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loris [4]
3 years ago
5

Ten years ago, Jacobson Recovery purchased a wrecker for $285,000 to move disabled 18-wheelers. He anticipated a salvage value o

f $50,000 10 years after the initial purchase. During this time his average annual revenue totaled $52,000. (a) Was his investment economically justified at a 12% discount rate
Business
1 answer:
expeople1 [14]3 years ago
7 0

Answer:

NPV    =  $24,910.26  

The investment is economically justified because it increases the wealth pg Jacobson Recovery by   $24,910.26

Explanation:

To determine whether the investment is justifiable we will compute the the Net present Value of the project

The Net present value (NPV) is the difference between the Present value (PV) of cash inflows and the PV of cash outflows. A positive NPV implies a good and profitable investment project and a negative figure implies the opposite.  

NPV = PV of cash inflows - PV of cash outflows  

<em />

<em>PV of cash  average revenue = A × (1-(1+r)^(-n))/r</em>

A- average revenue, r- discount ate- 12% , n- number of years- 10

PV of reveue = 52,000 × (1-(1.12)^(-10)/0.12= $293,811.60

<em>PV of salvage value = F × (1+r</em><em>)</em><em>^(-n)</em>

                                 = 50,000 × 1.12^(-10)

                                  = 16,098.66183

NPV = $293,811.60 + 16,098.66183  - $285,000

         =  $24,910.26  

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Igoryamba

Answer:

a. Kantianism

Explanation:

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According to this theory ,

Good deeds and duty are the crucial elements  in order to determine the action which need to be taken .

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5 0
3 years ago
In a statement of cash flows, which of the following would be classified as an investing activity?
Elanso [62]

Answer:

C. The sale of equipment.

Explanation:

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Hence, the correct option is C.

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3 years ago
Berry Corporation has 50,000 shares of $10 par common stock authorized. The following transactions took place during 2012, the f
mojhsa [17]

Answer:

$285,000

Explanation:

Please see attachment

5 0
3 years ago
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6 0
3 years ago
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its mo
Arisa [49]

Answer:

Wingate Company

1. A Contribution Format Income Statement for divisions:

2a. Increase monthly advertising for the West Division by $28,000 to increase its sales by 12%

                                    East          Central        West          Total

Sales                   $412,000  $670,000   $520,000 $1,602,000

Variable exp.         181,280     207,700      166,400      555,380

Contribution

          margin    $230,720    462,300    353,600    1,046,620

Fixed expenses  290,000    332,000     191,000       813,000

Non-Traceable

    Fixed Expenses                                                       338,000

Net operating Income

  (loss)               ($59,280)  $130,300  $162,600   ($104,380)

2b. How much Company's Net Operating Income Increase (Decrease) with the implementation of the above Proposal:

Net operating income before advert = $162,600

Division's net operating income after advert = $160,366

Therefore, the company's net operating loss will increase by $2,234

Explanation:

a) Wingate Company's recent monthly contribution format Income Statement:

Sales                                    $ 1,602,000

Variable expenses                    555,380

Contribution margin               1,046,620

Fixed expenses                        1,151,000

Net operating income (loss) $ (104,380)

b) Division West's Income Statement:

Sales                                 $582,400 ($520,000 x 1.12)

Variable expenses             203,034  ($181,280 x 1.12)

Contribution margin        $379,366

Fixed Expenses                 219,000 ($191,000 + 28,000)

Net Operating Income    $160,366

c) If sales value increases by 12%, the variable expenses will increase proportionately, unless there is an increase in the price, which will ultimately reduce demand, further depressing the sales value.  This is why it is called Variable Cost.  Therefore, a different result will be obtainable if the variable expenses are held constant, contrary to its behavior.

4 0
3 years ago
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