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Nikolay [14]
3 years ago
11

Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all invest

ments. The company is considering two different investments. Each require an initial investment of $15,000 and will produce cash flows as follows: End of Year Investment A B 1 $ 8,000 $ 0 2 8,000 0 3 8,000 24,000 The present value factors of $1 each year at 15% are: 1 0.8696 2 0.7561 3 0.6575 The present value of an annuity of $1 for 3 years at 15% is 2.2832 Which investment should Alfarsi choose?
Business
1 answer:
ohaa [14]3 years ago
6 0

Answer:

PV = $18,265.6

Explanation:

We will calculate the present value of the first investment ussing the annuity factor

annuity per year x factor = PV

8,000 x 2.2832 =  18,265.6

Then we calculate the PV of the second investment by multiplying the third year cash flow by the present value of $1 in 3 years

nominal x factor = PV

24,000 x 0.6575 = 15,780

the first alternative PV is higher than the second, so it is a better option

You might be interested in
The adjusted trial balance for China Tea Company at December 31, 2021, is presented below:
olchik [2.2K]

Answer:

Kindly check attached picture

Explanation:

Given the details below

Accounts Debit Credit

Cash $16,000

Accounts receivable 162,000

Prepaid rent 10,000

Supplies 31,000

Equipment 370,000

Accumulated depreciation $129,000

Accounts payable 11,000

Salaries payable 3,500

Interest payable 1,900

Notes payable (due in two years) 37,000

Common stock 210,000

Retained earnings 176,100

Dividends 27,000

Service revenue 360,000

Salaries expense 150,000

Advertising expense 75,000

Rent expense 18,000

Depreciation expense 32,000

Interest expense 2,500

Utilities expense 35,000

Totals $928,500 $928,500

Prepare an income statement for China Tea Company for the year ended December 31, 2021

Kindly check attached picture

8 0
3 years ago
Southern Hydraulic Supply is undertaking a review of their inventory policies. A typical product is a small hydraulic fitting. C
zheka24 [161]

Answer:

$418,550

Explanation:

Steps are shown below:

a. The computation of the economic order quantity is shown below:

= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}

= \sqrt{\frac{2\times \text{52,000}\times \text{\$50}}{\text{\$1.25}}}

= 2,040 units

b. The number of orders would be equal to

= Annual demand ÷ economic order quantity

= $52,000 ÷ 2,040 units

=  25.49 orders

c. The average inventory would equal to

= Economic order quantity ÷ 2

= 2040 units ÷ 2

= 1,020 units

d. The total cost of ordering cost and carrying cost equals to

Ordering cost = Number of orders × ordering cost per order

= 25.49 orders × $50

= $1,275

Carrying cost = average inventory × carrying cost per unit

= 1,020 units × $1.25

= $1,275

So, the total annual cost would be  

= Purchase cost + ordering cost + carrying cost

= $416,000 + $1,275 + $1,275

= $418,550

Purchase cost = Annual demand × cost per unit

                        = 52,000 × $8

                        = $416,000

6 0
3 years ago
Has anyone done the managing payroll quiz for Personal Finance on connexus???
trasher [3.6K]

Answer:

a) withholdings

b) deductions

c) payroll register

d) methods of paying employees

e) commission

f) specific required deductions

g) hourly rate

h) voluntary deductions

i) Salary

j) standard deductions

Explanation:

A)

Withholdings are the amount that is associated with the payroll deductions from an employee's gross wages. The employer does not include withholdings in the employee's paycheck. Instead of adding it to the salary, the amount is transferred to the federal, state, or local government or tax authorities. It also decreases the tax that an employee has to pay during the yearly tax return.

B)

When an employer withholds any amount from an employee's gross salary, such as taxes, insurance, wage responsibilities, saving plans, and child support payments, it refers to deductions. The payroll deduction is also known as involuntary deductions because the employer is withholding the amount. Those deductions are legally deductible; therefore, it is automatic deductions.

