The Speedy-Delivery Company has two options for its delivery truck. The first option is to purchase a new truck for $14,000. The new truck will have a useful life of 6 years and a residual value of $2000. Operating costs for the new truck will be $200. The second option is to overhaul its existing truck. The cost of the overhaul will be $8000. The overhauled truck will have a useful life of 6 years and a residual value of $0. Operating costs for the overhauled truck will be $800. Using Speedy's discount rate of 4%, which option is better and by what amount
Answers
Answer: Overhauling is a better option as it is cheaper by $1,273
Explanation:
Total cost of the new truck:
= Cost to purchase + Present value of operating costs - Present value of residual value
= 14,000 + (200 * present value of annuity factor, 4%, 6 years) - 2,000 / (1 + 4%)⁶
= 14,000 + (200 * 5.2421) - 1,581
= $13,467
Total cost of Overhauling truck:
= 8,000 + (800 * present value of annuity factor, 4%, 6 years)
= 8,000 + (800 * 5.2421)
= $12,194
Overhauling is a better option as it is cheaper by:
= 13,467 - 12,194
= $1,273
The better option will be overhauling the truck as it is cheaper by $1,273.
Based on the information given, the total cost of the new truck will be:
= Cost to purchase + Present value of operating costs - Present value of residual value
= 14,000 + (200 × PV of annuity factor, 4%, 6) - 2,000 / (1 + 4%)⁶
= 14,000 + (200 * 5.2421) - 1,581
= $13,467
The total cost of overhauling the truck will be:
= 8,000 + (800 × present value of annuity factor, 4%, 6)
= 8,000 + (800 × 5.2421)
= $12,194
Therefore, the difference between the two options will be:
= $13,467 - $12,194
= $1,273
Therefore, the better option will be overhauling the truck as it is cheaper by $1,273.
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Related Questions
On May 1, 2020, Teal Inc. entered into a contract to deliver one of its specialty mowers to Kickapoo Landscaping Co. The contract requires Kickapoo to pay the contract price of $990 in advance on May 15, 2020. Kickapoo pays Teal on May 15, 2020, and Teal delivers the mower (with cost of $648) on May 31, 2020.
(a) Prepare the journal entry on May 1, 2020, for Teal.
(b) Prepare the journal entry on May 15, 2020, for Teal.
(c) Prepare the journal entry on May 31, 2020, for Teal.
Answers
Answer:
A. May 1, 2020
No entry
B. May 15, 2020
Dr Cash $990
Cr Unearned revenue $990
C. May 31, 2020
Dr Unearned revenue $990
Cr sales $990
Dr cost of goods sold $648
Cr Inventory $648
Explanation:
(a) Preparation or the journal entry on May 1, 2020, for Teal.
May 1, 2020
No entry
(b) Preparation of the journal entry on May 15, 2020, for Teal.
May 15, 2020
Dr Cash $990
Cr Unearned revenue $990
(To record Advance received)
(c) Preparation of the journal entry on May 31, 2020, for Teal.
May 31, 2020
Dr Unearned revenue $990
Cr sales $990
(To record sales)
Dr cost of goods sold $648
Cr Inventory $648
(To record cost of goods sold)
trade industry short note
Answers
Answer:
Trade is a basic economic concept involving the buying and selling of goods and services, with compensation paid by a buyer to a seller, or the exchange of goods or services between parties.
A marketing research agency conducted a study to determine the reasons for the decreased sales of a line of fishing equipment at Wishin' I Were Fishin' stores. Researchers spoke to customers at the outdoor sporting goods store as well as at competitors' stores. This information gathered by the researchers is an example of:_____.
Answers
Answer:
Primary data
Explanation:
Researchers obtain information about a particular subject in order to identify a certain pattern in the popular under study.
They obtain information in two forms: primary data and secondary data.
Primary data is obtained from the original source that is affected by an event. While secondary data is obtained from primary data that was initially collected.
In the give scenario to determine the reasons for the decreased sales of a line of fishing equipment at Wishin' I Were Fishin' stores. Researchers spoke to customers at the outdoor sporting goods store as well as at competitors' stores.
