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Anna71 [15]
3 years ago
15

The management of Penfold Corporation is considering the purchase of a machine that would cost $270,000, would last for 5 years,

and would have no salvage value. The machine would reduce labor and other costs by $60,000 per year. The company requires a minimum pretax return of 12% on all investment projects. The net present value of the proposed project is closest to:______.
a. $(11,700).
b. $(53,700).
c. $(269,997).
d. $(113,700).
Business
1 answer:
Lorico [155]3 years ago
5 0

Answer:

The correct answer is B.

Explanation:

Giving the following information:

Initial investment= $270,000

Cash flow= $60,000

Number of years= 5

Discount rate= 12%

<u>To calculate the net present value (NPV), we need to use the following formula:</u>

NPV= -Io + ∑[Cf/(1+i)^n]

∑[Cf/(1+i)^n]:

Cf1= 60,000/1.12= 53,571.43

Cf2= 60,000/1.12^2= 47,831.63

.....

Cf5= 60,000/1.12^5= 34,045.61

∑[Cf/(1+i)^n]= 216,286.57

<u>Now, the NPV:</u>

NPV= -270,000 + 216,286.57

NPV= -53,713.43

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upine Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. Th
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Answer:

Total overhead applied = $220

Explanation:

Total variable overhead estimated = Variable manufacturing overhead per machine-hour * Total machine-hours

Total variable overhead estimated = ($2 * 32,700)

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Total overhead estimated = Total variable overhead estimated + Total fixed overhead estimated

Total overhead estimated = $65,400 + $294,300

Total overhead estimated = $359,700

Predetermined overhead rate = Total overhead estimated / Total machine hours

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3 0
3 years ago
Marlo Stanfield's operation also uses large quantities of prepaid cell phones, on average 1500 per week with a standard deviatio
Likurg_2 [28]

Answer:

option (A) 251 phones

Explanation:

Data provided in the question:

Average quantities of prepaid cell phones used = 1500 per week

Standard deviation, s = 145

Lead time for their own brand of prepaid cell phones, L = 3 weeks

lot size = 350 phones

Safety stock = 500 phone

Now,

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