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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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Fanning Corporation incurs the following annual fixed costs: Item Cost Depreciation $ 80,000 Officers’ salaries 190,000 Long-ter
ale4655 [162]

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Item Cost Depreciation $ 80,000 Officers’ salaries 190,000 Long-term lease 42,000 Property taxes 48,000 Required Determine the total fixed cost per unit of production, assuming that Fanning produces 4,000, 4,500, or 5,000 units.

Total fixed costs= 80,000 + 190,000 + 48,000 + 190,000= 508,000

4,000 units= 127

4,500= 112.89

5,000= 101.6

6 0
3 years ago
David, the manager of a bookstore, prefers to directly point out other's mistakes. Some employees see his communication style as
aalyn [17]

Answer:

Differences in work styles

Explanation:

Conflicts are serious disagreements. They arise from differences in ideas, opinions, methodology, or actions. Conflicts create tensions and may lead to verbal or physical violence if unresolved.

David, as the manager, has his style of working. The employees under him may have different methods of performing their roles. If David does not appreciate his junior ways of working, there could be tension and unnecessary conflicts.

4 0
3 years ago
The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 4,500 per day. FSF supplies hot dogs to local restaurants a
ASHA 777 [7]

Answer:

a. The Optimal run size is 5,086 hot dogs

b. The Number of runs per year is 18

c. The Run length is 1 day

Explanation:

a. According to the given data we have the following:

Daily production, p = 4500 per day

Daily demand, u = 310 per day

Number of working days in a year, Tyear = 295 days

Annual demand, D = Daily demand x number of working days; D = 310 x 295; D = 91450

Setup cost, S = $60

Annual holding cost, H = $0.45 per hot dog

So, Optimal run-size can be calculated as follows:

Q* = √ 2 x annual demand x Setup cost / holding cost per unit per year x √daily production / daily production - daily demand

Q* = √2DS / H x √p / p-u

Q* = (√ 2 x 91450 x 60 / 0.45) x (√ 4500 / 4500 - 310)

Q* = (√24386667) x (√1.07)

Q* = (4938.29) x (1.03)

Q* = 5086.44 = 5,086

Therefore, Optimal run size is 5,086 hot dogs

b) The  Number of runs per year can be calculated as follows:

Cycle time = Q / u

Cycle time = 5086 / 310 = 16 days

Number of runs = Tyear / cycle time

Number of runs = 295 / 16 = 18

The Number of runs per year is 18

c) The Run length or run time can be calculated as follows:

Run time = Q / p

Run time = 5086 / 4500

Run time = 1.13 = 1

Run length is 1 day

6 0
3 years ago
Compute the impact on the money multiplier of an increase in the currency-to-deposit ratio from 10 percent to 15 percent when th
Ronch [10]

Answer:

[email protected]%

4.11 @15%

Explanation:

Please see attachment

4 0
3 years ago
​Kim's Retail had 800 units of inventory on hand at the end of the year. These were recorded at a cost of $ 13 each using the la
nataly862011 [7]

Answer:

the Merchandise Inventory will be credited by $3200

Explanation:

given data

Retail  inventory = 800 units

recorded cost = $13

replacement cost = $ 9 per unit

selling price charged = $15

to find out

the Merchandise Inventory will be

solution

we know here market  is equal to current replacement cost that is $9

and here we can say

market is here less than cost

so inventory will be valued at Market

so we find

down in inventory is = 800 × ( 13 - 9 )

down in inventory is = 3200

so the Merchandise Inventory will be credited by $3200

5 0
3 years ago
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