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algol [13]
3 years ago
10

Sandra Morris is presently leasing a small business computer from Eller Office Equipment Company. The lease requires 10 annual p

ayments of $11,000 at the end of each year and provides the lessor (Eller) with an 11% return on its investment. You may use the following 11% interest factors:
9 Periods 10 Periods 11 Periods
Future Value of 1 1.999 2.15892 2.33164
Present Value of 1 0.50025 0.46319 0.42888
Future Value of Ordinary Annuity of 1 12.48756 14.48656 16.64549
Present Value of Ordinary Annuity of 1 6.24689 6.71008 7.13896
Present Value of an Annuity Due of 1 6.74664 7.24689 7.71008

Required:
a. Assuming the computer has a ten-year life and will have no salvage value at the expiration of the lease, what was the original cost of the computer to Eller? SHOW YOUR WORK.
b. What amount would each payment be if the ten annual payments are to be made at the beginning of each period? SHOW YOUR WORK.
Business
1 answer:
Andre45 [30]3 years ago
7 0

Answer: a. $73,810.88

b. $10,185.18

Explanation:

a. The payments of $11,000 are constant so this can be considered an Annuity.

The cost of the Computer is it's present value which is,

Present Value of Annuity = Annuity Payment * Present Value Interest Factor of Annuity, 11%, 10 periods

= 11,000 * 6.71008 (Payment is made at the end of the year so this is an Ordinary Annuity)

= $73,810.88

b. When an Annuity is instead paid at the beginning of the period it is considered to be an Annuity due.

The formula is the same but for the figures ,

Present Value of Annuity Due = Annuity * Present Value Interest Factor of an Annuity Due, 11% , 10 periods

73,810.88 = Annuity * 7.24689

Annuity = 73,810.88/7.24689

= $10,185.18

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A producer of felt-tip pens has received a forecast of demand of 31,000 pens for the coming month from its marketing department.
atroni [7]

Answer:

  • a. <em>Break-even quantity:</em> <u>28,000 pens</u>

  • b<em>. Price</em>: <u>$1.51 per pen</u>

Explanation:

1. Break-even quantity

<u>a) Revenue, R(x)</u>

The  monthly revenue is the product of the price by the number of units sold in the month.

Naming x the number of pens sold in the month:

  • R(x) = $1 × x = x

<u>b) Cost, C(x)</u>

<u />

The monthly cost is the sum of the fixed cost per month plus the variable costs:

  • C(x) = $21,000 + 0.25 × x = 21,000 + 0.25x

<u>c) Break-even</u>

Break-even is the point when the revenue and the total costs are equal, this is, when the profit is zero. Write the equation and solve:

  • x = 21,000 + 0.25x
  • x - 0.25x = 21,000
  • 0.75x = 21,000
  • x = 21,000 / 0.75
  • x = 28,000

Hence, the break-even quantity is 28,000 pens.

2. Price pens must be sold to obtain a monthly profit of $18,000

Profit = Revenue - Total cost

  • P(x) = R(x) - C(x)

  • P(x) = x.p - [ 0.25x + 21,000]

Where p is the price.

  • P(x) = x.p - 0.25x - 21,000

Substitute the quantity demanded, x, with 31,000, and the profit, P(x) with 18,000:

  • 18,000 = 31,000p - 0.25(31,000) - 21,000

Solve for p and compute:

  • 31,000p = 18,000 + 7,750 + 21,000

  • 31,000 p = 46,750

  • p = 1.51

That is $1.51 per pen.

4 0
3 years ago
In the last two years, BMW AG, the Bavarian auto maker, has developed a car made primarily from carbon-fibers that is not only l
Elis [28]

The new manufacturing plant of BMW vehicles will be engaged in the process of mass production.        

<h3>What is mass production?</h3>

The process of production, wherein a large proportion of goods or inventories are produced by a business organization to reduce the costs of production, is known as mass production.

Hence, option B states about mass production. Complete question has been added in the image for reference.

Learn more about mass production here:

brainly.com/question/17725162

#SPJ1

5 0
2 years ago
What is meant by Sandel's use of the phrase "a common currency"?
Zinaida [17]

Answer:

C. Sandel meant that utilitarianism aims to level all values to equal standing so that they can be quantified and measured

Explanation:

The common currency is the currency that are shared by the different countries

Utilitarianism refers to a theory in which the goods things are to be rise and the bad things would be decline also it shows the outcome of an action that generated right and wrong concept

Therefore it provides a measure that should be common depend upon the values

Hence, the option c is correct

3 0
3 years ago
After the delivery of the condominium documents in the TREC Residential Condominium Contract the buyer may terminate the contrac
sweet-ann [11.9K]

Answer:

The buyer would have a 12-day option to terminate the contract. Otherwise, he or she might not have any other option than to stick to the contract. (That is, the buyer will not have the unrestricted right to terminate the contract again.)

Explanation:

7 0
3 years ago
An investment banker has recommended aâ $100,000 portfolio containing assetsâ B, D, and F.â $20,000 will be invested in assetâ B
soldier1979 [14.2K]

Answer:

β = 1.45

Explanation:

The beta of the portfolio is defined as an average of the betas (β) of each asset within the portfolio weighted by their respective invested amounts (A):

A_{P}* \beta_{P} =A_{B}* \beta_{B} +A_{D}* \beta_{D} +A_{F}* \beta_{F} \\\beta_{P} =\frac{20,000 * 1.5 + 50,000*2.0 +30,000*0.5}{100,000}\\\beta_{P} = 1.45

The beta of the portfolio is 1.45

8 0
3 years ago
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