Answer:
Change in profit is Nil
Explanation:
<em>To determine whether to outsource the production of product X or not, we would compare the variable cost internal production to the external</em> <em>purchase price. And then adjust the net figure for the fixed costs.
</em>
<em>For a make or buy decision the relevant cash flows include </em>
1. the differential variable cost of the two options
2. savings from avoidable fixed costs associated with internal production
$
Variable cost internal production (2+7+5) 14
External buy in price <u>12</u>
Savings per unit of bought from outside <u> 2 </u>
Savings on 1000 units (2× 1,000) 2,000
Unavoidable fixed cost (2 × 1,000) <u> (2,000)</u>
Net change in profit <u> Nil </u>
<em>Note we assume that the fixed overhead is unavoidable. That is it will still be incurred whether or the product is outsourced </em>
It is DN took the test thank me later
Answer:
For 100 shares, the mount that should be paid = $1766
Explanation:
We have to calculate the price of the stock in the 4th year because the investor cannot afford the stock in another 3 years.
Price of the stock = Do + g / ke - g
Dividend in current year = $1.2
Dividend after 1 year = 1.2 +2.5% (1.2)= 1.23
Dividend after 2 years = 1.23 + 2.5%(1.23) = 1.26075
Dividend after 3 years = 1.26075 + 2.5%(1.26) = 1.29227
Price in 4th year = 1.29227 + 2.5% / (0.10 - 0.025)
=1.29227 + 2.5%(1.29227)/0.075
= 17.66
Therefore, for 100 shares, the mount that should be paid = 17.66 * 100 = $1766
