Answer:
$45,340
Explanation:
Calculation to determine the annual operating cash flow
Sale $260,300
Less: Operating Cost $143,200
Contribution $117,100
($260,300-$143,200)
Less: Fixed Cost $60,700
Less: Depreciation as per table given below $24,800
Profit before tax $31,600
($117,100-$60,700-$24,800)
Tax $11,060
($34%$31,600)
Profit After Tax $20,540
($31,600-$11,060)
Add Depreciation $24,800
Cash Profit After tax $45,340
($20,540+$24,800)
Therefore the annual operating cash flow is $45,340
Answer:Economic rent-$320,000
Opportunity Cost-80,000
Explanation:
Economic rent is the extra amount or addition earned by a production resource here and in this context,Mr Kurt is the resource.In this scenario,the extra amount he earned as a professional golfer having quit engineering for it and thus had a step-up(addition) of $320,000.
While the opportunity cost which known as the alternative forgone in order in favour of another alternative in a decision process here is $80,000.In this case,he had to forego engineering job($80,000) and therefore concentrate on professional golfing which paid him more(400,000) not omitting the fact that he could have engaged in the two jobs at same time.
Answer:
Total cost of operating the video store is $110,000
Explanation:
You decided to leave your job and operate a video rental store in the office space you inherited. You would not received the annually income from your job and rent commercial real estate.
Total income lost = $55,000 + $25,000 = $80,000
Total cost of operating the video store = Total income you lost + total costs for video purchases, utilities, taxes, and supplies = $80,000 + $30,000 = $110,000
Answer:
a. 1.096
Explanation:
The present value index is the same as the profitablility index(PI), which is computed by dividing the present value of future cash inflows by the initial investment(the present value of cash outflows). A profitability of above 1 means that the project is viable as the numerator(PV of cash inflows) exceeds the denominator( initial cash outlay).
Project A PI index= Present value of cash inflows/Present value of cash outflows
Project A PI index= $84,360/$77,000
Project A PI index= 1.096
