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ASHA 777 [7]
3 years ago
14

Cash flows of two mutually exclusive projects are as follows. Project A costs $80,000 initially and will have a $15,000 salvage

value after 3 years. The operating cost with this method will be $30,000 per year. Project B has initial cost of $120,000, an operating cost of $8,000 per year, and a $40,000 salvage value after its 3-year life. Assume the interest rate is 10% per year. Which of the following statements is true?A. Two projects have different life cycleB. Project A should be selected.C. The present worth of project A is -$143,252.17.D. The present worth of project B is -$109,842.22.
Business
1 answer:
son4ous [18]3 years ago
4 0

Answer:

C. The present worth of project A is -$143,252.17

Explanation:

Present worth can be calculated using a financial calculator

For method A ,

Cash flow in year 0 = $80,000

Cash flow in year 1 and 2 = $30,000

Cash flow in year 3 = $30,000 - $15,000 = $15,000

I = 10%

Present worth= $ 143,335.84

For method B,

Cash flow in year 0 = $120,000

Cash flow in year 1 and 2 = $8, 000

Cash flow in year 3 = $8,000 - $40,000 = $-32,000

I = 10%

Present worth = $130,157.78

Method b would is chosen because it worth less.

To find the present worth using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

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makvit [3.9K]

The wholesale price per ton is $5000 for exterior paint and $4000 for interior paint. 0.1686 interior and exterior paints should the company produced daily to maximize gross income.

Z-Score = 269-240 172 = 0·1686

P(x >269) = 0·43305 under normal distribution

Objective:- Max:- 5000×+ 4000y sub tor

                      6x+44 ≤24

                        Ix + 2y ≤6

where n is tons of exterior paints and y is tons of interior paints.

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4 0
2 years ago
Waterfall Company sells a product for $150 per unit. The variable cost is $80 per unit, and fixed costs are $270,000. Determine
Valentin [98]

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Waterfall Company sells a product for $150 per unit.

The variable cost is $80 per unit

The fixed costs are $270,000.

To calculate the break-even point in units, we need to use the following formula:

Break-even point= fixed costs/ contribution margin

Break-even point= 270,000/ (150 - 80)= 3,857 units

Now, we have to include the desired profit in the formula:

Break-even point= (fixed costs + desired profit)/ contribution margin

Break-even point= (270,000 + 36,000)/ 70= 4,371 units

7 0
3 years ago
Read 2 more answers
Bakery A sells bread for $2 per loaf that costs $0.50 per loaf to make. Bakery A gives an 80% discount for its bread at the end
butalik [34]

Answer:

324

Explanation:

Calculation to determine What order quantity maximizes expected profit for Bakery A

First step is for the Salvage value

Salvage value = $2 × (1 - 80%)

Salvage value= $0.40

Second step is to calculate the Overage cost

Overage cost = $0.50 - $0.40

Overage cost = $0.10

Second step is to calculate the Underage cost

Underage cost = $2 - $0.50

Underage cost = $1.50

Third step is to calculate the The critical ratio

The critical ratio = 1.5/(1.5 + 0.4) = 0.79. z = 0.8

Now let calculate the Order quantity

Order quantity = 300 + (0.8× 30)

Order quantity= 324

Therefore the order quantity maximizes expected profit for Bakery A is 324

5 0
2 years ago
Adam Company has 100 units costing $300 in beginning inventory. During the year, the company purchases 900 units for a total cos
shutvik [7]

Answer:

The value of the ending inventory is $ 640

Explanation:

First we have to make a table showing the inventory movements.

Beginning inventory                            100 units                         $    300

Purchases                                             900 units                        $ 2,880

Ending inventory                                   200 units

Adam Company uses the FIFO method which means that the units sold shall be valued at the opening inventory plus purchases. The ending inventory shall be priced at the purchase value.

The unit value for purchases is $ 2,880/900 = $ 3.20 per unit.

So the value of the ending inventory shall be

200 units * $ 3.2 per unit   = $ 640

8 0
2 years ago
Read 2 more answers
Assume you are the new Product Manager in our Amazon Prime business and are in charge of Pricing. The VP would like to lower the
vaieri [72.5K]

Answer:

Provided in Explanation

Explanation:

This is a very general question however I’ll try to answer it to the best of my knowledge.

If I use my own assumptions then these will be the Projections:

Selling Price         $79.99  Selling Price         $69.99

Cost of Sales/unit $40.00  Cost of Sales/unit $40.00

Expenses/unit $15.00  Expenses/unit $15.00

   

Demand @ $79.99 1000 Demand @ $69.99 1200

   

Sales         $79,990.00  Sales         $83,988.00

Cost of Sales $40,000.00  Cost of Sales $48,000.00

Expenses $15,000.00  Expenses $18,000.00

Profit        $24,990.00        Profit         $17,988.00

The final decision however relies on the Price Elasticity of the Product. If the Product is Price elastic then lowering the Price will lead to a significant rise in Demand. However if the Product is Price inelastic then lowering the Price will not lead to a significant rise in Demand and thus profit margins will be lowered. If the Product is Price inelastic then it is better to increase prices in order to gain more profits. In the case of Unit Elasticity the change in Demand will be at the same proportion as price change so it won’t be of any use to change the Price.

3 0
3 years ago
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