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Rainbow [258]
3 years ago
6

The maintenance expense (paid at the end of the year) on a machine, with 6 years of useful life, is expected to be (in constant

dollars of year 0) $5,000 during the first year and to increase (in constant dollars) $500 each year for the following five years. The average inflation rate for the next 6 years is calculated to be 3%. What is the equivalent equal annual maintenance cost (in actual dollars) for the machinery if the interest rate is 8%
Business
1 answer:
Amanda [17]3 years ago
7 0

Answer: $1387.5

Explanation:

Given data:

Useful life of the machine = 6years

Inflation for the 6years period = 3%

Interest rate = 8%.

Cost of maintenance = $5000

Yearly increments = $500 for five years.

Solution:

Total cost of maintenance for five years

= cost of maintenance + yearly increments x 5

= $5000 + $500(5)

= $5000 + $2500

= $7500.

Interest rate on the machinery = 8%

= 0.08 x $7500

= $600

Inflation rate

= 0.03 x 7500

= $225

Equal yearly maintenance cost

= $7500 + $600 + $225/ 6

= $8325/6

= $1387.5

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spayn [35]

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Return on Asset is expressed as a percentage of the total return an organization generates in relation to its total assets. The return on asset calculation formula is.

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8 0
2 years ago
Sunny Corporation began the year with cash of $ 142 comma 000 and land that cost $ 47 comma 000. During the year Sunny earned se
Dmitry [639]

Answer:

How much net income​ (or net​ loss) did Sunny experience for the​ year?

Net loss 6000

Explanation:

Cash 142.000

Land 47.000

 

Revenue    285.000

Salaries          185.000

Rent            81.000

Utilities            25.000

Net loss     -6.000

6 0
3 years ago
Burton Company uses a normal costing system. The company uses direct labor-hours as the cost-allocation base. The following info
densk [106]

Answer:

the allocated direct manufacturing overhead costs of Job 56 is $25

Explanation:

Overheads in manufacturing process are allocated to jobs or products using cost drivers or surrogates.

<em><u>First Step : Determine the Pre-determined Overhead rate</u></em>

Pre-determined Overhead rate = Budgeted Overheads / Budgeted Activity

                                                    = $2,000 / 800

                                                    = $ 2.50 per labor hour

<em><u>Step 2 : Determined the Amount of Overhead allocated to Job 56 based on labor hours utilised</u></em>

Overhead for Job 56 = Pre-determined Overhead rate × Hours Used

                                     = $ 2.50 × 10

                                     = $25

3 0
3 years ago
An outside supplier has offered to make the part and sell it to the company for $25.10 each. If this offer is accepted, the supe
gogolik [260]

Missing information:

Corporation makes 5,700 units of part U13 each year. This part is used in one of the company's products. The company's Accounting Department reports the following costs of producing the part at this level of activity: Per Unit Direct materials $9.60 Direct labor $7.80 Variable manufacturing overhead $10.20 Supervisor's salary $5.90 Depreciation of special equipment $8.80 Allocated general overhead $8.00 An outside supplier has offered to make and sell the part to the company for $25.10 each.

Answer:

annual financial advantage of purchasing part from outside vendor = $73,380  

Explanation:

current production costs per unit:

  • direct materials $9.60
  • direct labor $7.80
  • variable manufacturing overhead $10.20
  • supervisor's salary $5.90
  • depreciation of special equipment $8.80
  • allocated general overhead (fixed) $8.00
  • total current costs per unit = $50.30
  • total costs $50.30 x 5,700 units = $286,710

costs if company decides to purchase the part form outside vendor:

  • purchase cost per unit $25.10
  • deprecation of special equipment $8.80
  • allocated general overhead $8.00
  • total costs per unit = $41.90
  • total costs $41.90 x 5,700 = $238,830
  • - revenue generated from using facility space = $238,830 - $25,500 = $213,330

annual financial advantage of purchasing part from outside vendor = $286,710 - $213,330 = $73,380  

4 0
3 years ago
Suppose that short-term municipal bonds currently offer yields of 4%, while comparable taxable bonds pay 5%. Which gives you the
daser333 [38]

Answer:

1.Taxable bonds

2Taxable bonds

3.They have the same after-tax yield

4.

municipal bond

Explanation:

The missing tax brackets are zero,10%,20% and 30%

Zero % tax rate:

municipal bond pays 4%

taxable bonds after tax yield=5%*(1-0)=5%

10% tax rate

municipal bond pays 4%

taxable bond after tax yield=5%*(1-10%)=4.5%

20% tax rate

municipal bond pays 4.0%

taxable bond after tax yield=5%*(1-20%)=4.0%

30% tax rate

municipal bond pays 4.0%

taxable bond after tax yield=5%*(1-30%)=3.50%

8 0
3 years ago
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