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jeyben [28]
3 years ago
7

Wendell’s Donut Shoppe is investigating the purchase of a new $40,000 donut-making machine. The new machine would permit the com

pany to reduce the amount of part-time help needed, at a cost savings of $5,200 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 2,000 dozen more donuts each year. The company realizes a contribution margin of $2.40 per dozen donuts sold. The new machine would have a six-year useful life.
What would be the total annual cash inflows associated with the new machine for capital budgeting purposes?

a. Annual Savings in Part time Help:
b. Added Contribution Margin from expanded sales:
c. Annual cash inflows:
Business
1 answer:
Komok [63]3 years ago
5 0

<u>Solution and Explanation:</u>

<u> Answer:1</u> The total annual cash inflows associated with the new machine for capital budgeting purposes is:

=\$ 5200+(2000 * \$ 2.40 \text { per dozen })

=$10000

<u>Answer:2 </u>The internal rate of return promised by the new machine to the nearest whole percent is:

Particulars  Year  Amount ($)

Cash outflow  0  -40000

Cash inflow  1  10000

                2  10000

               3  10000

                4  10000

               5  10000

              6  10000

IRR   13%

=13% using IRR function in excel.

<u>Answer:3</u> IRR=17%

with salvage value

Particulars  Year  Amount ($)

Cash outflow  0  -40000

Cash inflow  1  10000

                 2  10000

                3  10000

               4  10000

                5  10000

              6  22000

IRR   17%

using IRR function in excel.

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N76 [4]

Answer:

Purchasing

Explanation:

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When someone purchases, when the price is less and quality is best as compared with the competitors dealing in the same industry

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5 0
3 years ago
1. A computer game that can be purchased online and played right away has good ___ utility. A) form. B) info. C) value. D) time
gizmo_the_mogwai [7]
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6 0
3 years ago
Lisa has $1,000 in cash today. Which one of the following investment options is most apt to double her money? A. 6 percent inter
Zepler [3.9K]

Answer:

D. 8 percent interest for 9 years

Explanation:

We would use the formula future value formula below to determine which of the investment options would double her money:

FV=PV*(1+r)^n

PV is the amount invested which is $1000

r is the interest rate expected to be earned while n is the number of years First option:

FV=$1000*(1+6%)^3

FV=$1,191.02  

Second option:

FV=$1000*(1+12%)^5

FV=$1,762.34  

Third option:

FV=$1000*(1+7%)^9

FV=$ 1,838.46  

Fourth option:

FV=$1000*(1+8%)^9

FV=$2000

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FV=$1000*(1+6%)^10

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8 0
3 years ago
On January 1, Year 1, Alla Co. sold a property to Mish Co. for $400,000 and simultaneously leased it back for 3 years. The carry
vichka [17]

Answer: $30,000

Explanation:

In accounting, the treatment of the Sale and Operating Leaseback operation is such that a gain is only recognized if the sales price is more than the fair value. In such a case the difference between the fair value and the carrying price is considered the Gain on Sale.

The Difference between the sales price and the fair value is to be amortized over the period of use.

Seeing as the selling price is more than the fair value, the Gain on Sale is therefore,

= Fair Value - Carrying Value

= 310,000 - 280,000

= $30,000

$30,000 is the amount of gain on sale of the property recognized by Alla on January 1, Year 1.

7 0
4 years ago
It has been said that incentive plans work only for a relatively short time. Do you agree or disagree with this statement? Why o
VashaNatasha [74]
<span>The correct answer is that it depends on the specifics of the incentive plan. A general incentive plan that is not linked directly to productivity will typically become old news to staff within a few years. What was once an incentive will become familiar and may be viewed as an entitlement as staff start looking for the eternal "what's next?". An incentive directly linked to some kind of productivity (e.g. hours worked) will have a far longer shelf life (though this will, of course, vary by employee). In this scenario the ongoing incentive remains year over year (e.g. the hours of overtime worked in the previous year will have no bearing on the current year so if you want a similar result you will need to maintain your effort whereas if you want a better result you will have to increase your effort). All incentive plans, however, are subject to the rules of diminishing marginal utility to the employees and will diminish over time as the employee either becomes comfortable at a certain productivity level or becomes disenchanted by other factors. In summation: an incentive plan, if designed properly, can work for a relatively long period of years though results may vary by employee as everyone is motivated by different things (though providing an alternative incentive to money may somewhat mitigate this additional potential problem).</span>
8 0
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