2

Two incinerators are being considered by a waste management company. Design A has an initial cost of $2,500,000, has annual oper

Vika [28.1K]

Answer:

Desing A: 23,024,370‬

Desing B: 22,520,274.6

It should purchase desing B as the capitalized cost is lower.

Explanation:

We consider annuity for the overhauls and then, perpetuity to consider this incinerators will last indefinitely.

maintenance cost: 800,000 / 0.05 = 16,000,000

Overhaul:

The company will need to fund 1,250,000 every 5 years. We need to determinate the annuity to obtain this future value:

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

PV 1,250,000

time 5

rate 0.05

$1250000 \div \frac{(1+0.05)^{5} -1}{0.05} = C\\$

C $ $ 226,218.498

Then at perpetuity:

$ 226,218.498 / 0.05 = 4,524,370

Desing A capitalized cost:

2,500,000 + 16,000,000 + 4,524,370 = 23,024,370‬

We do the same for Desing B:

investment: 5,750,000

maintenance: 600,000 / 0.05 = 12,000,000

overhaul:

$3000000 \div \frac{1-(1+0.05)^{-10} }{0.05} = C\\$

C $ 238,513.725

238,513.73/0.05 = 4,770,274.6

Capitalized cost: 5,750,000 + 12,000,000 + 4,770,274.6 = 22,520,274.6‬

8 0

3 years ago

Microsoft and Apple are widely known as technological rivals. When one company comes out with a new laptop, the other is quick t

rewona [7]

Answer: B dominant designs

Explanation:

The dominant design in a product class is, by definition, the one that wins the allegiance of the market place, the one that competitors and innovators must adhere to if they hope to command significant market. A dominant design is often the norm within the market which creates difficulties in other similar products to compete for market share. This often creates a monopoly over alternatives, whereby the only means of competing is to imitate or expand upon the concept.

6 0

3 years ago

Benito's family is thinking of relocating from Los Angeles to Oakland to save money. They set up a budget comparing the cost of

padilas [110]

Answer:

Total monthly saving = $1,315

Explanation:

Given:

Oakland Los Angeles

Cost Housing $565 $1200

Food $545 $655

Health Care $245 $495

Taxes $450 $625

Other Necessities $350 $495

Find:

Total monthly saving

Computation:

Saving in house = $1200 - $565 = $635

Saving in food = $655 - $545 = $110

Saving in health care = $495 - $245 = $250

Saving in taxes = $625 - $450 = $175

Saving in necessities = $495 - $350 = $145

Total monthly saving = $635+$110+$250+$175+$145

Total monthly saving = $1,315

7 0

2 years ago

Read 2 more answers

A rich donor gives a hospital $100,000 one year from today. Each year after that, the hospital will receive a payment 5% larger

wariber [46]

Answer:

D) $779,843.27

Explanation:

The present value of this donation = Donation in Year 1/(1+ discount rate)^9 + Donation in Year 2/(1+ discount rate)^8 + ….. + Donation in Year 2/(1+ discount rate)^1

= $100,000/(1+9%) + $100,000*(1+5%)/(1+9%)^2 +$100,000*(1+5%)^2/(1+9%)^3…. +$100,000*(1+5%)^9/(1+9%)^10 = $779,843.27

Or we can easily input in excel and generate NPV as file attached; in which the formula is NPV(discount rate, cash inflow year 1 : cash inflow year 10) = (9%, 100000,100000*(1+5%)….,100000*(1+5%)^9) = $779,843.27

Download xlsx

5 0

2 years ago

Daget Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated

AnnyKZ [126]

Answer:

$15.34

Explanation:

The formula and the computation of the predetermined overhead rate is shown be

Predeterminer overhead rate = Manufacturing overhead ÷ direct labor hours

where,

Manufacturing overhead is

= $359,860 + $8,300

= $368,160

And, the direct labor hours is 24,000

So, the predetermined overhead rate is

= $368,160 ÷ 24,000

= $15.34

4 0

3 years ago