Since the cost of $20,000 has been incurred two years ago, the firm should check and see as to how many units of the product were produced in the two years. Did the firm produce enough items to break even the cost of acquisition. Additionally the business should also check the current market value of this two year old equipment. The business manager should weigh in the savings that is to be obtained from outsourcing along with the resale value of the old machine and then take a declension as to whether the company should go for outsourcing. Also, the business manager must examine whether the outsourcing can happen for the long run. This is because two years down the line, outsourcing may have increased the cost and again another process may look attractive. So a through cost benefit analysis should be made before taking a decision.
Answer:
This project should be rejected because the AAR is 10.68 percent.
Explanation:
The accounting rate of return of the project needs to computed,compared with the required accounting rate of return in order to decide whether the project should accepted or rejected:
Profit margin=$86,800*6%=$5208
Average operating assets=($97,500+$0)/2=$48.750
Accounting rate of return=profit margin/average operating assets*100
Accounting rate of return=$5,208/$48,750*100=10.68%
The project accounting rate of return is lower than the required accounting rate of return,hence the project should be rejected.
Answer:
C. Fixed Interval
Explanation:
"Fixed Interval" is a type of <em>Reinforcement Schedule. </em>The "reward" in the situation above is the<em> salary given to the employees</em> during Wednesdays. As noticed, their productivity increases over the week, with the peak on Wednesday.
The<u> "peak" of productivity</u> is the<u> exhibited behavior during pay day.</u> They try to work hard in order to receive a salary. <em>They become more inspired to work during the salary day.</em> It is followed by<em> </em><em>less productivity on Thursdays</em><em> </em>because they have already been rewarded.
Such reinforcement schedule is called the "fixed interval." This also means that their productivity will not increase if they will not be paid.
So, this explains the answer.
Answer:
7.76%
Explanation:
The computation of the weighted average flotation cost is shown below:
= Weightage of equity × flotation cost for new equity + Weightage of debt × flotation cost for debt
Since the debt-equity ratio is 0.7 which means the debt value is 7 and the equity value is 10 so the total firm would be 1.70
So, Weighted of debt = (0.7 ÷ 1.70) =0.411
And, the weighted of common stock = (Common stock ÷ total firm)
= (1) ÷ (1.70)
= 0.588
Now put these values to the above formula
So, the value would equal to
= (0.588 × 9%) + (0.411 × 6%)
= 0.05292% + 0.02466%
= 7.76%
