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LuckyWell [14K]
3 years ago
7

A local government awards a landscaping company a contract worth $1.5 million per year for five years for maintaining public par

ks. The landscaping company will need to buy some new machinery before they can take on the contract. If the cost of capital is 6%, what is the most that this equipment could cost if the contract is to be worthwhile for the landscaping company
Business
1 answer:
KIM [24]3 years ago
5 0

Answer:

The equipment should not cost more than  $6,318,545.68  

Explanation:

The most that the land scrapping equipment could cost is the present of the 1.5  million annuity discounted at 6% p.a.

Present Value of Annuity = A × ( 1- (1+r)^(-n))/r

A- 1,500,000, n- 5, r- 6%

=1, 500,000 × ((1.06)^(-5))/0.06

= $6,318,545.68  

The equipment should not cost more than  $6,318,545.68  

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Aleksandr-060686 [28]

Answer:

Y= 6000 + 0.75X

Explanation:

High and low cost technique

Using the a high and low technique, total cost can be analysed and separated into fixed and variable portion. This analysis helps in the forecast of cost and therefore important for the preparation of budget.

<em>Variable cost of maintenance</em>

= (Cost at high activity - Cost at low activity)/ (high activity - low activity)

VC per act. = ( $15000 - $12000)/(12,000-8000)

                   = $0.75 per activity

<em>Fixed cost of maintenance</em>

= Total cost at high activity - (VC per act × high activity)

=  $15,000 - ( $0.75 ×  12,000)

=   $6,000

The cost formula will be:

Y= 6000 + 0.75X

Where Y = maintenance cost, X= level of activity

6 0
3 years ago
Which of the following is a person who authorized an agent to act on his or her behalf ​
lina2011 [118]

Answer:

Principal

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8 0
3 years ago
Break-Even Point
11111nata11111 [884]

Answer:

The right answer is:

(a) 5916 units

(b) 5046 units

Explanation:

Given:

Sales,

= $59

Variable cost,

= $30

Fixed cost,

= $171,564

Increased sale,

= $64

Now,

(a)

Contribution margin will be:

= Sales - Variable \ cost

= 59-30

= 29 \ per \ unit ($)

hence,

Breakeven will be:

= \frac{Fixed \ cost}{Contribution \ margin}

= \frac{171564}{29}

= 5916 \ units

(b)

Contribution margin will be:

= Sales-Variable \ cost

= 64-30

= 34 \ per \ unit ($)

hence,

Breakeven will be:

= \frac{Fixed \ cost}{Contribution \ margin}

= \frac{171564}{34}

= 5046 \ units

5 0
2 years ago
TB MC Qu. 08-104 Marlow Company purchased a point of... Marlow Company purchased a point of sale system on January 1 for $3,400.
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Answer:

$680

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When some one or something solves  the problem
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