Competition has driven the economic profits in the video rental business to zero. Surya Bacha, who owns a video rental business, would be better off leaving the industry for another alternative. ...
King Cones leased ice cream-making equipment from Ace Leasing. Ace earns interest under such arrangements at a 8% annual rate. The lease term is nine... | Course Hero
A lease in which the tenant pays rent, plus some- or most- of the operating expenses related to the property. Which of the following describes a net lease? A.)
Income rises as the result of an economic expansion. When two goods are substitutes, which of the following occurs? A. An increase in the price of good X leads to an increase in the quantity demanded of good Y. B. An increase in the price of good X leads to a decrease in the quantity demanded of good Y. C.
Good morning and welcome to the CyrusOne First Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.
Michael Schafer -- Vice President of Capital Markets & Investor Relations
We will now begin the question-and-answer session. [Operator Instructions] First question is from Jon Atkin of RBC. Please go ahead.
Michael Schafer -- Vice President of Capital Markets & Investor Relations
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The decision rule for the Net Present Value method is – accept the project if the Net Present Value is greater than zero or reject the project if the Net Present Value is less than zero. The value of the firm rises by the Net Present Value of the project.
In the long run, all projects generate normal profits. Exceptionally profitable projects are very rare, since the new inventions most of the times fail. The first step in the capital budgeting process i.e. Generation of exceptionally profitable project idea is very crucial. Screening of profitable projects also plays an important role in selecting the exceptionally profitable project.
A change in required rate of return will affect the decision, but it will not affect the IRR. IRR will be the same whether the required rate of return is 15% or 20% or 25%. But a change in required rate of return affects the decision.
Under the NPV the reinvestment rate is same as the required rate of return. Under the IRR the reinvestment rate is the Internal Rate of Return (IRR). NPV is better than IRR, since the required rate of return is nothing but the cost of capital, where as the IRR is not equal to cost of capital. It may be greater than the cost of capital or less than the cost of capital.
C.) Sublease. A tenant's lease does not terminate for five more years. The premises, however, have become too small to accommodate the tenant's growing business. Another business owner is interested in leasing the premises from the tenant for three years.
A tenant still has five month remaining on a one-year apartment lease. When the tenant moves to another city, he transfers possession of the apartment to a friend for the entire remaining term of the lease. The friend pays rent directly to the tenant. In this situation, the tenant has become a(n) A.) assignor.