in the value of abc's bonds payable means shareholders' claims on the firm's assets have decreased. moreover, abc's declining credit rating means that the firm's assets are probably also dropping in value, thus magnifying your losses even more." c : "on the surface, this seems like good news because it means your claim on the firm's assets has increased. however, the drop in creditworthiness may also indicate that abc's assets are declining in value, thus offsetting any gains associated with the drop in bonds payable." d : "you're right! this is good news because it means that abc's debtholders have a decreased claim on the firm's assets. as a result, the firm's existing shareholders"like you"have seen their claim on the firm's assets increase."

Which alternative accounting method allows farmers to record expenses and incomes in the year in which they sell their yield? gaap allows for the method, which permits farmers to subtract the expenses of producing the crop in the year in which they sell the yield and earn the revenue.