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Otrada [13]
3 years ago
10

Knowledge Check 01 Addison Corporation is considering the purchase of equipment that would increase sales revenues by $250,000 p

er year and cash operating expenses by $100,000 per year. The equipment would cost $400,000 and have a 5-year life with no salvage value. The simple rate of return on the investment is closest to ________. 17.5% 20.0% 25.5% 35.0%
Business
2 answers:
VashaNatasha [74]3 years ago
6 0

Answer:

The answer is 17.5%

Explanation:

Using Accounting Rate of Return (ARR)

ARR= Average Annual Accounting Profit/Average Investment ×100%

ARR = 70,000/400,000× 100% = 17.5%

Average Accounting Profit ?

                                                                $

Sales Revenue                                  250,000

Cash Operating Expenses               <u>(100,000)</u>

Cash flow                                            150,000

Depreciation Charge (See working)<u> 80,000 </u>

Average Accounting Profit              <u> 70,000  </u>

Average Investment cost =$400,000 (Since scrap value is nil)

Working

Depreciation ( Using straight line method)

Annual charge =400,000/5 yrs  = $ 80,000.

ARR is used to measure relative project profitability .It is relative simple to calculate and interpret by the management.

It however ignores time value of money which is one of its greatest limitation.

eduard3 years ago
3 0

Answer:

the simple rate of return on the investment is closest to

15.2%

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Assessment
Goryan [66]

Answer:

You must decline the transaction for the following reasons:

A customer may not purchase more than $2,000 in prepaid cards within a 24-hour period.

Customer ID must be a valid (not expired) government issued photo ID (US or Canadian  issued driver's license, state ID, passport; US military ID, US Territory ID)

Customers may not purchase more than $250 at the assisted check out (ACO).

Explanation:  

A customer may not purchase more than $2,000 worth of prepaid products in one business day.

POS will prompt cashiers for an ID at $300:

POS will prompt cashiers to scan or manually enter a valid ID for purchases  at   $300.

Customers may not purchase more than 10 prepaid cards in one day.

Customers may not purchase more than $250 at the assisted check out (ACO).

Managing our prepaid card limits on a daily basis is run, similar to our money order process. The 2,000 daily limits for prepaid/gift cards is accomplished through a partnership with  APPRISS.

 Note :

The POS Register does not allow a single transaction over $2,000 to ensure CVS/pharmacy is in compliance with federal regulations.

Breaking up transactions to allow the purchase of more than $2,000

in prepaid products to one customer, couple or group is strictly against CVS/pharmacy policy and may result in disciplinary action up to, and including, termination of employment.

6 0
3 years ago
sells one-year online subscriptions for viewing classic movies. Customers are required to pay for the subscription at the beginn
lesya [120]

Answer:

a. Debit deferred revenue and credit service revenue for $9000.

Explanation:

Note: The full question is attached as below

Subscription earned for 9 months = $12000 / 12 * 9

Subscription earned for 9 months = $9,000

Date                 Account titles              Debit    Credit

Dec 31, 2021    Deferred revenue       $9,000

                             To Service revenue                $9,000

4 0
2 years ago
n an attempt to have funds for a down payment in five years, James Dupont plans to save $3,800 a year for the next five years. W
Galina-37 [17]

Answer:

$20,582.03

Explanation:

For this question, we have to determine the future value that is shown on the attachment. Kindly find it below:

Data provided in the question

NPER = 5 years

PMT = $3,800

Rate of interest = 4%

PV = $0

The formula is shown below:

= -FV(Rate;NPER;PMT;PV;type)

So, after solving this, the future value is $20,582.03

6 0
3 years ago
Consider a 7-year bond with a 9% coupon and a yield to maturity of 12%. If interest rates remain constant, one year from now the
Llana [10]

Answer:

(C) Higher.

Explanation:

The computation of the present value in both the cases are as follows:

In the first case

Given that

Assume the par value i.e. future value be $1,000

PMT = $1,000 × 9% = $90

RATE = 9%

NPER = 7

The formula is shown below

=-PV(RATE;NPER;PMT;FV;TYPE)

After applying the above formula, the present value is $863.09

In the second case

Given that

Assume the par value i.e. future value be $1,000

PMT = $1,000 × 9% = $90

RATE = 9%

NPER = 6

The formula is shown below

=-PV(RATE;NPER;PMT;FV;TYPE)

After applying the above formula, the present value is $876.66

So as we can see that the price of the bond would increased

5 0
3 years ago
The price elasticities of supply and demand affect A. the tax incidence but not the size of the deadweight loss from a tax. B. b
stira [4]

Answer:

B. both the size of the deadweight loss from a tax and the tax incidence

Explanation:

The price elasticities of demand & supply are : buyers' & sellers' - demand & supply responsiveness to price change.

On levy of indirect tax - whose burden can be shared between buyers & sellers ; it affects tax incidence & deadweight loss both :-

  • More tax burden shifts on buyers if demand is more inelastic, more tax burden shifts on sellers if supply is more inelastic.
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4 0
3 years ago
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