Jarrod's Meat Shop doubles as a butcher shop and a sandwich shop that sells to both individuals and a nearby hospital system. On
1 answer:
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Answer: $329.75
Explanation:
The one year subscription is $40 per year. It is estimated that the average age of current subscribers is 38 and they will leave on average to 78. This means that they will leave for,
= 78 - 38
= 40 years
Evans Ltd average interest rate on long-term debt is 12% so this means that we can use that 12% as a discount rate for the cash-flow expected.
I have attached a Present Value Interest Factor of an Annuity table to this question. It helps calculate annuities faster.
The above can be treated as an annuity because the $40 is constant every year.
The present value of the $40 over 40 years can be calculated by,
= $40 * present value Interest Factor of an Annuity for 40 years at 12% (look at the table for where 40 years on the y axis intersects with 12% on the x axis)
= $40 * 8.2438 (this is the figure when it is not rounded off to 3 dp)
= $329.752
= $329.75
This shows that the lifetime flat fee of $480 is more profitable for Evans Ltd as opposed to the yearly subscription. They should therefore try to sell more of the lifetime contract with the flat fee.
Answer:
$9900
Explanation:
Given:
- Inventory value $150,000
- Revenue: $225,000
- Schilling resold: $105,000
- Tiberend owns 25 percent
We need to find the gross profit and its ratio.
The gross profit = Revenue - Inventory value
= $225,000 - $150,000 = $75,000
The gross profit ratio = =
=
= 33.33%
Ending inventory with schilling resold
= Revenue - schilling resold
= $225,000 - $105,000 = $120,000
Total unrealized profit: $120,000*25% = $30,000
So, Intra entity unrealized gross profit is
= Total unrealized profit × Tiberend ownership intra entity unrealized gross profit is
= $30,000 × 33%
= $9900
Hope it will find you well.