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DIA [1.3K]
3 years ago
15

A company is considering replacing its air conditioner. Management has narrowed the choices to alternatives that offer comparabl

e performance and considerable savings over their present system. The effective annual interest rate is 8%. What is the benefit-cost ratio of the better alternative?
Business
1 answer:
Naya [18.7K]3 years ago
4 0

Answer:

The benefit cost ratio of alternative 2 is 1.34

Explanation:

Initial cost $7000 $9000

Annual savings $1500 $1900

Salvage value $500 -$1250

Life 15 years 15 years

First, we calculate the present worth of Alternative 1 and 2, taking salvage value as a decrease in cost

.

For alternative 1

B1 = Benefits = ($1500)(P/A, 8%, 15) = ($1500)(8.5595) = $12,839

C1 = Cost = $7,000 – ($500)(P/F, 8%,15) = $7,000 – ($500)(0.3152) = $6842

Ratio of Benefit to Cost = Benefit/Cost = $12,839/$6842 = 1.88

For alternative 2

B2 = Benefits = ($1900)(P/A, 8%,15) = ($1900)(8.5595) = $16,263

C2 = Cost = $9000 + ($1250)(P/F,8%,15) = $9000 + ($1250)(0.3152) = $9394

Ratio of Benefit to Cost = Benefit/Cost = $16,263/$9394 = 1.73

Both alternatives can't be compared directly unless we perform incremental analysis on both.

Incremental Analysis =. (B2 – B1)/(C2 –C1) = ($16,263- $12,839)/ ($9394 - $6842) = 1.34

Incremental Analysis is greater than 1, so alternative 2 is better than alternative 1

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The relationship between quantity supplied and the price of output is such that Group of answer choices quantity will decrease a
Lady_Fox [76]

Answer:

An increase in quantity will automatically lead to a reduction in price.

An increase in price will lead to an increase in quantity supplied.

Explanation:

Option “2” and “4” are correct because the increase in quantity supplied shifts the supply curve rightwards and resulting in the price falls. While the positive relationship between price and the quantity supplied leads to an increase in supply when price increases. When price increases then the producer finds more profitable to supply more quantity. Thus, in order to curb more profit, the producer supplies more quantity when price increases.

5 0
3 years ago
Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of $1,350 per
Sergio039 [100]

Answer:

(a) $33750000 (b) $11250000 (c) $22500000

Explanation:

Solution

(a) How much would Ziegler Inc. total income of operating  increase.

Now,

Units * (Cost of purchased from outside supplier - Variable cost)

Thus,

75000 * ($1350 - $900) = $33750000

(b) How much would the Instrument Division's operating income increase

Now,

The Units * (Cost of purchased from outside supplier - Transfer Price)

So,

75000 units * ($1350 - $1200) = $11250000

(C) How much would the Components Division's operating income increase?

Now,

Units * (Transfer Price - Variable cost)

75000 units * ($1200 - $900) = $22500000

3 0
3 years ago
EASY WILL GIVE BRAINLIEST!
Alex787 [66]
Answer: True
A chronological resume lists your work history in order of of date.
4 0
2 years ago
Read 2 more answers
Gale Corporation manufactures windsocks. The business recently decided to adopt an ABC system. The following activities have bee
solniwko [45]

Answer:

$270,000

Explanation:

The first step is to calculate the overhead cost of the material handling parts

Since each wind stock require 3 parts then the overhead cost can be calculated as follows

= 3 × 20,000

= 60,000

The overhead cost of machining hours can be calculated as follows

Since 5 minutes is spent in the machining department then overhead cost is

= 5× 20,000

= 100,000

The overhead cost of packaging number of finished units can be calculated as follows

= 2 × 20,000

= 40,000

Total overhead cost= 100,000 + 60,000 + 40,000

= 200,000

The total cost of direct materials and labor can be calculated as follows

= 3.5 × 20,000

= 70,000

Therefore the total cost of producing 20,000 windstocks is

= Total overhead cost + total cost of direct materials and labor

= 200,000 + 70,000

= $270,000

Hence the total cost of producing 20,000 windstocks is $270,000

5 0
3 years ago
Elite Trailer Parks has an operating profit of $307,000. Interest expense for the year was $32,000; preferred dividends paid wer
ollegr [7]

Answer:

a. $8.33

$1.95

b.$136,500

Explanation:

The computation of earnings per share and the common dividends per share is shown below:-

a. Earning per share = Earnings Available to Common Stockholders ÷ Number of Shares of Common Stock Outstanding

= $178,300 ÷ 21,400

= $8.33

Dividends per Share = $41,800 ÷ 21,400

= $1.95

b. Increase in retained earnings = Operating Profit (EBIT) - Interest expense - Taxes - Preferred dividends - Common dividends

= $307,000 - $32,000 - $65,100 + $31,600 + $41,800

= $136,500

We simply applied the above formulas

7 0
3 years ago
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