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Akimi4 [234]
2 years ago
13

Consider the owner of a local boutique. She is deciding if she should upgrade the storage and display containers. The total cost

is $2,000, and the depreciation rate is 8% per year. The expected increase in next year’s revenue resulting from the investment is $400. Assume an interest rate of 5%. a. What is the present value of the stream of revenue due to the upgrades? Round to the nearest dollar. $ b. Based on the marginal principle, the owner make this investment because the marginal benefit is the marginal cost.
Business
1 answer:
miv72 [106K]2 years ago
8 0

Answer:

a) $3077

b) The owner should make this investment because the marginal benefit is greater than the marginal cost

Explanation:

Given data :

Total cost = $2000

depreciation rate = 8% per year

expected increase in revenue (CF ) = $400

interest rate = 5%

a) Determine the present value of the stream of revenue due to the upgrades

= CF / ( 1 + r ) ^t      where ( 1 + r )^t = 13%

= 400 / 13%

= $3077

b) The owner should make this investment because the marginal benefit is greater than the marginal cost

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Explanation:

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True or False. The standminus−alone cost allocation method ranks the individual users of a cost object in order of users most re
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Answer:

False

Explanation:

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Answer:

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3 0
3 years ago
If house A had a sale price of $70,000, monthly rent of $500, and a GRM of 140; House B had a sale price of $68,500, monthly ren
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Answer:

$69,300

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GRM = 139.8

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Monthly rent = $485

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GRM = (Sales price / monthly rent)

If a property is rented for 495 and house A is the

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140 × $495 = $69,300

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