Based on the cost to produce each unit of the switches and the annual demand, the total costs will be $25,900 more than the cost of purchasing the switches.
<h3>What is the cost of producing the switches?</h3>
This can be found as:
= Variable cost + set up costs + supervisor's salary + opportunity cost of lost rent
= ( (6 + 5 + 4) x 5,000 units) + 45,500 + 41,000 + (3,700 x 12 months)
= $205,900
If they bought the switches at $36, they would cost:
= 36 x 5,000
= $180,000
Its cheaper to buy by:
= 205,900 - 180,000
= $25,900
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Answer: risk
Explanation: 100% satisfaction guarantee is a statement that if a customer of a product (or service) is not satisfied with the item purchased, then the producer will offer a full refund back to the customer. In this case REI allows this option for a period of up to 1 year after the sale was made.
REI utilises this option in an effort to reduce costs attributed to risk. For customers, this is a powerful tool as they are allowed to try the product, while knowing that if they don't like it then they can return it for a full refund. For REI, it increases customer trust as it allows customers to believe that the product is worth the sales price. It also reduces risk as REI is able to test the product out to actual customers and get a feel for if they like it, and what can be improved if needed.
Answer:
Option C Tier 2
Explanation:
the reason is that the tier 2 vendors targets firms that are of medium sizes which means the revenue of such organization ranges between $20m to $1 billion. And this falls under the classification of Enterprise resource planning. According to a market research 200,000 US companies have met the condition for medium sized organization.
The above explanation provides reasons why option C is correct.
Flexible exchange rate systems are calculated according to supply and demand. Every currency decides the type of exchange rate arrangement to uphold.
Answer:
After tax cost of debt is 5.239%
Explanation:
Given:
Face value = $1,000
Bond price = $895
Coupon payments = 0.035×1,000 = $35 (coupon payment is paid semi-annually so 7% is divided by 2)
Maturity = 20×2 = 40 periods
Using bond price formula:
Bond price = Present value of face value + present value of coupon payments
Use excel function =RATE(nper,pmt,PV,FV) to calculate cost of debt.
substituting the values:
=RATE(40,35,-895,1000)
we get Pre-Tax cost of debt = 4.03% semi- annual
Annual rate is 4.03%×2 = 8.06%
Note: PV is negative as bond price is cash outflow.
After tax cost of debt = 8.06(1 - 0.35)
= 5.239%
