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Dvinal [7]
3 years ago
11

Crane Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on lar

ge homes and commercial properties. Last year, Crane Roofing spent $73,200 refurbishing the lift. It has just determined that another $39,000 of repair work is required. Alternatively, it has found a newer used lift that is for sale for $166,500. The company estimates that both lifts would have useful lives of 6 years. The new lift is more efficient and thus would reduce operating expenses by about $24,400 per year. Crane Roofing could also rent out the new lift for about $10,000 per year. The old lift is not suitable for rental. The old lift could currently be sold for $24,500 if the new lift is purchased.
Prepare an incremental analysis for the life of the machines showing whether the company should replace the equipment.
Business
1 answer:
Novay_Z [31]3 years ago
8 0

Answer:

The company should replace the equipment.

Explanation:

The cost analysis is calculated as follows;

                         Retain                Replace                 Net Income

                                     Equipment        Equipment         Increase (Decrease)

Operating expenses     $146,400                0                      $146,400

($24,400*6)  

Repair costs            $39,000                 0                    $39,000

Rental revenue                      0                 -$60000              $60,000

($10,000*6)  

New machine cost              0                $166,500            -$166,500

Sale of old machine   0               -$24,500              $24,500

Total cost                  $185,400   $82,000               $103,400

From the calculation above, the equipment should be replaced as it incur a lesser cost compare to when it is retained.

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Answer:B. Opponents of active stabilization policy believe that significant time lag in both fiscal and monetary policy often excercebate economic fluctuations.

C. Advocate of active stabilization policy believe that the government can adjust monetary and fiscal policy to counter waves of excessive optimism and pessimism among consumers and business.

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A. Corporate income taxes

B. Personal income taxes

Explanation:

Stabilization policy helps to stabilize the economy during expansionary or deficit period however a lag in the implementation will surely affect getting the right outputs from the implementation.

The economy has inbuilt stabilizer s that tend to correct excessiveness in economy such as the personal and corporate tax . The federal fund rate will be adjusted as the need be to stabilizer the economy even though it can be used as a stabilizer but it's not an automatic stabilizer.

5 0
3 years ago
How are business entrepreneurs and social entrepreneurs different?
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Both approaches fulfill a need in the market and aim to earn a sustainable profit. The main difference is that social entrepreneurship focuses beyond simply generating a profit, and measures its performance on the positive impact the business makes on society – whether social, cultural or environmental.

5 0
2 years ago
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Suppose Tim spends his entire income on hot dogs and hamburgers and consumes at least some of both. Now suppose that the price o
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7 0
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Match the statements below with the appropriate terms by entering the appropriate letter code in the spaces provided. Terms:A. P
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