to run if you leaeve the teat Remaining Time: 1 hour, 25 minutes, 03 seconds. *
ID: 2396616 • Letter: T
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to run if you leaeve the teat Remaining Time: 1 hour, 25 minutes, 03 seconds. * Question Completion Status: Moving to another question will save this response Question 27 of 30 uestion 27 5 points Save An The Balcones Hotel Company is ooking to acquire a 10 room independet hotel n need of renovation ard oor vritoanator-brdThe hot be pund t Stiin.d ngi" ? emo ancor version costs. Curenty the hotel is breakng ever, but Balones believes it wildo elas a national brand Estated cat fon ae se 1·S2200000, you 2.pmm?wa.saumar Balcones plans on seling the property. Proiected market aap rane 9% and Bae nes' vered oot d ati is 11%. Based on the income capitalization approach, would you recommend that Baloones invests in this hotel and why? O Yes; the prosent value of the future cash fow, $24,489.945 is greater than the total cost of $21,000,000 O No; the prosent v value of the future cash flow $25,241,605 is smaller than the acquistion cost of $19,000,.000 Yos; te present value of the future cash fow, $2.753,169 is gmater than the tow bont of troooooo O No; the present value of the future cash flow, $25,704,754 s smaller than the acquistion cost of $19.000.000. Moving to another question wil save the response. MacBook Air 888 ra 6 5 4 3 2Explanation / Answer
28. IRR(Internal Rate of Return) is the maximum return the cash flow pattern of the investment is providing. The difference between the IRR and Minimum required rate of return is the profit to the company. Thus, IRR should be greater than the Minimum required rate of return. Option 2.
29. Working Capital is the capital required to finance the day-to-day operations or workings of the business. The financing could either be by cash or non-cash sources. Thus, Option 4.
30. Option 4, purchasing a building for cash will impact the net working capital because building is non-current assets and cash is current assets. The transaction is not getting nullifying as in other 3 cases.
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