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pshichka [43]
3 years ago
15

A manufacturing company is considering a capacity expansion investment at the cost of $258,388 with no salvage value. The expans

ion would enable the company to produce up to 26,241 parts per year and the useful life of the additional capacity is seven years. Each part would generate $2.43 net profit and annual operating and maintenance costs are estimated at $28,599 per year. The market demand for the parts is unlimited, all parts produced will be sold. The MARR of the firm is 10%. The minimum annual production rate to make this investment justifiable is:

Business
1 answer:
Jobisdone [24]3 years ago
4 0

Answer:

33,610.42  units

Explanation:

For computing the minimum annual production rate first we have to determine the annual worth by using the PMT formula which is shown below:

Given that

Present value = $258,388

Interest rate = 10%

NPER = 7 years

Future value = $0

The formula is shown below:

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

The present values comes in a negative

After solving this, the annual worth is $53,074.32

And, the annual operating maintenance cost is $28,599

So, the revenue should be

= $53,074.32 + $28,599

= $81,673.32

Now the minimum annual production rate is

= $81,673.32 ÷ $2.43

= 33,610.42  units

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(7.23 million/ 37.93 million ) x $7.5860 million = $1.446 million

I hope my answer helps you

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6 0
3 years ago
Avery Company has two divisions, Polk and Bishop. Polk produces an item that Bishop could use in its production. Bishop currentl
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Answer and Explanation:

a. The computation of operating profit is shown below:-

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= $15 - $7

= $8

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= $8 × 24,000

= $192,000

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4 years ago
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the demand curve for the bonds shifts to the left and the interest rate rises

when the market is volatile , then the risk associated with the bond is very high . there is an inverse relation ship between risk and demand. when the risk is high, the demand for the bond decrease and the demand curve shifts to the left. also there is an inverse relation ship between the demand and interest rate. hence, when the demand decrease , the interest rate on the bond rises

the explanation for correct option because of an inverse relationship between the risk demand and demand interest rate, the interest rate cant fall when the demand curve shift to the left and when the risk is high , the demand curve shifts to the left only, not to the right .

Learn more about demand curve here.

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