Answer:
Explanation:
South Tel Communications is considering the purchase of a new software management system. The system is called B-image, and it is expected to drastically reduce the amount of time that company technicians spend installing new software. South Tel's technicians currently spend 6,000 hours per year on installation which cost South Tel $25 per hour. The owners of the B-image system claim that their software can reduce time on task by at least 25%. The system requires an initial investment of $55,000 and an additional investment of$10,000 for technician training on the new system. Annual upgrades will cost the firm $15,000 per year. Because the investment is comprised of software, it can be fully expensed in the year of the expenditure (no depreciation). South Tel faces a 30% tax rate and uses a 9% cost of capital to evaluate projects of this type.
A. Assuming that South Tel has sufficient taxable income from other projects so that it can immediately expense the cost of the software, what are the free cash flows for the project for years zero through five?
Total (65,000)
Cash flow year 1 - 5
Saving on installations per year 450,000
Less: Annual upgrades ( 15,000)
Total 435,000
Less: Tax (30%) (130,500);
Total project free cash flow 304,500.answer
Answer:
b. 8.225%
Explanation:
The rate formula will be used to solve this question.
Please note that the NPER represents the time value.
Where;
Present value is $754.08
Let's assume that the face value is $1,000
PMT= 1,000 x 7.25% ÷2
=$36.25
NPER= 9 years x 2
= 18 years
The formulae is therefore
Rate(NPER,PMT,-,PV,FV)
The value of the present value is negative.
a. The pretax would therefore be 11.75%
b. After tax cost of debt would be ;
Pretax cost of debt x (1 - tax rate)
11.75% x (1 - 30%)
11.75% x (1 - 0.03)
=8.225%.
Answer:
Owners have limited liability.
Explanation:
A corporation is an entity , established by shareholders or individuals with the aim of making profit. It is a legal entity hence can enter into a contract, can also sue and be sued.
The legal process involved in the establishment of corporation is called incorporation. It contains the main reason why the corporation is in business, name and office address, types and number of shares to be issued.
Because the business is incorporated and also a legal entity, it means that the owners are protected personally should their be any litigation against the corporation. Moreover, the liability of the owners are limited to the investment in the corporation.
Answer:
The acquisition cost is $38140
Explanation:
acquisiton cost = invoice price + applicable sales tax - cash discount + freight paid + cost of insurance + installation cost +testing and adjusting costt
= $34000 + $2000 - $400 + $260 + $125 + $2000 + $425
= $38410
Therefore, The acquisition cost is $38140.
Answer:
E. I, II, and IV only
Explanation:
Six sigma is a management technique that involves measuring the number of defective products resulting from production activities, and carefully undergoing certain processes to reduce these defects and improve quality.
The DMAIC cycle is an important process when using the six sigma technique. It involves;
• Defining the goals and objectives to be achieved and problems to be fixed.
• Measuring the production process to see how it currently performs and gathering data on defective products.
• Analysing the processes to find root causes of problems and possible causes of defects.
• Improving the process by implementing carefully formed plans which will help reduce defects.
• Controlling how the new processes are implemented to yield and sustain favorable results and deliver value to customers.
Six sigma aims to remove variations from business processes to reduce product defects and improve quality.
