Answer:
Total PV= $46,728.79
Explanation:
Giving the following information:
Cash flow:
Cf1= $8,000
Cf4= $16,000
Cf8= $20,000
Cf10= $25,000
Discount rate= 6%
To calculate the present value, we need to use the following formula on each cash flow:
PV= FV/(1+i)^n
Cf1= 8,000/(1.06^1)= 7,547.17
Cf4= 16,000/(1.06^4)= 12,673.50
Cf8= 20,000/(1.06^8)= 12,548.25
Cf10= 25,000/(1.06^10)= 13,959.87
Total PV= $46,728.79
Here, we are decide the best option between making the part or buying the part.
a. Make or Buy Analysis
Particulars Make amount Buy amount
Direct Materials $4.50
Direct Labor $1.00
Overhead (80% of Direct Labor) $0.80
Cost to buy <u> </u> <u>$4.70</u>
Cost per unit <u>$5.70 </u> <u>$4.70</u>
Cost Difference = $5.70 - $4.70
Cost Difference = $1.00
Therefore, the cost difference of making amount over buying amount is $1.00.
b. Because of the difference, Beto should buy the part because its cost is lesser than to make the part.
Therefore, the buying of the part is the best decision.
See similar solution about Analysis
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Answer:
The correct option is (b)
Explanation:
Given:
Monthly payment for 6 months = $30 per month
Time period = 6 month (6 periods)
Monthly interest rate = 2%
In order to compute borrowed amount, present value of these payments need to be computed which is an annuity as same amount of $30 is paid.
Checking PVIFA table for 2%, 6 periods, annuity factor is 5.6014.
Borrowed amount = Monthly payment × PVIFA(2%,6)
= 30 × 5.6014
= $168.042
Borrowed amount is $168.042 or $168.22 approximately (difference in value due to annuity factor being rounded off)
Answer:
they have an opportunity to exploit network effects and positive feedback loops
Explanation:
The first mover advantage refers to competitive advantages that can be achieved by a firm that first enters a market or launches a new product first. E.g. Volkswagen has a first mover advantage in China because it was the first foreign car manufacturer to successfully a car factory there. Another type of first mover advantage would be the ones obtained by Apple for launching the first smartphone.
Network effects refers to a good or service becoming more valuable because more people purchase or use them, e.g. social media apps.
Positive feedback loops occurs when a company's output is used as a positive input in the productive system, e.g. when a company uses information gathered by customer service (CRM) to improve the products or services it offers.
Answer:
c. will earn zero economic profits but positive accounting profits
Explanation:
A competitive industry is characterised by many buyers and sellers of homogenous goods and services.
There are no barriers to entry and exit of firms. If firms in a competitive industry earn economic profit in the short run, firms enter into the industry in the long run and economic profit falls to zero.
A competitive firm earns accounting profit but doesn't earn economic profit.
Accounting profit = Revenue - Cost
Economic profit = Accounting profit - Opportunity cost
I hope my answer helps you.
