Vision Company sells optical equipment. Blitz Company manufactures special glass lenses. Vision orders 11 comma 700 lenses per
year, 280 per week, at $ 38.00 per lens. Blitz covers all shipping costs. Vision earns 16% on its cash investments. The purchaseminusorder lead time is 4 weeks. Vision sells 225 lenses per week. The following data are available: Relevant ordering costs per purchase order $ 44.25 Relevant insurance, materials handling, breakage, and so on, per year $ 9.50 What is the economic order quantity for Vision?
2 answers:
Answer:
330 units are the economic order quantity
Explanation:
Here
Annual Demand = D = 11,700 Units
Ordering cost per purchase order = S = $44.25
Holding cost = H = $9.5
Economic order quantity = √(2SD/H)
Economic order quantity = √(2* $44.25 * 11,700 units/ $9.5 per unit per year)
Economic order quantity = 330 units
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Answer:
The bond's yield to maturity is 9.45% using Excel to get exact values, and 9.59% using approximate method.
Explanation:
We can calculate is using 2 ways, using Excel to get the exact percentage or with approximate methods, calculating the semi-annual Yield to Maturity using the following formula
And from there we can calculate the Yield to Maturity just by multiplying the semi-annual one by 2.
Identifying the given information.
We have a period of 30 years, so for the semiannual bond we have periods.
The face value, FV, is $1000, the coupon rate is 0.10, thus we can use them to find the interest per period PMT.
The current price of the bond, PV is $1050.
Replacing the values on the semiannual Yield to Maturity
Simplifying we get
Finding the Yield to Maturity.
We can just multiply by 2 to get the Yield to Maturity from our previous result and rounding it to 2 decimals we get
Alternatively we can use Excel and write:
RATE(n, PMT, PV, FV)*2
That is
RATE(60,50,1050,1000)*2
And we will get the exact Yield to maturity 9.49%