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exis [7]
3 years ago
13

China Importers would like to spend $215,000 to expand its warehouse. However, the company has a loan outstanding that must be r

epaid in 2.5 years and thus will need the $215,000 at that time. The warehouse expansion project is expected to increase the cash inflows by $60,000 in the first year, $140,000 in the second year, and $150,000 a year for the following 2 years. Should the firm expand at this time? Why or why not? Multiple Choice Yes;a.because the money will be recovered in 2.10 years Yes;b.because the money will be recovered in 1.87 years No;c.because the project never pays back No;d.because the money will not be recovered in time to repay the loan Yes;e.because the money will be recovered in 1.69 years
Business
1 answer:
Nimfa-mama [501]3 years ago
4 0

Answer:

Yes;a.because the money will be recovered in 2.10 years

Explanation:

Assume the company takes uses the loan to expand, how much time will it take to pay back the loan?

This can be expressed as;

T=F+S+T

where;

T=total cash flow needed to repay the loan

F=cash flow for the first year

S=cash flow for the second year

T=cash flow for needed in the third year to pay the loan

In our case;

T=$215,000

F=$60,000

S=$140,000

T=unknown

replacing;

215,000=60,000+140,000+T

T+200,000=215,000

T=215,000-200,000=15,000

The cash flow needed in the third year to pay the loan=$15,000

Determine how long it will take to raise $15,000 in the third year;

total cash flow in the third year=$150,000

1 year=$150,000

To raise $15,000=15,000/150,000=0.1 years

Total number of years=1+1+0.1=2.1 years

It will take 2.1 years to pay back the loan.

The firm should expand since the money will be recovered in 2.1 years even before the repayment period.

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Answer:

a. 2560 checkout

b. 3072 checkout

c. Old system = 3.85 checkout/$

New system = 5.56 checkout/$

Explanation:

Given:

Checkout lanes = 4

a.

How many checkouts did the old system provide in a shift?

Given

Lanes = 2

Time in use = 16 hours --- Convert to seconds

Time = 16 * 3600 = 57600 seconds

Checkout = 1 per 45 seconds

Number of check outs is calculated as:

2 lanes * 57600 seconds * 1 checkout / 45 seconds

Number of checkout = 2560 checkouts

b.

How many checkouts does the new system provide?

Lanes = 4

TimeTime in use = 16 hours --- Convert to minutes

Time = 16 * 60 = 960 minutes

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4 lanes * 960 minutes * 1 checkout / 1.25 minutes

Number of checkout = 3072 checkouts

c.

Given

Electricity costs for both setups are $0.06 per checkout

Bagging (material) costs are $0.12 per checkout with the old system

Bagging (material) costs are $0.20 per checkout with the old system

Cost for the old system is calculated by:

$0.06 * 2560 + $0.12 * 2560

= $153.6 + $307.2

= $460.3

Multifactor = 2560 checkout/$460.3

Multifactor = 5.56 checkout/$

Cost for the new system is calculated by:

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= $184.32 + $614.4

= $798.72

Multifactor = 3072 checkout/$798.72

Multifactor = 3.85 checkout/$

6 0
3 years ago
"Experience goods" are those which: a. Have performance attributes that are difficult to ascertain at the moment of purchase b.
jek_recluse [69]

Answer:

a. have performance attributes that are difficult to ascertain at the moment of purchase

Explanation:

In case of an experience good, it is difficult to make predictions regarding its price and quality.

The reputation of a seller and word of mouth are the important things that customers can use to make decisions regarding purchasing of the product.

Experience goods are those which have performance attributes that are difficult to ascertain at the moment of purchase

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Paying an amount on account reduces:_______
hichkok12 [17]

Option (d) the amount owed on a liability is correct.

Paying an amount on account reduces the amount owed on a liability.

<h3>What is liability?</h3>
  • A liability is an obligation that a person or business has, typically financial in nature. Over time, liabilities are resolved by the transmission of economic advantages like cash, products, or services.
  • There are various ways to define a liability's duration. The average duration (or mean term) of the liability is what is typically meant by the term "duration of liability" in actuarial valuation. In other terms, it refers to the typical rate of a liability's repayment.
  • Liabilities can be used by businesses to increase liquidity if they are having cash flow issues. Most small and medium-sized enterprises lack the financial resources necessary to grow.

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3 0
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the tendency of naive investors to buy high (after prices have risen for several periods) and sell low (after prices have droppe
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The tendency of naive investors to buy high (after prices have risen for several periods) and sell low (after prices have dropped for several periods) can be explained by the behavioral tendency known as anchoring.

<h3>What does anchoring in purchasing behavior mean?</h3>

A behavioral finance heuristic known as "anchoring" refers to the unconscious use of unimportant information, such as the price at which a security was purchased, as a fixed reference point (or "anchor") for making decisions about that security in the future.

The cognitive bias known as "anchoring" occurs when the mere existence of an initial number has an outsized impact on later decision-making. The TV's exorbitant cost acts as an anchor that encourages buyers to spend more money than they intend to. By announcing a lower price after stating a price, the anchoring effect in making purchase decision is activated. Customers will view the higher price as being more comparable to the original, lower price than the alternative prices being provided.

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Answer:

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With the Accrual Basis, it provides very useful information to the users, such as investments made, the capital position of the entity the risk associated with investing in the entity considering the credit rating of the entity through its Liability to Asset computation. Accrual basis also help the user know the quality of management staff available, since information such as Creditors collection period and Turnover rate. Which can tell how efficient the management is working. In addition the Accrual basis includes the cash basis because of the preparation of the cash flow statement.

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3 years ago
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