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rusak2 [61]
3 years ago
12

You are given the following information about equipment that is required for your business. Assume that the equipment will be re

placed as it wears out and that straight-line depreciation to zero is used for each. The required return is 15% and ignore taxes. Machine A has an initial cost of $200,000, an operating cost per year of $15,000, and an expected life of 8 years. Machine B has an initial cost of $300,000, an operating cost per year of $17,500, and an expected life of 10 years. How does the equivalent annual cost of Machine A compare to that of Machine B
Business
1 answer:
s2008m [1.1K]3 years ago
4 0

Answer:

Machine B EAC is $17,705.78 more than Machine A EAC.

Explanation:

First find the present values of the cost of both machines.

Machine A:

= 200,000 + (15,000 * Present value of annuity interest factor, 15%, 8 years)

= 200,000 + ( 15,000 * 4.4873)

= $‭267,309.5‬0

Machine B

= 300,000 + (17,500 * Present value of annuity interest factor, 15%, 10 years)

= 300,000 + 17,500 * 5.0188

= $‭387,829‬

Equivalent Annual cost Machine A:

= [(NPV * Required return) / 1 - (1 + Required return) ^–Number of Periods

=[(267,309.50 * 15%) / 1 - 1.15⁻⁸

= $59,569.95

Equivalent Annual cost Machine B:

= (387,829 * 15%) / (1 - 1.15⁻¹⁰)

= $77,275.73

Difference:

= 77,275.73 - 59,569.95

= $‭17,705.78‬

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Answer: Mixed cost

Explanation:

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Mixed costs are also known as semi variable cost. The natural gas is used constantly with the expense incurred on it continuous, therefore it's a fixed cost. Also, when there is no pizza, the usage of natural gas decreases so it's a variable cost. Since it has attribute of fixed and variable cost, it's a mixed cost.

6 0
3 years ago
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G during february, $186,500 was paid to creditors on account, and purchases on account were $201,400. assuming the february 28 b
Rufina [12.5K]
<span>The balance on Feb 1 was $44,100. Find by solving for x, the account balance on Feb 1, knowing that $59,900 was the balance on Feb 28. Find by adding $201,400 of purchases and subtracting $186,500 paid to creditors:
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4 0
3 years ago
1) true or false :
Alex777 [14]

Answer:

1) False

2) False

3) True

4) True

Explanation:

1) International trade did not begin in 18th century but it started in between 16th and 17th century when the barter system was shifting towards mercantilism. Therefore, answer is False.

2) Twentieth-century although marked duly rise in the female sports fans but marketing efforts were not primarily shifted towards them but included them among the male sports fan base. The female fans created a new segment of marketing which resulted in creating a new product line according to their tastes and preferences. Therefore, the answer is false.

3) Economic sanction does not take into consideration only the economic factors but also various other factors like trade barriers, restrictions on financial transactions, etc. Thus, this makes the economic sanctions more restrictive in nature than the trade sanctions. Therefore, the answer is true.

4) Less affluent countries generally focuses on minimizing the cost and not maximizing the profit in order to meet there requirements effectively. Thus, such countries mostly prefer to use ethnocentric orientation of management system and therefore prefer to operate locally as this would help them minimize the cost and reduce wastage. Therefore, the answer is true.

6 0
3 years ago
Why should the people on the RA team be different from the people responsible for correcting deficiencies?a. to avoid potential
NemiM [27]

Answer:

The correct answer is the option C: To avoid conflicts of interest.

Explanation:

To begin with, the term of risk assesstment refers to the process of identifying and analyzing possible future threats that may cause harm to the individuals or the assets of the company and from there on to evalute possible solutions to those situation that the company does not want to. Moreover, the risk manager is the one who should take care of those aspects and therefore that an RA team is the one that is being under his commands and should focus on the fact of identifying and analyzing the problems as well as evaluating instead of correcting some of those deficiencies and therefore that they need to have a different mind in the theme because they need to avoid conflicts of interest with the other team that is responsible from correcting.

8 0
3 years ago
Cracker Company had 2 million shares of common stock outstanding all through 2017. On April 1, 2018, an additional 100,000 share
JulsSmile [24]

Answer:

a. $ 2.41 $ 2.00

Explanation:

Earning per share is the ratio of net Income of the business per outstanding share of the business after deducting the preferred dividend from net earning. It shows how much each stockholder earn against their each share in a specific period.

Earning Per share = Net Income / Outstanding numbers of shares

2017

EPS = $8,000,000/(2,000,000 x 2) = $2.00

As new stock is issued and stock split is declared so, outstanding numbers of shares are changed.

2018

EPS = $10,000,000 / [ ( 2,000,000 x 2 ) + ( 100,000 x 9 / 12 x 2 ) ] = $2.41

8 0
3 years ago
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