___________ is a phenomenon in which the project manager spends more time documenting project tasks, collecting performance meas
1 answer:
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Answer:
$418,550
Explanation:
Steps are shown below:
a. The computation of the economic order quantity is shown below:
=
=
= 2,040 units
b. The number of orders would be equal to
= Annual demand ÷ economic order quantity
= $52,000 ÷ 2,040 units
= 25.49 orders
c. The average inventory would equal to
= Economic order quantity ÷ 2
= 2040 units ÷ 2
= 1,020 units
d. The total cost of ordering cost and carrying cost equals to
Ordering cost = Number of orders × ordering cost per order
= 25.49 orders × $50
= $1,275
Carrying cost = average inventory × carrying cost per unit
= 1,020 units × $1.25
= $1,275
So, the total annual cost would be
= Purchase cost + ordering cost + carrying cost
= $416,000 + $1,275 + $1,275
= $418,550
Purchase cost = Annual demand × cost per unit
= 52,000 × $8
= $416,000
Answer:
NPV with a 14.9% discount rate: 6,329.06
The toy should be produced as the NPV is positive.
IRR = 26.65%
Explanation:
First we calculate for the NPV using the given discount rate of 14.9%
We will calculate the present value of each year cash inflow:
Year 1 cash inflow: 47,500.00
time 1.00
rate 0.149
PV 41,340.30
Year 2 cash inflow: 18,600.00
time 2.00
rate 0.149
PV 14,088.76
Then, we add them and subtract the investment to get NPV
NPV = 14,088.76 + 41,340.3 - 49,100 = 6,329.06
The toy should be produced as the NPV is positive.
Now for the IRR
That is the rate at which NPV equals zero we can solve for this using the quadratic equation as there are only two cash flow:
Year 1 will discount at (1+IRR)
Year 2 will be discount at (1+IRR )^2
So we can express and recreate the quadratic formula:
18,600 X^2 + 47,500 X - 49,500 = 0
A = 18,600
B = 47,500
C = -49,100
We can solve and get:
x1 = 0.78957
x2 = -3.3433
We take the positive value.
and now solve for IRR
IRR = 0,2665121 = 26.65%
This will be the IRR for the project.