A manager must make a decision on shipping. There are two shippers, A and B. Both offer a two-day rate: A for $526 and B for $53
2. In addition, A offers a three-day rate of $470 and a nine-day rate of $411, and B offers a four-day rate of $459 and a seven-day rate of $412. Annual holding costs are 34 percent of unit price. Three hundred and fourty boxes are to be shipped, and each box has a price of $148. Which shipping alternative would you recommend? (Round your intermediate calculations to 3 decimal places and final answers to 2 decimal places. Omit the "$" sign in your response.) A B Option Cost Option Cost 2 days $ 2 days $ 3 days $ 4 days $ 9 days $ 7 days $ a. Ship three-day using A b. Ship two-day using B c. Ship four-day using B d. Ship seven-day using B e. Ship two-day using A
1 answer:
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Answer:
The firm should pay $46907.57 for the given project.
Explanation:
Given information:
Return = $15000 annually
Time = 5 years
Opportunity cost = 18%
The formula for payment is
where, R is return, OC is opportunity cost, t is time in years.
Substitute R=15000, t=5 and OC=0.18 in the above formula.
Therefore the firm should pay $46907.57 for the given project.