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netineya [11]
2 years ago
13

A new machine can be purchased today for $450,000. The annual revenue from the machine is calculated to be $72,000, and the equi

pment will last 10 years. Expect the maintenance and operating costs to be $4500 a year and to increase $750 per year. The salvage value of the machine will be $35,000. What is the rate of return for this machine
Business
1 answer:
shutvik [7]2 years ago
6 0

Answer:

7.98%

Explanation:

The Rate of Return (ROR) is the gain or loss of an investment over a period of time compared to the initial cost

Starting year 2, Annual O&M cost in year N = Annual O&M cost in year (N - 1) + $750

Annual net benefit  = Annual revenue - Annual O&M cost

In year 10, Annual revenue ($) = 72,000 + 35,000 salvage value = 107,000

Rate of Return (ROR) of Annual net benefit is computed using Excel11 IRR function as follows.

Year (N) Revenue ($) Cost ($) NAB ($)

0                                     4,50,000 -4,50,000

1               72,000 4,500 67,500

2               72,000 5,250 66,750

3               72,000 6,000 66,000

4               72,000 6,750 65,250

5               72,000 7,500 64,500

6               72,000 8,250 63,750

7               72,000 9,000 63,000

8               72,000 9,750 62,250

9               72,000 10,500 61,500

10              1,07,000 11,250 95,750

ROR of NAB = 7.98%

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Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA). Johnny's cumulative GPA will fall even furt
Debora [2.8K]

Answer: B

Explanation:

With the options given, Johnny can only perform worse if he performs worse than his cumulative GPA and also if he performed less than he ever performed before. The last option about Johnny's performing worse than last semester might not necessarily have an effect on his GPA. A cumulative GPA is the total GPA Johnny has gotten since he started school. The last semester might be one of his best semesters and probably had a good result so getting a result slightly lower than his last semester might not necessarily mean there will be a reduction in his cumulative GPA. So option B is correct.

6 0
3 years ago
The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 1
SOVA2 [1]

Answer:

$287.01

Explanation:

The 2 stage dividend discount model would be used to determine the current value of the stock.

first stage

Present value in year 1 = (1.6 x 1.16) / 1.071 = 1.73

Present value in year 2 = (1.6 x 1.16²) / 1.071² = 1.88

Present value in year 3 = (1.6 x 1.16³) / 1.071³ =2.03

Present value in year 4 = (1.6 x 1.16^4) / 1.071^4 = 2.20

second stage

[ (1.6 x 1.16^4) x (1.06) ] / (0.071 - 0.06) = 279.17

Value of the stock = 1.73 + 1.88 + 2.03 + 2.20 + 279.17 = $287.01

4 0
2 years ago
Sharp Screen Films, Inc., is developing its annual financial statements at December 31, the current year. The statements are com
elena-s [515]

Answer:

Detailed step-wise solution in tabular form is given below:

4 0
3 years ago
In early 2018 businesses bought more inventory, increasing GDP. What would happen
puteri [66]

Answer:

If a company increases its final goods inventory level, that will increase the country's GDP even if the goods are not sold during the current period (they will be sold in future periods). Increases in inventory level are considered part of Investment component of the GDP.

If the inventories are not sold during the year (2018) and if they continue to be  unsold during part of 2019, that will negatively affect the GDP because fewer goods will be purchased to replenish these inventories and the market price of the goods will also decrease. The market price of goods is determined by the supply and demand. If the supply is much higher than the demand and inventories start to pile up, their price will decrease in order to increase the quantity demanded. If the volume of the goods in inventory is significant enough, this should lower the inflation rate.

4 0
3 years ago
Racing Motors wants to save $825,000 to buy some new equipment three years from now. The plan is to set aside an equal amount of
Salsk061 [2.6K]

Answer:

It will have to save 51,224.05 to reach their financial goal of 825,000 in thre years at the given market rate

Explanation:

We have to solve for the annuity-due future value installment

FV \div \frac{(1+r)^{time} -1}{rate}(1+r) = C\\

FV $825,000.0000

time 12 (4 quartes x 3 years )

rate 0.0445

825000 \div \frac{1-(1+0.0445)^{-12} }{0.0445} = C\\

C  $ 51,224.043

8 0
3 years ago
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