Answer:
c. It eliminates the age of equipment as a factor in ROI computations
Explanation:
As we know that
The formula to compute the return on investment is shown below:
Return on Investment = Net Income ÷ Cost of Investments
Also, the gross value does not includes the depreciation expense, operating expense as the depreciation expense is a non cash expense
Therefore it eliminates the equipment age as a factor for the calculation of return on investment
hence, the correct option is c.
Answer: Yes, the firm should continue to produce in the short run as its revenues cover all of its total variable cost of $16,000.
Explanation:
Given that,
Produces = 3,000 units
Total cost = $36,000
Fixed cost of production = $20,000
price of each good = $10
Total cost = Total fixed cost + total variable cost
$36,000 = $20,000 + Total variable cost
Total variable cost = $36,000 - $20,000
= $16,000
Revenues = 3,000 units × price of each good
= 3,000 × $10
= $30,000
Yes, the firm should continue to produce in the short run as its revenues cover all of its total variable cost of $16,000.
Answer:
Date General Ledger Dr. Cr.
1. September 30 Cash $6,300
Sales Tax Payable $300
Sales $6,000
2. September 30 Cost of Goods Sold $3,900
Merchandise Inventory $3,900
3. October 15 Sales Tax Payable $300
Cash $300
Explanation:
Sales Tax is subject to the price of merchandise. Sales tax is collected by the business on the taxable supplies on the behalf of government and paid to the government.
Sales tax amount = 6,000 x 5% = $300
Cost of Merchandise is recorded as cost of goods sold and deducted from the merchandise inventory.
Answer:
NPV= -$1,172.57
Explanation:
Giving the following information:
Initial investment= $2,500
Cash flow= $1,500
Discount rate= 13%
To calculate the net present value (NPV), we need to use the following formula:
NPV= -Io + ∑[Cf/(1+i)^n]
NPV= -2,500 + (1,500/1.13)
NPV= -1,172.57