1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Daniel [21]
3 years ago
15

Most businesses replace their computers every two to three years. Assume that a computer costs $2,000 and that it fully deprecia

tes in 3 years, at which point it has no resale value and is thrown away.
If the interest rate for financing the equipment is equal to I, show how to compute the minimum annual cash flow that a computer must generate to be worth the purchase.
Business
1 answer:
sineoko [7]3 years ago
3 0

Answer:

$2000=Z/(1+i)^1+Z/(1+i)^2+Z/(1+i)^3

Explanation:

let Z be the annual minimum cash flow

The internal rate of approach can be used here, in other words, the rate of return at which capital outlay of $2000 is equal present values of future cash flows

In year 1, present value of cash =X/discount factor

year 1 PV=Z/(1+i)^1

year 2 PV=Z/(1+i)^2

year 3=Z/(1+i)^3

Hence,

$2000=Z/(1+i)^1+Z/(1+i)^2+Z/(1+i)^3

Solving for Z above would give the minimum annual cash flow that must be generated for the computer to worth the purchase

Assuming i, interest rate on financing is 12%=0.12

Z can be computed thus:

$2000=Z(1/(1+0.12)^1+(1/(1+0.12)^2+(1+0.12)^3)

$2000=Z*3.09497902

Z=$2000/3.09497902

Z=$646.21

You might be interested in
Perch Co. acquired 80% of the common stock of Float Corp. for $1,600,000. The fair value of Float's net assets was $1,850,000, a
Nikolay [14]

Complete question:

Perch Co. acquired 80% of the common stock of Float Corp. for $1,600,000. The fair value of Float's net assets was $1,850,000, and the book value was $1,500,000. The non-controlling interest shares of Float Corp. are not actively traded. What amount of goodwill should be attributed to the non-controlling interest at the date of acquisition?

a. 150,000

b. 250,000

c. 0

d. 120,000

e. 170,000

Answer:

150,000 of goodwill should be attributed to the non-controlling interest at the date of acquisition

Solution:

A non-controlling interest (NCI) is a role in which a owner holds less than 50% of remaining and has little control over decisions. A minority ownership is often known as the minority interest. Non-controlling interests are calculated by their net worth and are not eligible for future right to vote.

Now , Calculate the amount

Cost(PP) - 1,600/0.8 = 2,000

FV - 1,850

GW = 1,850 - 2,000

     = 150,000

8 0
3 years ago
The sea wharf restaurant would like to determine the best way to allocate a monthly advertising budget of $1000 between newspape
Andreas93 [3]
From what I understood in the problem, the total budget that covers all types of media is only $1,000 per month. For the allocation, each type of media would get at least 25% of the budget. If we infer on this information, there should only be 4 types of media, at least. This is because four 25% portions would equal to 100%. If it exceeds 25% for each of the four types, it would be over the $1000 budget. With that being said, it is also possible that there will be 3 or 2 types of media. Nevertheless, let's just stick to the least assumption of 25% for each of the 4 types.

If local newspaper advertising is one of the four types, then:

$1000(25%) = $250

It would get $250 from the overall budget.
5 0
3 years ago
[The following information applies to the questions displayed below.]
Vinil7 [7]

Answer:

3.2 Million

Explanation:

7 0
3 years ago
It is important to use information that is both reliable and relevant when making financial decisions. True False
melamori03 [73]
True because if you don’t have those things you won’t have a stable finance situation and if something goes wrong you will be in a pickle.
3 0
3 years ago
In mid-October, Lambert expects to buy a new computer for $4,500 using the company credit card. Typically, the credit card bill
vfiekz [6]

Answer:

$6,000

Explanation:

Since it is stated in the question that "Typically, the credit card bill is paid in full in the following month", it implies that cash will be disbursed in October for purchases of goods made in September, while cash will be disbursed in November for purchases of goods made in October.

Based on this, Lambert's expected cash disbursement in October for purchases of goods made in September is $6,000, while his expected cash disbursement in November for purchases of goods (a new computer) made in October is $4,500.

8 0
3 years ago
Other questions:
  • The multiplier effect occurs when an initial increase (or decrease) in autonomous expenditure produces a greater increase (or de
    15·1 answer
  • A new client in the medical–surgical unit complains of difficulty sleeping and is scheduled for an exploratory laparotomy in the
    9·1 answer
  • Which term refers to business processes that are not executed by a single group or function? _______
    15·1 answer
  • Which the following consists of all the benefits a product will provide for consumers or business​ customers? A. Augmented produ
    11·1 answer
  • Dec. 1 Merchandise with a list price of $4,700 is purchased on account, terms FOB shipping point, 1/10, n/30. The seller prepaid
    5·1 answer
  • The pattern in which a lab scope shows all the cylinders firing in sequence is called the:________
    6·1 answer
  • create a persuasive email to Mrs. Jarrett and Mrs. Haynes about recruiting graduating seniors to come work for you this summer.
    14·1 answer
  • A Las Vegas hotel want to provide to bear experience for a rep for its rapidly growing custom made base from China at the hotel
    10·1 answer
  • A 13-year, 6 percent coupon bond pays interest semiannually. The bond has a face value of $1,000. What is the percentage change
    6·1 answer
  • Campaign Company, which applies overhead to production on the basis of machine hours, reported the following data for the period
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!