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Bogdan [553]
2 years ago
10

Nadine Chelesvig has patented her invention. She is offering a patent manufacturer two contracts for the exclusive right to manu

facture and market her product. Plan A calls for an immediate single lump payment to her of $35,000. Plan B calls for an annual payment of $1,200 plus a royalty of $0.40 per unit sold. The remaining life of the patent is 10 years. Nadine uses a MARR of 7 %/year.
a. What must be the uniform annual sales volume of the product for Nadine to be indifferent between the contracts, based on a present worth analysis?
b. If the sales volume is below the volume determined in (a), which contract would the manufacturer prefer?
Business
1 answer:
Olegator [25]2 years ago
5 0

Answer:

A) 9458 units

B) She would prefer the one with the single lump payment of $35,000 because the present value of the other one would increase with an increase in the units sold.

Explanation:

A) To calculate the uniform annual sales volume based on a present worth analysis, we will make use of the formula for present value of annuity.

Thus;

P = PMT × (1 - ((1/(1 - rⁿ))/r

From the question, we are given;

P = $35,000

PMT = (1200 + 0.4x)

r = 7% = 0.07

n = 10

Thus, Plugging in the relevant values, we have;

(1200 + 0.4x)((1 - (1/(1 + 0.07)^10))/0.07 = 35000

This gives;

(1200 + 0.4x) × 7.0236 = 35000

(1200 + 0.4x) = 35000/7.0236

(1200 + 0.4x) = 4983.2

0.4x = 4983.2 - 1200

0.4x = 3783.2

x = 3783.2/0.4

x = 9458 units

B) She would prefer the one with the single lump payment of $35,000 because the present value of the other one would increase with an increase in the units sold.

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Incomplete manufacturing costs, expenses, and selling data for two different cases are as follows.
qwelly [4]

Answer:

<u>Cost of goods manufactured schedule for Case1</u>

Opening Work In Process                  $1,000

Add Total Manufacturing Costs       $16,000

Less Ending Work In Process          ($3,000)

Cost of goods manufactured           $14,000

<u>Income statement for Case 1</u>

Sales                                                                                              $24,500

Less Sales discounts                                                                     ($2,500)

Net Sales Revenue                                                                       $22,000

Less Cost of Goods Sold

Beginning Finished Goods Inventory                 $3,300

Add Cost of goods manufactured                     $14,000

Less Ending Finished Goods Inventory            ($3,400)          ($13,900)

Gross Profit                                                                                     $8,100

Less Operating expenses                                                           ($2,500)

Net Income                                                                                    $2,500

<u>Current assets section :</u>

Inventory :

    Raw Materials                                      $600

    Work In Process                               $3,000

    Finished Goods                                $3,400

Receivables (net)                                 $15,000

Prepaid Expenses                                    $400

Cash                                                      $4,000

Total Current Assets                          $26,400

Explanation:

Part b

Cost of Goods Manufactured = Opening Work In Process + Total Manufacturing Costs - Ending Work In Process

Part c

Income statement shows the Profit earned during the reporting period

Profit = Gross Profit - Operating expenses

Part d

The current assets section will include assets of a short term nature (not exceeding a period of 12 months). For a manufacturing company, it is important to show each inventory balance in the inventory categories of Raw Materials, Work In Process and Finished Goods among other items.

Note : Current Assets are shown in their order of liquidity in the Balance Sheet as above.

3 0
3 years ago
Suppose that the central bank in this economy is concerned that inflation is too high and wants to lower the inflation rate by 6
leva [86]

Answer:

a) True

Explanation:

We can not determine the exact percentage by which a 6% reduction in inflation will cause a hike in unemployment but this conclusion is true. As per the Philips Curve, inflation and unemployment are in an inverse relationship

This is to say an increase in one will cause a decrease in the other and vice versa. This relationship however is not linear and so the degree of changes one variable causes in another will depend on the economy and statistics of the economy.

Hope that helps.

8 0
3 years ago
Tricia’s Decor purchased merchandise from House Beautiful and issued a promissory note. Tricia should record the transaction by
Tju [1.3M]
I think that Tricia should record the action by entering it in, in a log/journal system or keep her recite.
6 0
3 years ago
calculate the unadjusted rate of return for an investment that has a net cost of $430,000 and should provide an average after-ta
Elden [556K]

9%, as the unadjusted rate of return is equal to the average yearly net income growth rate divided by the initial investment's net cost.

<h3>Calculation:</h3>

$40,090 divided by $430,00 is.093 * 100, or 9%.

<h3>If the needed rate of return is 6%, what is the present value of a cash inflow of $2,000 five years from now? Examine later?</h3>

$2600 will be given to the recipient after five years.

<h3>If the internal rate of return is 5% and the desired rate of return is 6%, should management accept the investment opportunity?</h3>

No, as the internal rate of return on the investment is lower than the intended rate of return.

To know more about unadjusted rate visit:-

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3 0
1 year ago
Damien Carranza is an nonexempt employee of Verent Enterprises where he is a salesperson, earning a base annual salary of $30,00
Kay [80]

Answer:

Total weekly pay of August =   =  $ 1468.75

Explanation:

Annual salary = $30,000

Monthly Salary = $ 30,000/12=  $ 2500

Salary for 40 hours * ( 4 weeks) = 160 hours = $ 2500

Salary for 1 hour= $ 2500/160=  $ 15.625= $ 15.63

He worked additional 4 hours so pay for four hours is = 4 * 15.63=  $ 62.5

But as he is a non exempt  employee he is entitled to get 1.5 times higher than normal pay for over time so  

he will be paid $ 62.5 * 1.5= $ 93.75 for over time

Commission on Sales = 3 % of $25,000

                                    = $ 750

Weekly pay= $ 2500/4=  $ 625

Total weekly pay of August =  Weekly pay + Commission + Overtime

                                                =  $ 625 +  $ 750 +  $ 93.75

                                                 =  $ 1468.75

8 0
3 years ago
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