Answer:
The most I could pay for the investment is $12,960.09
Explanation:
The maximum a rational investor could pay acquire an investment is the present value of all future cash flows receivable from the investment.
In the case, the present of all cash flows is calculated thus:
Years Cashflows [email protected] 12% PV
1 5000 0.892857143 4,464.29
2 5300 0.797193878 4,225.13
3 6000 0.711780248 4,270.68
Total of present values 12,960.09
The discounting factor is calculated using the formula :
1/(1+r)^n where r and n are rate and number of years respectively.
Answer:
$6 per unit
Explanation:
using the weighted average method:
units completed 92,000 x 100% (both materials and conversion)
ending work in progress 24,000
- materials 90% completed = 21,600
- conversion 40% completed = 9,600
equivalent unit conversion costs = total conversion costs / total equivalent units of conversion
- total conversion costs = $20,320 + $15,240 + $$182,880 + $391,160 = $609,600
- total equivalent units of conversion = 92,000 + 9,600 = 101,600
equivalent unit conversion costs = $609,600 / 101,600 units = $6 per unit