They went to the actual people that had an opinion on the subject matter, so the information is primary data
Pecan acquires Southern in an acquisition reported as a merger. The acquisition results in $50 million in goodwill. The acquisition cost includes an earnings contingency, valued at $1 million at the date of acquisition. Within the measurement period, additional information on Southern's expected future performance at the date of acquisition reveals that the earnout actually had a fair value of $200,000 at the date of acquisition. The entry to record the new information includes a credit of $800,000 to:
Answers
Answer:
Dr Earnings contingency liability $800,000
Cr Goodwill $800,000
Explanation:
Based on the information given the appropiate journal entry to record the new information includes a credit of $800,000 to:Dr Earnings contingency liability $800,000 and Cr Goodwill $800,000 reason been that the acquisition cost is lesser.
Dr Earnings contingency liability $800,000
Cr Goodwill $800,000
Brand [X] has tasked you with looking at various KPIs for their recent campaign. Below are the results for the campaign. Using the provided KPI calculations, your own research and intuition.
Amount spent (USD) CPM Impression Clicks Click- Through Rate
Campaign Total $2783 $1.55 1,801,348 26,048 1.45%
Required:
Do you believe this campaign performed well?
Answers
Answer:
Yes, the campaign performed well.
Explanation:
Recent campaign by Brand X has performed really well. The results obtained are analyzed against the Key Performance Indicators set by the company. The amount spent on the campaign is $2783 whereas the Clicks per minute is $1.55 which indicates that customers are impressed by the campaign and they are gaining attraction in the campaign details so the CPM impression is high.
You are offered the opportunity to put some money away for retirement. You will receive five annual payments of $25,000 each beginning in 40 years. How much would you be willing to invest today if you desire an interest rate of 12%?
Answers
Answer:
19k
Explanation:
why might trade unions be against the privatisation of government industries
Answers
Answer:
GDTDE
Explanation:
EGREGRE
Crane Company issued common stock for proceeds of $389000 during 2019. The company paid dividends of $88000 and issued a long-term note payable for $96000 in exchange for equipment during the year. The company also purchased treasury stock that had a cost of $17000. The financing section of the statement of cash flows will report net cash inflows of
Answers
Answer:
$284,000
Explanation:
Calculation to determine what The financing section of the statement of cash flows will report net cash inflows of
Using this formula
Net cash inflows=Common stock-Dividends-Treasury stock
Let plug in the formula
Net cash inflows= $389000-$88000 -$17000
Net cash inflows=$284,000
Therefore The financing section of the statement of cash flows will report net cash inflows of $284,000
Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,250,000. The project began in 2021 and was completed in 2022. Data relating to the contract are summarized below:
2018 2019
Costs incurred during the year $300,000 $1575,000
Estimated costs to complete as of 12/31 1,200,000 0
Billings during the year 380,000 1,620,000
Cash collections during the year 250,000 1,750,000
Required:
a. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming Nortel recognizes revenue over time according to percentage of completion.
b. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming this project does not qualify for revenue recognition over time.
c. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming Nortel recognizes revenue over time according to percentage of completion.
d. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming this project does not qualify for revenue recognition over time.
Answers
Answer:
Nortel Networks
Revenue Recognized over time according to percentage of completion:
2018:
Percentage of completion = 20%
Revenue = $450,000 ($2,250,000 * 20%)
Costs incurred 300,000
Gross profit = $150,000
2019:
Percentage of completion = 80% (100% - 20%)
Revenue = $1,800,000
Costs incurred 1,575,000
Gross profit = $225,000
b.
2018:
Revenue = $0
Costs incurred = $300,000
Gross loss = $300,000
2019:
Revenue = $2,250,000
Costs incurred 1,575,000
Gross profit = $675,000
c. Partial balance sheet (Revenue over time according to percentage of completion):
Assets:
2018
Accounts receivable $130,000
Equity:
Retained earnings $150,000
d. Partial balance sheet, assuming this project does not qualify for revenue recognition over time:
Assets:
2018
Accounts receivable $130,000
Equity:
Retained earnings ($300,000)
Explanation:
a) Data and Calculations:
Contract price = $2,250,000
2018 2019
Costs incurred during the year $300,000 $1575,000
Estimated costs to complete as of 12/31 1,200,000 0
Billings during the year 380,000 1,620,000
Cash collections during the year 250,000 1,750,000
Accounts Receivable:
2018 2019
Beginning balance $0 $130,000
Billings 380,000 1,620,000
Cash collection (250,000) 1,750,000
Ending balance $130,000 $0
c. Partial balance sheet (Revenue over time according to percentage of completion):
Assets:
2018 2019
Accounts receivable $130,000 $0
Equity:
Retained earnings $150,000 $225,000
d. Partial balance sheet, assuming this project does not qualify for revenue recognition over time:
Assets:
2018 2019
Accounts receivable $130,000 $0
Equity:
Retained earnings ($300,000) $675,000
If an announcement by a firm causes the price of that firm's stock to suddenly change, that price change will most likely be driven by:________.
a. the unexpected part of the announcement.
b. the expected part of the announcement
c. market inefficiency
d. systematic risk
Answers
Answer:
The correct answer is the option A: The unexpected part of the announcement.
