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Alex787 [66]
3 years ago
11

BD Corporation has purchased new computers to modernize the office. The increased efficiency from the computers will lead to inc

reases in productivity from the office staff. Estimates of the additional revenue from the productivity are $75,000 per year (end of year) for the next five years when the computers will need to be replaced. The new computers will cost $300,000. You will have to borrow from your local bank at a rate of 8% APR. Should you go ahead with the new computers
Business
1 answer:
Inessa [10]3 years ago
5 0

Answer:

BD Corporation should not purchase the new computers

Explanation:

initial outlay year 0 = -$300,000

increased productivity per year = $75,000 for years 1-5

discount rate = 8%

NPV = -$300,000 + $75,000/1.08 + $75,000/1.08² + $75,000/1.08³ + $75,000/1.08⁴ + $75,000/1.08⁵ = -$300,000 + $69,444.44 + $64,300.41 + $59,537.42 + $55,127.24 + $51,043.74 = -$300,000 + 299,453.25 = -$546.75

since NPV is negative, then the project should be rejected

we can also use an annuity factor to determine the present value of this annuity, PV = $75,000 x 3.9927 = $299,452.50

NPV = -$300,000 + $299,452.50 = -$547.50

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At the beginning of 2020, Earth Co purchased a machine at a cost of $40,000. Earth Co expects the machine to remain useful for e
emmasim [6.3K]

Answer:

Option B Depreciation Expense $8,400, net book value $31,600

Explanation:

The depreciation can be calculated using the following formula:

Depreciation For Y1 = (Cost - Residual Value)* Hours consumed / T. Hours

Here

Cost is $40,000

Residual Value is $5,000

Hours consumed are 1,200 hours

Total Hours are 5,000 hours

Now by putting values, we have:

Depreciation For Y1 = ($40,000 - $5,000) * 1200 / 5000

Depreciation For Y1 = $8,400

Now Net Book Value can be calculated using the following formula:

Net Book Value = Cost  - Accumulated Depreciation

Net Book Value = $40,000 - $8400 = $31,600

Hence the right answer is option B.

8 0
3 years ago
Jim and Lisa own a dog-grooming business in Champlain, New York, called JL Groomers. There are many buyers and many sellers in t
Ganezh [65]

Answer:

$22

Explanation:

JL Groomers will maximize its accounting profit while taking to 0 its economic profits when the marginal revenue = marginal costs.

Economic profits are not the same as accounting profits, since they include the opportunity costs of investing the money somewhere else. That is why in the long run firms are not able to make economic profits since as long as they exist, new competitors will enter the market. But on the short run, firms are able to make economic profit, but by doing so, they will not be maximizing their accounting profit.

Economic profit = accounting profit - opportunity costs

Opportunity costs are the extra costs associated or benefits lost from choosing one activity or investment over another one.

6 0
3 years ago
Kirk Minerals processes materials extracted from mines. The most common raw material that it processes results in three joint pr
NARA [144]

Answer:

Spock

Incremental Profit or Loss = -$20,000 --- Loss

Uhura;

Incremental Profit or Loss = $15,000 ---Profit

For Sulu;

Incremental Profit or Loss = $95,000 ---Profit

Explanation:

Given

Sales Value at Split-Off Point Allocated Joint Costs Cost to Process Further Sales Value of Processed Product

Spock $210,000 $40,000 $110,000 $300,000

Uhura 300,000 60,000 85,000 400,000

Sulu 455,000 80,000 250,000 800,000

Calculating the incremental profit or loss that each of the three joint products.

Incremental Profit or Loss is calculated by subtracting profit under processing from the current profits.

i.e.

Incremental Profit or Loss = Profit under processing - Current Profit

Currect profits is calculated as

Sales value at split-off point- allocated joint costs

Profit under processing is calculated as

Sales value of processed product- allocated joint cost - further processing cost

For Spock;

Current Profit = $210,000 - $40,000 = $170,000

Profit Under Processing = $300,000 - $40,000 - $110,000 = $150,000

Incremental Profit or Loss = $150,000 - $170,000

Incremental Profit or Loss = -$20,000 --- Loss

For Uhura;

Current Profit = $300,000 - $60,000 = $240,000

Profit Under Processing = $400,000 - $60,000 - $85,000 = $255,000

Incremental Profit or Loss = $255,000 - $240,000

Incremental Profit or Loss = $15,000 ---Profit

For Sulu;

Current Profit = $455,000 - $80,000 = $375,000

Profit Under Processing = $800,000 - $80,000 - $250,000 = $470,000

Incremental Profit or Loss = $470,000 - $375,000

Incremental Profit or Loss = $95,000 ---Profit

4 0
3 years ago
Read 2 more answers
At year​ end, Tangshan China Company balance sheet showed total assets of​ $60 million, total liabilities​ (including preferred​
Studentka2010 [4]

Answer:

Earnings per share

= <u>Net income - Preferred dividend </u>

  No of common stocks outstanding

= <u>$1,500,000 - 0</u>

   1,000,000 shares

= $1.50 per share

P/E ratio = <u>Market price per share</u>

                 Earnings per share

15   = <u>Market price per share</u>

              $1.50

Market price per share = 15 x $1.50

                                      = $22.50

Explanation:

In this question, there is need to calculate earnings per share by dividing net income by number of common stocks outstanding. Thereafter, we will apply P/E ratio formula, where P/E ratio and earnings per share are known. We will make market price per share the subject of the formula.

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3 years ago
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Answer:

Candy

Explanation:

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