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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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Answer:

Option D. Prepare a trial balance, prepare adjusting entries, prepare financial statements

Explanation:

The accounting cycle sequence is given as under:

  1. Analyzing the business
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  4. Prepare a Trial Balance
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So we can see that the three steps highlighted above are the sequence shown in the option D. Hence option D is correct.

5 0
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Assume that the risk-free rate is 3.5% and the market risk premium is 6%. 1. What is the required return for the overall stock m
Radda [10]

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Explanation:

The market required rate of return = risk free rate + ( Market Beta × Market risk premium)

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The stock required rate of return = 3.5% + (2.3 × 6%) = 0.173 = 17.3%

I hope my answer helps you

6 0
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On April 1, the price of gas at Bob’s Corner Station was $4.95 per gallon. On May 1, the price was $5.45 per gallon. On June 1,
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Answer: Please refer to Explanation

Explanation:

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The price increased by $0.50 from $4.95. Percentage Increase should be,

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= 0.5/5.95

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2. Across the street, their price is 20% higher than Bob's.

When Bob's prices are $5.45, there's are,

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= 5.45 * 1.2

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Difference is,

= 6.54 - 5.45

= <u>$1.09</u>

3. The Fed raised it's rate from 2% to 2.75%.

The change is,

= 2.75% - 2%

= 0.75%

This is a percentage Change of,

= 0.75/2 * 100%

= 37.5%

This change of <u>0.75</u> percentage points means that the Fed raised its target by approximately <u>37.5%.</u>

8 0
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The front matter of a formal report refers to the preliminary sections before the body section. True False
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Answer:

TRUE

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Front matters are pages of a report that preceeds the first text. It is the first section of a book or report and it's usually the shortest.

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