C)

A list of periodic reports that enlist the hourly wages, additionals, gross pay, deductions, net pay, and the date of payrolls refers to the payroll register. More precisely, it is a summary of each employee's paycheck throughout a period. It starts with the current quarter's or month's total hourly wages and ends with the net pay of the employee.

D)

The commission is the percentage paid to an employee for his or her additional service provided for the company. For example, a company asks an employee to produce anything over 500 shirts per week will receive 10% additions, if the employee contributes in 510 shirts, he will receive an extra payment, it is commission. The hourly rate is the amount paid to the employee per hour. The salary is the monthly or weekly amount paid to an employee for his periodic contribution towards a business.

E)

The commission is the portion given to an employee for his or her supplementary service rendered for the company. For example, a manager of a firm urges the sales representative to sell $10,000 per month to receive an extra 10% of the total sales. If the sales representative sells $10,000 or more, he will receive an additional fee as a percentage. That percentage refers to the commission.

F)

Specific payroll deduction means deduction from paycheck to meet the obligations of income tax and other required duties. Every individual and corporation whose income is taxable is obliged to pay a tax. In the case of specific payroll deduction, an employee is legally obligated to withhold this money from an employee's payroll check based on federal and state laws. But specifically required deduction is not only used for tax provisions but also used for employee-related benefits like health insurance and short time disability plans that are offered by the employer.

G)

According to the Cambridge dictionary, hourly rate means the amount of money that is charged, paid, or earned for every hour worked. An employer is bound to pay a minimum hourly wage to the employee. It is one of the critical issues as many workers work as a part-time job. Since it is not a fixed job, so monthly or weekly payment is not applicable here. To adjust the amount for every type of employment, whether it is a permanent or temporary hourly rate of wage, is the best solution.

H)

When any deductions from employees salary or wages are not legally binded, those deductions are termed as Voluntary deductions. Voluntary deduction does not need any imposition of law. As it is not legally required, it is offered by the employer for employee's acceptance. This kind of deduction may include health, accident, disability, retirement plans; flexible spending accounts such as parking and transit costs; union dues; and deductions for paycheck advances and other company-sponsored benefits.

I)

Salary is most commonly known as compensations paid by the employer to an employee in return for required job performance. Salary generally paid in fixed intervals for an individual's performance. The intervals may be weekly, monthly, etc. and these are set up by a mutual contract between employer and employee. Salary mainly includes base pay and other benefits,  bonuses, or rises. Salary mainly gives security towards the employee as it is fixed payment for their work performances.

J)

Standard deduction means deduction of some amount of money from the total amount of income to reduce total taxable income. In short, it means a portion of income that is not subject to tax. The amount of one's standard deduction depends on one's filing status, age, or whether one is disabled or claimed as a dependent on someone else's tax return. But all the taxpayers are not qualified to enjoy this provision. Nonresident husbands and wives, married people filing separately whose spouses itemized, and trusts and estates cannot entertain this benefit.

8 0
3 years ago
CRANE COMPANY Adjusted Trial Balance January 31, 2020 Debit Credit Supplies $900 Prepaid Insurance 1,800 Salaries and Wages Paya
GREYUIT [131]

Answer:

beginning supplies 1,600

Explanation:

With the following identity we will sovle for beginning supplies:

beginning + purchases = ending + expense

the left side are the input of supplies

and the right side are the output

we will plug into the formula and solve for beginning supplies

beg + 3,400 = 900 + 900

beg = 3,400 - 900 - 900 =  1,600

4 0
3 years ago
Lacy's Linen Mart uses the retail method to estimate inventories. Data for the first six months of 2019 include: beginning inven
Harman [31]

Answer:

A. $68,200

Explanation:

Retail Cost

Beginning inventory $60,000

$120,000

Plus: Net purchases. $312,000

$480,000

Goods available for sale $372,000

$600,000

Cost to retail percentage = $372,000 ÷ $600,000 = 62%

Less : Net sales

($490,000)

Estimated ending inventory at retail

$110,000

Estimated ending inventory at cost

62% × $110,000 = $68,200

4 0
3 years ago
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