Answer:
correct option is $12,668
Explanation:
given data
net present value = $85,000
time = 10 year
rate of return = 8%
solution
we apply here formula for Present Value of annual additional cash flow that is
Present Value of annual additional cash flow = Annual cash flow × present value factor for an annuity ............................1
put here value
$85,000 = Annual cash flow × 6.71
Annual cash flow = $12,668
so here correct option is $12,668
Answer:
$75
Explanation:
Calculation to determine what selling price will the company be indifferent between accepting and rejecting the special order
Using this formula
Selling price between accepting and rejecting the special order= ( Additional cost ÷ Units sold number) + Unit level Cost
Let plug in the formula
Selling price between accepting and rejecting the special order= ( $15,000 ÷ 500 ) + $45
Selling price between accepting and rejecting the special order= $30 + $45
Selling price between accepting and rejecting the special order= $75
Therefore The selling price that the company will be indifferent between accepting and rejecting the special order is $75
Answer:
It is more profitable to continue processing the units.
Explanation:
Giving the following information:
Product A:
Units= 23,000
Selling price= $420,000
Continue processing:
Product B= 6,000 units sold for $106 each
Product C= 11,900 units sold for $52 each
Total cost= $280,000
We need to calculate the effect on the income of both options and choose the most profitable on<u>e. We will not take into account the first costs of Product A because they are irrelevant.</u>
Option 1:
Effect on income= $420,000
Option 2:
Effect on income= (6,000*106) + (11,900*52) - 280,000
Effect on income= $974,800
It is more profitable to continue processing the units.
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