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Elena L [17]
3 years ago
15

Suppose a firm is considering the purchase of a machine which when used will increase its total revenues by $10,000 for the year

. The machine costs $8,000 and has a useful life of one year. The interest rate is 20 percent. This investment should:
Business
1 answer:
xz_007 [3.2K]3 years ago
6 0

Answer: Be undertaken because the rate of return is 5 percent greater than the interest rate

Explanation:

Given the following ;

Revenue increase = $10,000

Cost of machine = $8,000

Calculating the Rate of Return on the investment ;

FV = PV × (1 + r)^n

FV = Revenue increase = $10,000

PV = Cost of machine = $8000

n = period = 1 year

r = rate of return

$10000 = $8000 × (1 + r) ^1

1 + r = $10,000 ÷ $8,000

1 + r = 1.25

r = 1.25 - 1

r = 0.25 = 25 %

Interest rate = 20%

Rate of Return on investment = 25%

Rate of Return is 5% greater than interest rate

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Answer:

4000

Explanation:

Calculation to determine how many units of foreign currency does the same basket of goods cost in that country

Based on the information given we were told that the PRICE OF A BASKET OF GOODS is the amount of $2000 in which the dollar buys TWO UNITS of some country’s currency, now let determine HOW MANY UNITS of foreign currency does the same basket of goods cost in that country

Using this formula

Units of foreign currency=Basket of goods price*Some country’s currency units

Let plug in the formula

Units of foreign currency=$2,000* 2 units

Units of foreign currency=4,000 units

Therefore the number of units of foreign currency that the same basket of goods cost in that country is 4,000

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7 0
3 years ago
Simpson and Homer Corporation acquired an office building on three acres of land for a lump-sum price of $3,350,000. The buildin
Volgvan

Answer:

Building = $1,340,000

Land = $1,675,000

Furniture and fixtures = $335,000

Explanation:

This is an example of Basket Asset Purchase whereby a number of assets purchased as one package.

Initial value of each asset is are determined by the Basket Asset Purchase  based on their relative fair market value as follows:

Building = $3,350,000 × [$2,560,000 ÷ ($2,560,000 + $3,200,000 + $640,000)] = $3,350,000 × 0.4 = $1,340,000

Land = $3,350,000 × [$3,200,000 ÷ ($2,560,000 + $3,200,000 + $640,000)] = $3,350,000 × 0.5 = $1,675,000

Furniture and fixtures = $3,350,000 × [$640,000 ÷ ($2,560,000 + $3,200,000 + $640,000)] = $3,350,000 × 0.1 = $335,000

Therefore, the initial values of the building, land, and furniture and fixtures would be $1,340,000, $1,675,000, and $335,000 respectively.

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Wildhorse Company accumulates the following data concerning a mixed cost, using miles as the activity level. Miles Driven Total
tangare [24]

Answer:

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Explanation:

Giving the following information:

Miles Driven Total Cost Miles Driven Total Cost

January: 8,000 $14,120

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Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)

Variable cost per unit= (14,979 - 13,495) / (8,550 - 7,490)

Variable cost per unit= $1.4 per unit

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