Explanation:
To begin with, the stock market is characterized for being completely umpredictable due to the fact that the information available for the common people is not enough to predict the possible behaviors of the prices, so that means that when an unexpected announcement happens and nobody new about it then the market will react depending on how it takes the new so that explains that if something not good happens all the sudden the priece of the stocks of that company will probably go down due to the bad reception of the news.
If the monopolist can engage in perfect price discrimination, what is the marginal revenue from selling the 5th shirt
Answers
Answer:
Hello your question is incomplete, the missing part is attached below
answer : $120
Explanation:
In a perfect price discrimination situation the price( revenue ) attached to the quantity of goods is = the marginal revenue gotten
From the attached table
The price for the quantity demanded ( 5 ) = marginal revenue
i.e. Marginal revenue from selling the 5th shirt = $120
The net income reported on the income statement for the current year was $212000. Depreciation recorded on plant assets was $35500. Accounts receivable and inventories increased by $2100 and $7900, respectively. Prepaid expenses and accounts payable decreased by $1900 and $12500 respectively. How much cash was provided by operating activities?
Answers
Answer:
$226,900
Explanation:
Calculation to determine How much cash was provided by operating activities
Using this formula
Operating activities=Net income+Depreciation-Accounts receivable + inventories increased-Prepaid expenses - accounts payable decreased
Let plug in the formula
Operating activities=$212000 + $35500 - $2100 - $7900 + $1900 - $12500
Operating activities =$226,900
Therefore The Amount of cash that was provided by operating activities is $226,900
Irving Corporation makes a product with the following standards for direct labor and variable overhead: Standard Quantity or HoursStandard Price or RateStandard Cost Per Unit Direct labor 0.20hours$33.00per hour$6.60 Variable overhead 0.20hours$6.90per hour$1.38 In November the company's budgeted production was 7,200 units, but the actual production was 7,000 units. The company used 1,520 direct labor-hours to produce this output. The actual variable overhead cost was $9,880. The company applies variable overhead on the basis of direct labor-hours. The variable overhead rate variance for November is:
Answers
Answer:
Variable overheads rate variance = $608 favorable
Explanation:
The variable overhead rate variance is the difference between the standard cost of the actual labour hours and the actual variable overhead expenditure
$
1,520 hours should have cost (1,520× $6.90) 10,488
But did cost 9,880
Rate variance 608 Favorable
Variable overheads rate variance = $608 favorable
Brandon and Jane Forte file a joint tax return and decide to itemize their deductions. The Fortes' income for the year consists of $120,000 in salary, $1,000 interest income, $1,500 non qualifying dividends, and $1,100 long-term capital gains. The Fortes' expenses for the year consist of $3,000 in investment interest expense and $900 in tax preparation fees. Assuming that the Fortes' marginal tax rate is 32 percent and they make no special elections, what is the amount of investment interest expense deduction for the year
Answers
Answer: $2500
Explanation:
The amount of investment interest expense deduction for the year will be calculated thus:
The value of interest expense will be:
= Interest income + Non qualifying dividend
= $1000 + $1500
= $2500
It should be noted that the investment interest expenses will be $2500 due to the fact that thus is lesser than Fortes' expenses for the year which is $3,000 in investment interest expense.
Simone is the only provider of pumpkins for three cities. Because she has her own large garden, the marginal cost to produce an additional pumpkin is $0. As she knows, firms discriminate to improve profits. How much would her she earn in additional profit if she practiced price discrimination across cities, charging a different price in each city versus charging everyone a single price
Answers
Answer: hi your question has some missing data attached below is the missing table
answer : $9
Explanation:
If Simone practices price discriminations across cities i.e. charging different prices across city instead of charging a single price
To determine the additional profit we will apply the formula below
Profit made from charging different prices - profit made from charging a single price
= ( ( $11 * 4) + ( $9 * 4 ) + ( $10 * 5) ) - ( $11 * 11 units )
= $130 - $121
= $9
Note : For a single pricing system Simone will sell only 11 units at a unit price of $11
while for different pricing system Simone will sell 4 units in city A at$11 , 4 units in City B at $9 , 5 units in city C at $10
A public good is A. any good provided by government. B. a good that can be most cheaply provided by government, though it may in fact be provided by private enterprise. C. a good whose benefits cannot readily be restricted to a small group of people. D. a good whose benefits cannot be enjoyed by an individual alone.
