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Gwar [14]
2 years ago
15

Bugle's Bagel Bakery is investigating the purchase of a new bagel making machine. This machine would provide an annual operating

cost savings of $3,650 for each of the next 4 years. In addition, this new machine would allow the production of one new type of bagel which would result in selling 1,500 dozen more bagels each year. The company earns a contribution margin of $0.90 on each dozen bagels sold. The purchase price of this machine is $13,450 and it will have a 4 year useful life. Bugle's discount rate is 14%. (Ignore income taxes.)
The total annual cash inflow from this machine for capital budgeting purposes is:
a. $4,750
b. $5,150
c. $5,000
d. $3,650
Business
1 answer:
bagirrra123 [75]2 years ago
3 0

Answer:

Total annual cash inflow= $5,000

Explanation:

The total annual cash inflow will be the sum of the savings in operating costs and the incremental contribution from the sale of the bagels.

Annual contribution from Bagel = 1,500×$0.90=1350

Operating cost savings = 3,650

Total annual cash inflow = 1,350 + 3,650 =5,000

Total annual cash inflow= $5,000

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A

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Every person I have ever met says their favorite pizza is pepperoni pizza. Therefore, I can assume that everyone I ever meet wil
oksano4ka [1.4K]

Answer:

Inductive reasoning

Explanation:

This type of reasoning is considering generalization that is formed and based on some previous experiences and with that previous experiences the observation that is made is forming an inductive reasoning.

In this case, the person met many of them who says that their favorite pizza is pepperoni and then every time that someone say that they love pizza, this person will think of pepperoni pizza because of the previous experiences that caused those observations.

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3 years ago
The Red Bud Co. pays a constant dividend of $1.80 a share. The company announced today that it will continue to do this for anot
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Answer:

One share of this stock worth today if the required rate of return is 7.4 percent is $ 3.24

Explanation:

According to the details the dividend for the next 2 years = $1.80 a share and the required return is=7.40%.

Hence to calculate current price of stock we have to use the following formula:

current price= present value of future cash flows

current price=$1.80/1.074 + $1.80/1.074∧2

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current price of stock is $ 3.24

8 0
3 years ago
You deposit $100 in an account that pays 6 percent annual interest, compounded quarterly. What will your deposit grow to in 3 ye
Burka [1]

Answer:

$119.56

Explanation:

We will use compound interest formula to solve this problem.

The formula is:

F=P(1+r)^t

Where

F is the future value

P is the present amount

r is the rate of interest per period

t is the number of periods

Here,

F is the value we want, after 3 years

P is the present amount, $100

r is the rate of interest per quarter (per period)

Given r = 6% annually, so that would make:

6%/4 = 1.5% per quarter, or 1.5/100 = 0.015

Also, t is the number of quarters in 3 years, that would be 4*3 = 12

Now, substituting, we get our answer:

F=P(1+r)^t\\F=100(1+0.015)^{12}\\F=100(1.015)^{12}\\F=119.56

The first answer choice is right, $119.56

3 0
3 years ago
Ms. Pay, who has a 40.8 percent marginal tax rate on interest income (37 percent income tax 3.8 percent Medicare contribution ta
Butoxors [25]

Answer:

After tax cash flow    $44,281.60

After tax cash flow   ($30,518.40)

After tax cash flow   $8856.32

Explanation:

In the first case when the interest income of $74,800 ,the after-tax cash flow would be taxed as follows"

before tax cash flow   $74,800.00

tax at 40.8%*$74,800 ($30,518.40)

After tax cash flow      $44,281.60  

If the entire interest income is re-invested after tax cash flow is computed thus:

before tax cash flow   $0

tax at 40.8%*$74,800 ($30,518.40)

After tax cash flow      ($30,518.40)

If the entire interest income represents the original  issue discount,which is the difference between the face value and the issue price,after tax cash  flow is computed thus:

The OID is taxable as if it accrues over the duration of the investment(bonds),hence a portion of the OID would be assessed to tax each year (assume the duration of investment is 5 years)

Annual portion of OID=$74,800/5

before tax cash flow    $14,960 .00

tax at 40.8%*$74,800  ($6103.68 )

After tax cash flow         $8856.32

After tax cash flow      $44,281.60  

3 0
3 years ago
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