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marta [7]
3 years ago
14

Suppose an industry earns a rate of return of 10%, which is twice as high as that of competitive industries, 5%. How much is the

price overcharge of that industry, if its capital is valued at half its annual revenue
Business
1 answer:
sergey [27]3 years ago
6 0

Answer:

Let us assume that both the industries are having an investment of $100,000

The profit of the given industry which is having 10% rate of return will be $100,000 * 10% = $10,000

The other industry which is having the Rate of return of 5% will earn a profit of $100,000 * 5% = $5000.

As the capital is just half of the revenue, it signifies that the total revenue will be $200,000 . So the same value of $10,000 will be 5% of the total revenue.  On the other hand, $5,000 would be 2.5% of total revenue.

Thus, the first stated industry will charge 2.5% more than the other industry.

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You are evaluating two different silicon wafer milling machines. The Techron I costs $276,000, has a three-year life, and has pr
kramer

Answer:

Techron I

-$154,842

Techron II

-$144,981

Explanation:

Techron I

Cash Flow From Year 1 to Year 3

Pretax operating costs             ($75,000)

Depreciation ($276,000 / 3)   <u>($92,000)</u>

Profit before tax                       ($167,000)

Tax (21% x $167,000)                <u>$35,070</u>

Profit after tax                           ($131,930)

Add back Depreciation            <u>$92,000</u>

Cash Flow after tax                   (<u>$39,930)</u>

Terminal Value = Salvage value - Tax = $52,000 - ($52,000 x 21%) = $41,080

NPV = ($276,000) + [ (39,930) x (1+12%)^-1] + [ (39,930) x (1+12%)^-2] + [ (39,930) x (1+12%)^-3] = ($276,000) + ($35,652) + ($31,832) + ($28,421) = ($371,905)

EAC = NPV/(1-(1+r)^-n)/r

EAC = -371,905 / ( 1 - ( 1 + 12% )^-3/12% = -$154,842

Techron II

Cash Flow From Year 1 to Year 3

Pretax operating costs             ($48,000)

Depreciation ($480,000 / 5)   <u>($96,000)</u>

Profit before tax                       ($144,000)

Tax (21% x $167,000)                <u>$30,240</u>

Profit after tax                           ($113,760)

Add back Depreciation            <u>$96,000</u>

Cash Flow after tax                   (<u>$17,746)</u>

Terminal Value = Salvage value - Tax = $52,000 - ($52,000 x 21%) = $41,080

NPV = ($480,000) + [ (17,746) x (1+12%)^-1] + [ (17,746) x (1+12%)^-2] + [ (17,746) x (1+12%)^-3] = ($480,000) + ($15,845) + ($14,147) + ($12631) = ($522,623)

EAC = NPV/(1-(1+r)^-n)/r

EAC = -522,623 / ( 1 - ( 1 + 12% )^-5/12% = -$144,981

7 0
3 years ago
The Churchill Corporation uses a periodic inventory system and the LIFO inventory cost method for its one prod-uct. Beginning in
trasher [3.6K]

Answer:

$32,000

Explanation:

Calculation to determine the before-tax LIFO liquidation profit or loss that the company would report

Before-tax LIFO liquidation profit =8,000 Units × ($12.00 per unit – $9.00 per unit) + (12,000 units-10,000units)× ($12.00 per unit – $8 per unit)

Before-tax LIFO liquidation profit =(8,000 units× $3 per unit)+(2,000 units ×$4 per unit)

Before-tax LIFO liquidation profit =$24,000+$8,000

Before-tax LIFO liquidation profit =$32,000

Therefore the before-tax LIFO liquidation profit or loss that the company would report in a disclosure note will be $32,000

7 0
3 years ago
What is the present value of the following cash flows at a discount rate of 9 percent?
frutty [35]

Answer:

Year 1 PV = 91,743.12

Year 2 PV =126,251.99

Year 3 PV =  154,436.70  

Explanation:

<em>The present value of future sum is the amount that ought to be invested today at interest rate compounded annually to equal the sum at the end of a particular period.</em>

The present value of a future sum is given as follows:

PV = FV × PV (1+r)^(-n)

PV - present value

FV - Future value

r- interest rate

n- number of years

Year 1 PV = 100,000× 1.09^(-1) =91,743.12

Year 2 PV = 150,000× 1.09^(-2) =126,251.99

Year 3 PV = 200,000× 1.09^(-3) =  154,436.70  

4 0
3 years ago
Once dan kim has successfully tested the concept for a new product, his next step would be
natali 33 [55]

Develop the product / Release the new product.

7 0
3 years ago
It is estimated the national cost of overweight and obesity combined each year is:________
Evgen [1.6K]

It is estimated the national cost of overweight and obesity combined each year is <u>113 billion dollars</u>

<u></u>

<h3>What are Obesity and overweight?</h3>

According to the definition of obesity and overweight in the United States, these conditions are characterized by an increase in the size and number of fat cells in the body. Many things contribute to becoming overweight or obese, including habits including eating habits, lack of sleep or exercise, some medications, genetics, and family history.

Obesity is a long-term medical condition that increases the risk of heart disease, the number one killer in the US, and is associated with a wide range of other health issues, for example type 2 diabetes and cancer.

In the US, about a third of adults (20 and older) are either overweight or obese. Between the ages of 2 and 19, over 1 in 5 kids and teens are obese.

Learn more about obesity

brainly.com/question/1646944

#SPJ4

5 0
1 year ago
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