1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
DedPeter [7]
3 years ago
7

A company is considering constructing a plant to manufacture a proposed new product. The land costs ​$​, the building costs ​$​,

the equipment costs ​$​, and ​$ additional working capital is required. It is expected that the product will result in sales of ​$ per year for ​years, at which time the land can be sold for ​$​, the building for ​$​, and the equipment for ​$. All of the working capital would be recovered at the EOY . The annual expenses for​ labor, materials, and all other items are estimated to total ​$. If the company requires a MARR of ​% per year on projects of comparable​ risk, determine if it should invest in the new product line. Use the AW method.
a) The AW is $.........
b) According to the AW decision rule the investment in the new product line .. (is not/is) economically justified.
Business
1 answer:
zzz [600]3 years ago
4 0

Complete question :

A company is considering constructing a plant to manufacture a proposed new product. The land costs $350,000, the building costs $600,000, the equipment costs $250,000, and $150,000 additional working capital is required. It is expected that the product will result in sales of $900,000 per year for 10 years, at which time the land can be sold for $450,000, the building for $400,000, and the equipment for $50,000. All of the working capital would be recovered at the EOY 10. The annual expenses for labor, materials, and all other items are estimated to total $500,000. If the company requires a MARR of 15% per year on projects of comparable risk, determine if it should invest in the new product line. Use the AW method.

Answer: $182,800

Explanation:

Given the following :

land costs = $350,000

building costs = $600,000

equipment costs = $250,000

additional working capital = $150,000

Expected sales per year for 10 years = $900,000

Salvage value After (10years):

Cost of land = $450,000

Building = $400,000

Equipment = $50,000

All working capital will be recovered at end of year, Hence, working capital will be $150,000

Annual expenses = $500,000

MARR = 15% per annum

Total amount invested = $(350,000 + 600,000 + 250,000 + 150,000) = $1,350,000

Expected sales per Annum = annual revenue = $900,000

Expenditure per year = $500,000

Net income = Revenue - Expenditure

Net income = $900,000 - $500,000 = $400,000

Worth or valuation of investment after 10 years :

($450,000 + $50,000 + $400,000 + $150,000)

= $1,050,000

Hence,

Capital recovery factor : (A/P, 15%, 10) = 0.199

Sinking fund table : (A/F, 15%, 10) =0.049

NET ANNUAL WORTH :

-Initial investment(A/P, 15%, 10) + annual net income + salvage value(A/F, 15%,10)

= - 1,350,000(0.199) + 400,000 + 1,050,000(0.049)

= $182,800

The investment is economically justified as the net annual worth yields a positive value.

You might be interested in
Viral marketing messages have a higher chance of being opened because they come from a _____________.
sleet_krkn [62]
When it comes from a friend, these viral marketing messages could yield to a much higher chance of being opened and exposed. By definition, a viral marketing is a common method used in the marketing industry wherein the company would request people, mostly in social media, to share their products.
7 0
3 years ago
A company manufactures a product using machine cells. Each cell has a design capacity of 250 units per day and an effective capa
Blababa [14]

Answer:

1.90

Explanation:

Calculation for how many cells that the company require to satisfy predicted demand

Using this formula

Numbers of cell=Projected annual demand/Annual capacity per cell

Based on the information given we were told that Annual demand is 50,000 units in which it is forecasted that within 2 years it will tripple which means that Annual demand will be calculated as:

Projected annual demand = 50,000*2 years

Projected annual demand=100,000

Let plug in the formula

Numbers of cell=100,000÷(220 units/day × 238 days/year)

Numbers of cell=100,000÷52,360

Numbers of cell=1.90

Therefore the amount of cells that the company require to satisfy predicted demand will be 1.90

6 0
3 years ago
Marissa gives Larry a check in payment for a computer that she is buying from him. She writes the check to Cash. Larry then give
Lena [83]

Answer: personal

Explanation:

Based on the information given with regards to the question, this is a personal defense. A personal defense occurs when there's a breach of contract whereby there was issuing of the negotiable instrument.

In this case, Marissa writes the check to Cash but Larry then gives the check to Gary Graduate his nephew, without indorsing it, as a graduation gift

8 0
2 years ago
Entity B bought equipment for $240,000 on January 1, 2021. It estimated the useful life to be 3 years with no salvage value, and
mezya [45]

Answer:

Part 1

Revised depreciation expense =  $32,000

Part 2

The entry to record depreciation expense :

Debit : Depreciation Expense $32,000

Credit : Accumulated Depreciation $32,000

Explanation:

Straight line method charges a fixed depreciation charge over the year of use of an asset.

<em>Depreciation expense = (Cost - Salvage Value) ÷ Estimated Useful Life</em>

2021

Depreciation expense = $80,000

2022

Old Depreciation expense = $80,000

New Depreciation expense = Depreciable Amount ÷ Remaining Useful Life

                                              = ($240,000 - $80,000) ÷ 5

                                              = $32,000

7 0
3 years ago
If a family spends its entire budget in a given time frame, the family can afford either 90 cans of vegetables or 60 frozen pizz
Alborosie

Answer:

60 frozen dinners is better

Explanation:

4 0
3 years ago
Other questions:
  • The appropriate cost accounting system to use when inventory items are produced on an assembly line is
    5·1 answer
  • Which is NOT a tactic TV stations use to get people to watch the news?
    14·1 answer
  • QUESTION 4<br> Which of the following payment types require you to pay upfront?
    8·2 answers
  • FetchFun Inc. is currently an all-equity firm with 20 million shares outstanding and a stock price of $7.50 per share. FetchFun
    5·1 answer
  • What is the effect of political institutions on economic performance?
    7·1 answer
  • Which of the following statements comparing debit and credit cards is TRUE?
    5·1 answer
  • Anybody got discord?
    15·2 answers
  • Based on a predicted level of production and sales of 12,000 units, a company anticipates reporting operating income of $26,000
    12·1 answer
  • Pamelia (21) is a full-time undergraduate student pursuing an accounting degree at her state university. During the year, she re
    12·1 answer
  • Identify Maslow’s needs
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!