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Hunter-Best [27]
3 years ago
6

Microbiotics currently sells all of its frozen dinners cash-on-delivery but believes it can increase sales by offering supermark

ets 1 month of free credit. The price per carton is $100, and the cost per carton is $65. The unit sales will increase from 1,050 cartons to 1,110 per month if credit is granted. Assume all customers pay their bills and take full advantage of any credit period offered.
a. If the interest rate is 1% per month what will be the change in the firm's total monthly profits on a present value basis if credit is offered to all customers?
b. If the interest rate is 1.5% per month v/hat will be the change in the firm's total monthly profits on a present value basis if credit is offered to all customers?
c. Assume the interest rate is 1 5% per month but the firm can offer the credit only as a special deal to new customers, while existing customers will continue to pay cash on delivery. What will be the change in the firm's total monthly profits on a present value basis under these conditions?
Business
1 answer:
NikAS [45]3 years ago
4 0

Answer:

Following are the responses to the given question:

Explanation:

\text{Present value of profit} = ( Revenue - cost ) \times  Unit\ sold

                                   = (\$100 - \$65 ) \times 1,050\\\\= (\$35 ) \times 1,050\\\\= \$36,750

For point a:

\text{PV of profits} = PV(REV -COST) \times Units \ sold

                     = (\frac{\$100}{ (1 + .01)} - \$65) \times 1,110\\\\= (\frac{\$100}{ (1 .01)} - \$65) \times 1,110\\\\= (99.0 -65) \times 1,110\\\\= 34\times 1,110\\\\= \$37,740\\

Changes in monthly profits:

= \$37,740 - \$36,570 = \$1,170

At 1%, the credit offer raises the company's earnings for one month.

 For point b:

\text{PV of profits} = PV(REV -COST) \times Units \ sold

=(\frac{\$100}{(1 + .015)} -\$65) \times  1,110\\\\=(\frac{\$100}{(1.015)} -\$65) \times  1,110\\\\=33.52\times 1,110\\\\= 37,207.2

  Changes in monthly profits:  

= \$37,207.2- \$36,570 = $637.2.

At 1.5%, the loan offering raises the company's earnings for one month.

For point c:

\text{PV of profits} = PV(REV -COST) \times Units \ sold

                     = (\$100 - \$65 ) \times 60\\\\ = \$2,100

\text{PV of profits} = PV(REV -COST) \times Units \ sold  

                     = (\frac{\$100}{(1 + .015)} - \$65) \times 60\\\\= (\frac{\$100}{(1.015)} - \$65) \times 60\\\\=33.52 \times 60\\\\= 2011.2

Changes in monthly profits:

= \$2,011.2 -\$2,100 = \$88.8

At a cost of 1.5%, the credit rates decrease the company's income for one month.

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Answer:

$1,550

Explanation:

Given that

Price tag = $620

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Answer:

This is a repeat question on Brainly but here you go.

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You wish to buy a cabin in 15 years. TODAY, the cabin costs $150,000. You believe the price of the cabin will inflate at 4% annu
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I will need to invest 64,669.73 dollars now.

Explanation:

We will calcualte the future value of the cabin considering the inflation:

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time  15 years

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150000 \: (1+ 0.04)^{15} = Amount

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Then we calculate the present value of the lump sum at 15 years discounted at 10% which is the yield of the funds

\frac{Maturity}{(1 + rate)^{time} } = PV  

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Answer:

Calculate the tax consequence of withdrawal from retirement account.

T and L are 40 years old and decide to withdraw $2,100 from their IRA. They lie in a 35% marginal tax bracket.

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Calculation of tax consequences if withdrawal amount is $2,100:

Ordinary income tax amount calculates by multiplying the withdrawal amount with the ordinary tax rate.

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The withdrawal amount attracts the 10% penalty. So, the penalty amount is calculated as follows: Penalty on withdrawn funds calculates by multiplying the withdrawn funds with the percentage of penalty.

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Therefore, T and L would incur a tax of $945 on their withdrawal. This $945 is the sum of income tax amount and penalty on withdrawal balance.

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