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Ira Lisetskai [31]
3 years ago
10

Short Company purchased land by paying $11,000 cash on the purchase date and agreed to pay $11,000 for each of the next six year

s beginning one-year from the purchase date. Short's incremental borrowing rate is 7%. On the balance sheet as of the purchase date, after the initial $11,000 payment was made, the liability reported is closest to: (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided.)
Business
1 answer:
sergeinik [125]3 years ago
7 0

Answer: $‭52,431.5‬0

Explanation:

The liability reported will be the present value of the six payments of $11,000.

Since this is a constant amount, it will be an annuity:

= 11,000 * Present value interest factor of an annuity, 6 years, 7%

= 11,000 * 4.7665

= $‭52,431.5‬0

<em>Any difference between this and any options given is down to rounding errors. Pick the closest figure. </em>

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Answer and Explanation:

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The  standard deviation of daily demand  = 4 quarts

based on the above information

Overage cost = (Co) is

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= $3.00 - $1.50

= $1.50

Now

Underage cost= (Cu)

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So,  

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= 50%

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At 50 % service level, the value of Z is 0

So,

Optimal stocking level is

= d + Z × standard deviation

= 35 + (0  × 4)

= 35 + 0  

= 35 quarts

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