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tangare [24]
2 years ago
5

You and your partner have become very interested in cross-country motorcycle racing and wish to purchase entry-level equipment.

You have identified two alternative sets of equipment and gear. Package K has a first cost of $200,000, an operating cost of $6,000 per quarter, and a salvage value of $30,000 after its 2-year life. Package L has a first cost of $280,000 with a lower operating cost of $2,200 per quarter and an estimated $30,000 salvage value after its 4-year life. Which package offers the lower present worth analysis at an interest rate of 20% per year, compounded quarterly
Business
1 answer:
Lana71 [14]2 years ago
7 0

Answer:

Package K offers the lower present worth analysis.

Explanation:

This can be determined using the following 3 steps.

Step 1: Calculations of present worth of Package K

First cost = $200,000

Present value of quarterly operating cost = quarterly operating cost * ((1- (1/(1 + r))^n)/r) ....... (1)

Where;

r = quarterly interest rate = interest rate per year / Number of quarters in a year = 20% / 4 = 5%, or 0.05

n = number of quarters = Number of years * Number of quarters in a year = 2 * 4 = 8

Substituting the values into equation (1), we have:

Present value of quarterly operating cost = $6,000 * ((1- (1/(1 + 0.05))^8)/0.05) = $38,779.28

Present value of salvage value = Salvage value / (1 + quarterly interest rate)^Number of quarters = $30,000 / (1 + 0.05)^8 = $20,305.18

Present worth of package K = First cost + Present value of quarterly operating cost - Present value of salvage value = $200,000 + $38,779.28 - $20,305.18 = $218,474.10

Step 2: Calculations of present worth of Package L

First cost = $280,000

Present value of quarterly operating cost = quarterly operating cost * ((1- (1/(1 + r))^n)/r) ....... (1)

Where;

r = quarterly interest rate = interest rate per year / Number of quarters in a year = 20% / 4 = 5%, or 0.05

n = number of quarters = Number of years * Number of quarters in a year = 4 * 4 = 16

Substituting the values into equation (1), we have:

Present value of quarterly operating cost = $2,200 * ((1- (1/(1 + 0.05))^16)/0.05) = $23,843.09

Present value of salvage value = Salvage value / (1 + quarterly interest rate)^Number of quarters = $30,000 / (1 + 0.05)^16 = $13,743.35

Present worth of package L = First cost + Present value of quarterly operating cost - Present value of salvage value = $280,000 + $23,843.09 - $13,743.35 = $218,474.10 = $269,900.25

Step 3: Comparison of present worth

Present worth of package K = $218,474.10

Present worth of package L = $269,900.25

Therefore, Package K offers the lower present worth analysis.

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Answer:

Please sew solution below

Explanation:

a. What are the dividend payout ratios for each firm

Dividend payout ratio = Dividend / EPS

• Payout ratio stock A = $1.30 / $2.6 = 0.5= 50%

• Payout ratio stock B = $1.3 / $1.8 = 0.72222 = 72.22%

b. What are the expected dividend growth rates for each stock.

Growth rate = ROE × (1 - dividend payout ratio)

•Growth rate stock A = 0.08 × (1 - 50%) = 0.04 = 4%

• Growth rate stock B = 0.05 × (1 - 72.22%) = 0.01389 = 1.39%

c. What is the proper stock price for each firm

• Stock A

Price = D1 / (Re - g)

D1= $1.30 * (1 + 0.04)

= 1.352

Stock B

Price = D1 / (Re - g)

D1= $1.30 * (1 + 0.013)

= 1.3169

Therefore,

• Stock A's proper price = $1.352 / (0.08 - 0.04) = $33.8

• Stock B's proper price = $1.3169 / ($0.08 - $0.013) = $19.66

6 0
3 years ago
RE: Planned Obsolescence, Perceived Obsolescence "A product is deliberately designed to have a specific life span. For example,
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Answer:

Planned Obsolescence

Explanation:

According to my research on the answers provided, I can say that based on the information provided within the question this is most related to Planned Obsolescence. This term is basically defined exactly in the question, but in simpler terms this is a product that is specifically designed to become obsolete after a certain time frame.

I hope this answered your question. If you have any more questions feel free to ask away at Brainly.

8 0
3 years ago
Miami Solar manufactures solar panels for industrial use. The company budgets production of 4,800 units (solar panels) in July a
azamat

Answer and Explanation:

The preparation of the factory overhead budget for August month is shown below:

Total budgeted direct labor  $286,000

(5,500 × 4 hours × $13)  

variable factory overhead 70%

Budgeted overhead  $200,200 ($286,000 × 70%)

Add: Fixed overhead $179,000

Budgeted total factory overhead $379,200

Hence, the budgeted total factory overhead is $379,200

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3 years ago
Presented below is information from Perez Computers Incorporated. July 1 Sold $20,000 of computers to Robertson Company with ter
Advocard [28]

Answer:

A journal is provided as an attachment to record the entries for Perez Computers.

Explanation:

The gross method of cash discounts assumes that the customer will not take advantage of the offered discount.  It therefore records the sale in full without netting off the discount element.  This was done in the answer.

When Robertson paid within 10 days, the 3% cash discount was allowed since payment was received within the terms of 15 days.

For The Clark Store, there was no discount because payment was received later than the allowed 10 days.

Download xlsx
4 0
3 years ago
On October 1, 20X4, Shaw Corp. purchased a machine for $126,000 that was placed in service on November 30, 20X4. Shaw incurred a
balu736 [363]

Answer:

$138,000

Explanation:

The computation of the machine cost that would be reported is shown below:

= Purchase value of machine + shipping cost + installation cost + testing cost

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= $138,000

At the time of reporting the machine cost, we have to consider all the cost that is related to the machine. Therefore, all the given cost is considered.

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