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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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3 years ago
Yoko is trying to explain to one of her ticket counter associates the differences in price associated with concert tickets. She
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Answer:

The correct answer is letter "A": Product line pricing.

Explanation:

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Therefore, <em>Yoko is talking about product line pricing by describing how the lowest-priced tickets of the concert are for least-desirable seats while the highest-priced tickets are for the most-desirable seats.</em>

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4 years ago
Ceteris paribus, the law of diminishing returns states that beyond some point, the:________.
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Answer:

a. Marginal product of a factor of production diminishes as more of it is employed with a given quantity of other inputs

Explanation:

The law of diminishing return states that in applying a successive unit of variable cost to a fixed cost, the return per unit of variable cost will eventually diminish or fall.

What the above means is that at a certain point, the continuous addition of land, labor , capital and entrepreneur will bring about a fall or reduction in output.

An example is where a company operate at a maximum level, there would be a fall in output even when additional workers are employed given that the factors of production are constant.

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When a firm has international operations, choosing the most appropriate structure depends upon the extent of international expan
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Answer:

True

Explanation:

When a firm has international operations it should choose the most appropriate structure based on the following factors:

  1. extent of international expansion: into how many international regions do we plan to expand our activities.  
  2. the type of strategy: the have to choose between global, multidomestic or international strategy
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Although 1 and 3 may be similar, there can be significant differences. For example, a US company may want to start selling their products in all of South America (regional product diversity), but it will do it by setting a South American office in Brazil only (international expansion is limited to Brazil only).

5 0
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is trading at 54.33. You decide to short sell 100 shares of their stock, providing 3100 in collateral to your broker. You hold t
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Answer: 30.1%

Explanation:

Return = (Value of stock when shorted - Dividend - Value of stock when returning stock)/Capital employed

Dividend = 100 shares * $1 per share

= $100

Dividends are subtracted because they are owed to the shareholders the stock was borrowed from.

Value of stock when shorted = 54.33 * 100 = $5,433

Value of stock when returning stock = 44 * 100 = $4,400

= (5,433 - 100 - 4,400) / 3,100

= 30.1%

6 0
3 years ago
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