Answer:
The amount to be paid for the contract today = $220,908.32
Explanation:
<em>The amount to be paid for the contract today will be equal to the present value of the annuity of $22,500 payable for 20 years discounted at a rate of 8% per annum.</em>
Present Value = A ×( 1 - (1+r)^(-n))/r
A- 22,500, r- rate of return - 8%, n -no of years 20 years
PV = 22,500 ×( 1-(1.08)^(-20) )/ 0.08
PV = 22,500 ×9.8181
PV = $220,908.32
The amount to be paid for the contract today = $220,908.32
Answer:
The correct answer is straight rebuy.
Explanation:
The straight buyback is a routine, low participation purchase. A minimum of information is needed and consideration of alternatives is not necessary. This type of purchase is handled by the purchasing department and is usually acquired from a list of approved suppliers. Examples of straight repurchase are repeating purchases of office supplies, and small parts.
Answer:
$43
Explanation:
The total cost incurred by the company is made of two classes of cost namely; Fixed and variable cost. While the fixed cost is constant, the variable cost is dependent on the number of tractors produced.
A such,
Fixed cost = $550,000
Variable cost = 22000 × $180 = $396,000
Total cost = $550,000 + $396,000
= $946,000
The average cost per tractor is the result of the ratio of the total cost to the number of tractors
average cost per tractor = $946,000/22,000
= $43
