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Leviafan [203]
2 years ago
10

An existing electrical power line needs to have its capacity increased, and this can be done in either of two ways. The first me

thod is to add a second conductor to each phase wire using the same poles, insulators and fittings, at a construction cost of $15,000. The second method for increasing capacity is to build a second line parallel to the existing line, using new poles, insulators and fittings, at a construction cost of $23,000. At some time in the future, the line will require another increase in capacity, with the first alternative now requiring a second line at a cost of $32,500, and the second alternative requiring added conductors at a cost of $23,000. If interest rate is 6%, how many years between the initial expenditure and the future expenditure will make the two methods economically equal
Business
1 answer:
nekit [7.7K]2 years ago
3 0

Answer:

3 years

Explanation:

<u>First method</u>

The PV of the investment can be written as:

PV1 = $15,000 + $32,500/(1+0.06)^n

<u>Second method</u>

The PV of the investment can be written as:

PV2 = $23,000 + $23,000/(1+0.06)^n

After n years both projects will be economically equal. Hence their present value must be equal PV1 = PV2

$15,000 + $32,500/(1.06)^n = $23,000 + $23,000/(1.06)^n

$23,000 - $15,000 = $32,500/(1.06)^n - $23,000/(1.06)^n

$8,000 = $9,500/(1.06)^n

(1.06)^n = $9,500/$8,000

(1.06)^n = 1.1875

Taking log on both sides we get:

nlog1.06 = log 1.1875

n = log 1.1875/log 1.06

n = 0.07463361829/0.02530586526

n = 2.94926166417121

n = 3

So, the answer is 3 years

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Marigold Corp. gathered the following reconciling information in preparing its April bank reconciliation: Cash balance per books
Helga [31]

Answer:

Marigold Corp. gathered the following reconciling information in preparing its April bank reconciliation: Cash balance per books, 4/30 $13700 Deposits in transit 1900 Notes receivable and interest collected by bank 4620 Bank charge for check printing 160 Outstanding checks 9400 NSF check 870.

The adjusted cash balance per books on April 30 is:__$17,290.

Explanation:

a) Data and Calculations:

Cash balance per books, 4/30 = $13,700

Deposits in transit 1,900

Notes receivable and interest collected by bank 4,620

Bank charge for check printing 160

Outstanding checks 9,400

NSF check 870

b) Cash balance per books, 4/30                           $13,700

Notes receivable and interest collected by bank     4,620

Bank charge for check printing                                    -160

NSF check                                                                     -870

Adjusted cash balance as per books on April 30 $17,290

c) The adjusted cash balance of $17,290 will be equal to the balance on the bank statement on the same date, unless there is another accounting error that is not listed above.

7 0
3 years ago
Emerald Co. uses a perpetual inventory system and records purchases of merchandise at net cost. The company recently purchased 2
STALIN [3.7K]

Answer:

Credit to cash for $3,000

Explanation:

Based on the information given the appropiate the journal entry to record payment of this invoice after the discount period has expired is: CREDIT TO CASH FOR $3,000 which is calculated as (1/2*$6,000).

Credit to cash for $3,000

(To record payment of invoice after the discount period has expired)

6 0
3 years ago
Select the statements that are true.
o-na [289]
<h2>The first three options are right</h2>

Explanation:

Exchange rate:

  • The "price  or value of one country's currency" is exchanged for the price of "another country's currency value".
  • The exchange rate always varies. It gets updated everyday.
  • Exchange rates are calculated based on the value of "interest rate, trade, inflation, growth rate, employment and geopolitical conditions".
  • There are two ways in which currency value is determined. A floating value is identified by the open market.
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3 years ago
The number of days' sales in inventory is calculated as __________ divided by __________.
Irina18 [472]
A. Average inventory; average daily cost of goods sold
8 0
3 years ago
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Pollution control equipment for a pulverized coal cyclone furnace is expected to cost $190,000 two years from now and another $1
alexandr1967 [171]

Answer:

$212,882.75

Explanation:

Cost from 2 years now = $190,000

Cost from 9 years now = $120,000

Interest rate = 9% Quarterly

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Present Worth = 190,000*[1/(1+0.09/4)^2*4] + 120,000*[1/(1+0.09/4)^9*4]

Present Worth = 190,000*[1/(1.0225)^8] + 120,000*[1/(1.0225)^36]

Present Worth = 190,000*[1/1.19483] + 120,000*[1/2.22782]

Present Worth = 190,000*0.83693915 + 120,000*0.4488693

Present Worth = 159018.4385 + 53864.316

Present Worth = 212882.7545

Present Worth = $212,882.75

Thus, the amount to invest to cover these cost is $212,882.75

5 0
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