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LenKa [72]
3 years ago
14

Your buddy in mechanical engineering has invented a money machine. The main drawback of the machine is that it is slow. It takes

one year to manufacture $100. ​However, once​ built, the machine will last forever and will require no maintenance. The machine can be built​ immediately, but it will cost $1,000 to build. Your buddy wants to know if he should invest the money to construct it. If the interest rate is 9.5% per​ year. a. What should your buddy​ do? b. What is your advice if the machine takes one year to​ build?
Business
1 answer:
m_a_m_a [10]3 years ago
5 0

Answer:

 

Explanation:

a ) We shall calculate the NPV of the project . If it is positive , then money can be invested

Cash outflow in the beginning =1000

Present value of perpetual annuity of 100 at 9.5 %

100 / .095

= 1052.63

which is more than initial cash outflow

So NPV is positive

Hence money can be invested.

b )

If machine takes one year to build , first year cash outflow of 100 will be absent

Present value of 100 after 1 year

= 100 / 1.095

= 91.32

So present value of annuity

= 1052.63 - 91.32

= 961.31

This is less than 1000 so

NPV is negative.

Hence money can not be invested.

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The allowance for doubtful accounts currently has a debit balance of $200. The company's management estimates that 2.5% of net c
lidiya [134]

Answer:

Bad debt expense (w/o allowance) = $2,875

Bad debt expense ( with allowance) = $2,675.

Explanation:

According to the scenario, the given data are as follows:

Net credit sales = $115,000

Uncollectible percentage = 2.5%

So, we can calculate the bad debt expense without Allowance for doubtful accounts by using following method:

Bad debt expense ( W/o allowance) = $115,000 × 2.5%

= $2,875

After Allowance for doubtful expense

Bad debt expense = $2,875 - $200

= $2,675

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3 years ago
If merchandise was returned under the periodic inventory method, this will be recorded with a A. debit to Accounts Payable and a
Nonamiya [84]
The answer would be a.
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3 years ago
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A company makes $200,000 in a year and has $150,000 in production costs, leaving them with $50,000. The $200,000 represents
NeX [460]

Answer:

The $200,000 represents the revenue and the $50,000 represents the profit.

Explanation:

4 0
2 years ago
Why might a town decide to issue bonds?
Sophie [7]
A town might decide to issue bonds to B) to build new roads or bridges. A town will achieve a specified amount of money by issuing the bond and there must be an obvious source for returning the bond value until its maturity date. Therefore, building projects or other projects related to the town's infrastructure would be the most appropriate reason for a town to issue bonds.
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3 years ago
Arturo would incur an opportunity cost of 36 burritos if he increased his production of tacos by :__________
IrinaK [193]

Arturo would incur an opportunity cost of 36 burritos if he increased his production of tacos by 27

<h3>How to find the opportunity cost</h3>

opportunity cost of Burritos

= 400 / 300

= 1.33

The opportunity cost of Tacos

300 / 400

= 0.75

For the tacos produced we would have

opportunity cost of tacos x opportunity cost that was incurred

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= 27

Hence we would conclude by saying that Arturo would incur an opportunity cost of 36 burritos if he increased his production of tacos by 27

Read more on opportunity cost here: brainly.com/question/1549591

#SPJ1

complete question

The complete question for this particular question is in the attachment (picture)

7 0
1 year ago
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