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3 years ago

Your company is trying to decide which of the two following devices should be selected.

Business

1 answer:

jeyben [28]3 years ago

7 0

Answer:

a) Find the attached jpeg file for the cash flow diagram

b) The company should purchase Device B.

Explanation:

a) Draw cash flow diagram for each option

A project cash flow diagram is a tool that is used to present a visual representation of the cost of a project and cash it is expected to generate over a specified period of time. On the diagram, x-axis represents the year, and y-axis represents cash out flows and/or inflows.

Note: See the attached jpeg for the cash flow diagram.

b) If interest rate is 7%, which device should your company purchase?

To determine this, we compare the Net Present Value (NPV) of the 2 devices.

Note: See the attached excel file for the calculation of the NPVs of the two devices.

From the attached excel file, we have:

NPV of Device A = $230

NPV of Device B = $262

Decision: Since $262 NPV of Device B is greater than the $230 NPV of Device A, <u>the company should purchase Device B.</u>

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3 years ago

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3 years ago

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3 years ago

Wisseman Corporation is a shipping container refurbishment company that measures its output by the number of containers refurbis

Serjik [45]

Answer:

VARIANCE for Total Expenses = $3,000 F

Explanation:

PLANNING Budget:

Container Refurbished = 28

Employee salaries and wages = $55,100 + $900x(28) = $55,100 + $25,200 = $80,300

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Other expenses = $41,200

Total Expenses = $80,300 + $16,800 + $41,200 = $138,300

FLEXIBLE Budget:

Container Refurbished = 26

Employee salaries and wages = $55,100 + $900x(26) = $55,100 + $23,400 = $78,500

Refurbishing materials = $600x(26) = $15,600

Other expenses = $41,200

Total Expenses = $78,500 + $15,600 + $41,200 = $135,300

VARIANCE for Total Expenses:

VARIANCE = PLANNING Budget - FLEXIBLE Budget = $138,300 - $135,300 = $3,000 F

Since Planning Budget is greater than Flexible Budget, the change is favorable (F)

Hope this helps!

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4 years ago