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Vinil7 [7]
3 years ago
6

Your friend Harold is trying to decide whether to buy or lease his next vehicle. He has gathered information about each option b

ut is not sure how to compare the alternatives. Purchasing a new vehicle will cost $33,500, and Harold expects to spend about $1,200 per year in maintenance costs. He would keep the vehicle for five years and estimates that the salvage value will be $13,300. Alternatively, Harold could lease the same vehicle for five years at a cost of $4,355 per year, including maintenance. Assume a discount rate of 12 percent. Required: 1. Calculate the net present value of Harold’s options. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amounts should be indicated by a minus sign. Round your final answers to 2 decimal places. Do not round intermediate calculations.) 2. Advise Harold about which option he should choose. Lease Option Purchase Option
Business
1 answer:
Hoochie [10]3 years ago
5 0

Answer :

Net present value = -$30,284.90

Net present value = -$15,699.78

Explanation :

As per the data given in the question,

Particulars                 Amount     Factor              Purchase

Cost of new vehicle -$33,500    1                    -$33,500.00

Annual Maintenance -$1,200   3.605             -$4,326.00

Less : Salvage value    $13,300 0.567              $7,541.10

Net Present value                                             -$30,284.90

Particulars                  Amount       Factor           Purchase

Cost of new vehicle       $0                1                      $-

Annual Maintenance -$4,355       3.605          -$15,699.78

Less : Salvage value        $0             0.567              $-

Net Present value                                               -$15,699.78

We simply multiplied the amount with the factor so that the purchase amount could come

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At the beginning of 2018, Artichoke Academy reported a balance in common stock of $168,000 and a balance in retained earnings of
frozen [14]

Answer:

increase in retained earnings = $48,000 - $11,800 = $36,200

increase in common stock = $58,000

<h2>Balance sheet</h2>

Assets:

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Prepaid rent $33,000  

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Total assets                                                     $390,100

Liabilities

Accounts payable $15,600

Utilities payable $6,000

Salaries payable $5,300

Notes payable $33,000

Total liabilities                              $59,900

Equity

Common stock $226,000

Retained earnings $104,200

Total equity                                $330,200

Total liabilities + equity                                   $390,100

<h2>Statement of stockholders' equity</h2>

Common stock balance Jan. 2018              $168,000

Retained earnings balance Jan. 2018          $68,000

Net income                                                  <u>  $58,000</u>

Sub-total                                                       $294,000

Common stocks issued                                $58,000

Distributed dividends                                  <u>  ($11,800)</u>

Subtotal                                                        $330,200

Common stock balance Dec. 2018           $226,000

Retained earnings balance Dec. 2018      $104,200                      

7 0
2 years ago
The nations of Pamland and Lillytonia can produce two goods, DVD
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Answer:

The best deal would be option B) that is

Lillytonia sells 1/4 bushels of wheat to Pam land and gets 1 DVD player in return.

Explanation:

STEP 1

The output of DVD per unit of labor for Pamland = 150.

The output of Bushels of wheat per unit of labor for Pamland= 300.

The output of DVD per unit of labor for Lillytonia = 200.

The output of Bushels of wheat per unit of labor for Lillytonia= 600.

STEP 2

To calculate the comparative advantage, we use the following formula:

Comparative Advantage = DVD Output / Wheat Output

STEP 3

In Pamland, the opportunity cost, or the comparative advantage, of DVD is

300 / 150 = 2 bushels of wheat.

The opportunity cost of wheat in Pamland is 120/ 300 = 0.5 DVDs.

In Lillytonia the opportunity cost, or comparative advantage, of DVD is 600/200 = 3 bushels of wheat, while

The opportunity cost of wheat in Lillytonia is 200/600 = 1/3 or 0.33333 DVDs

STEP 4

As is clear from the calculations, Pamland should produce more wheat because it has the lower opportunity cost during production 2 against 3 for Lillytonia. Conversly, Lillytonia has the lowest opportunity cost for the production of DVD clocking 1/3 against a higher 1/2 for Pamland.

The countries should therefore trade in such a way that Pamlan is selling it's Wheat while Lillytonia is selling it's DVDs.

STEP 5

Given that Pamland's 2 bushels of wheat will cost it 0.5 DVDs, 4 bushels will thus cost it 1 DVD. It is impracticable (in any case) to have 1/2 of a DVD player.

Cheers

7 0
2 years ago
The Balance Sheet reports assets, liabilities, and stockholders' equity at a specific date. A : True B : False
marysya [2.9K]

Answer:

A. True

Explanation:

Balance sheet: The assets, liabilities, and equity of stockholders are recorded in the balance sheet. The accounting equation which is shown below is used

In this:

Total assets = Total liabilities + Stockholder equity

The balance sheet debit and credit side should be fair, equal and balanced.  

In addition, it is always prepared on the date specified.

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8 0
3 years ago
When marginal costs are below average total costs, a. average fixed costs are rising. b. average total costs are falling. c. ave
hoa [83]

Answer:

The correct answer is option b. average total costs are falling.

Explanation:

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A firm is highly productive and efficient when the average total cost is the lowest. At this point, the average total cost is also equal to the marginal cost i.e.

Average Total Cost (ATC) = Marginal Cost (MC).

3 0
3 years ago
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