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Alona [7]
2 years ago
12

"A forklift will last for only 2 more years. It costs $5,000 a year to maintain. For $20,000 you can buy a new lift that can las

t for 10 years and should require maintenance costs of only $2,000 a year." a. Calculate the equivalent cost of owning and operating if the discount rate is 4% per year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. Calculate the equivalent cost of owning and operating if the discount rate is 12% per year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. Should you replace the forklift?
Business
1 answer:
BabaBlast [244]2 years ago
5 0

Answer:

a. $2,465.82

b. $3,539.68

c. Yes, we should

Explanation:

Annual cost to maintain old forklift is $5,000

Equivalent Annual Cost (EAC) of new forklift = (Asset price x discount rate)/(1-(1+discount rate)-n), in which n is the number of year for usage of this forklift?

If discount rate is 4% per year, the EAC of new forklift is $2,465.82  

= ($20,000x4%)/(1-(1+4%)-10)

If discount rate is 12% per year, the EAC of new forklift is $3,539.68  

= ($20,000x12%)/(1-(1+12%)-10)

We should replace because with such above discount rate, the old forklift is more costly than the new one

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Select the items that describe how business investments can cause economic growth.
NikAS [45]
Investments can lead to more demand for goods. Investment means an increase in capital spending and is a component of Aggregate Demand (AD), if there is an increase in investment it will help to boost AD and therefore economic growth.
4 0
3 years ago
A one-year call option contract on Cheesy Poofs Co. stock sells for $1,330. In one year, the stock will be worth $65 or $86 per
givi [52]

Answer:

$98.02

Explanation:

Data provided in the question:

Value of contract = $1,330

Maximum value = $86

Minimum value = $65

Exercise price = $78

Risk-free rate = 3%

Now,

Current value of stock = (\frac{\text{Maximum value-Minimum value}}{\text{Maximum value-Exercise price}}\times\text{Call price})+(\frac{\text{Maximum value }}{\text{1+Risk-free rate}})

also,

a standard contract has 100 shares

thus,

Call price = Value of contract ÷ 100 shares

or

Call price = $1,330 ÷ 100  = $13.30

Thus,

Current value of stock = (\frac{\text{86-65}}{\text{86-78}}\times\text{13.30})+(\frac{\text{86}}{\text{1+0.03}})

or

Current value of stock = ( 2.625 × $13.30 ) + $63.1068

= $98.0193 ≈ $98.02

6 0
3 years ago
Following are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $12,750 cash an
djyliett [7]

Answer:

Aug 1

Dr Cash $12,750

Dr Photography equipment $54,825

Cr Common stock $67,575

Aug 2

Dr Prepaid insurance $3,500

Cr Cash $3,500

Aug 5

Dr Office supplies $2,423

Cr Cash $2,423

Aug 20

Dr Cash $2,050

Cr Photography fees earned $2,050

Aug 31

Dr Utilities Expense $868

Cr Cash $868

Explanation:

Preparation of general journal entries for the above transactions

Aug 1

Dr Cash $12,750

Dr Photography equipment $54,825

Cr Common stock $67,575

($12,750+$54,825)

Aug 2

Dr Prepaid insurance $3,500

Cr Cash $3,500

Aug 5

Dr Office supplies $2,423

Cr Cash $2,423

Aug 20

Dr Cash $2,050

Cr Photography fees earned $2,050

Aug 31

Dr Utilities Expense $868

Cr Cash $868

3 0
2 years ago
In a given amount of time John can produce either 40 pounds of vegetables or 10 pounds of chicken. In the same amount of time Ge
aleksandrvk [35]

Answer:

Ten pounds of chicken to trade for at least <u>40</u> pounds of vegetables but not more than<u> 50</u> pounds of vegetables

Explanation:

                  Vegetables        Chicken        Trade Off Ratio

John             40                     10                4:1 (40/10) or 1:0.25 (10/40)

George          25                      5                 5:1 (25/5) or 1:0.20 (5/25)

John has comparative advantage in Chicken and George has comparative advantage in Veggies because :

  • John's chicken opportunity cost, in veggies < George (4<5). George's veggies opportunity cost, in chicken < John (0.20<0.25).
  • George is more (5X) productive in veggies than chicken, than John (4X). John is less unproductive in chicken than veggies (1/4th), compared to George (1/5th).  

So,  John will sell Chicken to George & George will sell veggies to John. Gains from trade are when each get trade ratio better than their their own trade off ratio.

  • It implies: John gets >' 4 pounds veggies per chicken pound' and George gets > '0.20 pound chicken per veggie pound'.
  • Unitary method:-  '1chicken : 4veggies' = '10chickens : 40veggies' and '0.20chicken : 1veggie' = '10chickens : 50 veggies' .

7 0
2 years ago
The mandala of jnanadakini shows what kind of balance?
Tems11 [23]

Answer:

radial

Explanation:

step by step explanation

8 0
2 years ago
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