Answers
Answer:
C. a good whose benefits cannot readily be restricted to a small group of people.
Explanation:
Factors of production can be defined as the fundamental building blocks used by individuals or business firms for the manufacturing of finished goods and services in order to meet the unending needs and requirements of their customers.
The four factors of production are;
I. Land: this refers to the natural resources and raw materials extracted from the ground or grown in the soil e.g oil, gold, rubber, cocoa, etc.
II. Labor (working): this is the human capital or workers who are saddled with the responsibility of overseeing and managing all the aspects of production.
III. Capital resources: it includes the physical assets used for production of goods and services such as equipment, money, plant, etc.
IV. Entrepreneurship: it is intellectual capacity required to drive a business and the skills to develop an idea into a money making venture (business).
These four (4) factors of production when combined effectively and efficiently are used for the manufacturing or production of goods and services that meets the unending requirements or needs of the consumers.
A public good is a good whose benefits cannot readily be restricted to a small group of people.
This ultimately implies that, a public good such as power utility (electricity) or water supply is capable of being provided simultaneously to the general public.
Furthermore, a public good is non-excludable and cannot be exhausted due to its use by the general public i.e it's never depleted.
To help finance a major expansion, Castro Chemical Company sold a noncallable bond several years ago that now has 20 years to maturity. This bond has a 9.25% annual coupon, paid semiannually, sells at a price of $875, and has a par value of $1,000. If the firm's tax rate is 25%, what is the component cost of debt for use in the WACC calculation
Answers
Answer:
8.09%
Explanation:
Semi annual coupon = 1000*(9.25/2)% = 46.25
N = (20*2) = 40
Using Ms Excel to get I/Y
N = 40, PV=-875, PMT = 46.25, FV = 1000
CPT I/Y = I/Y(n, -pv, pmt, fv) * 2
CPT I/Y = I/Y(40, -875, 46.25, 1000) * 2
CPT I/Y = 5.39% * 2
CPT I/Y = 10.78%
After tax cost of debt = 10.78%*(1 - 0.25)
After tax cost of debt = 10.78%*0.75
After tax cost of debt = 0.08085
After tax cost of debt = 8.09%
On January 1, 20A, two individuals invested $200,000 each to form Reiner Corporation. Reiner had total revenues of $20,000 during 20A and $50,000 during 20B. Total expenses for the same periods were $12,000 and $36,000 respectively. Cash dividends paid out to stockholders totaled $6,000 in 20A and $10,000 in 20B. What was Reiner's total stockholders' equity at the end of 20A and 20B
Answers
Answer:
Reiner Corporation
Year 20A Year 20B
Total stockholders' equity $402,000 $406,000
Explanation:
a) Data and Calculations:
Stockholders' Equity:
Year 20A Year 20B
Common stock $400,000 $400,000
Retained earnings: 2,000 6,000
Total stockholders'
equity $402,000 $406,000
Income Statement: Year 20A Year 20B
Sales revenue 20,000 50,000
Total expenses 12,000 36,000
Net income $8,000 $14,000
Retained earnings statement:
Year 20A Year 20B
Beginning retained earnings $0 $2,000
Net income $8,000 $14,000
Dividends 6,000 10,000
Ending retained earnings $2,000 $6,000
A leader has a problem of low Product X sales. She meets individually (i.e., one at a time) with a number of her subordinates and shares the problem of low Product X sales. She asks for their ideas and suggestions about how to increase Product X sales and then makes the decision alone based on their input. According to Vroom and Yetton's normative theory of leadership, what decision-making style is the leader using in this situation
Answers
Answer: CI consultative.
Explanation:
According to Vroom and Yetton's normative theory of leadership, the decision-making style that the leader is using in this situation is the consultative leadership style.
This is a form of leadership style whereby the leader seeks the opinion of his team members and then uses the input gotten from them to make a final decision. Since the leader meets them individually and seeks their opinion, the leader is using a consultative leadership style.
Zachary Airline Company is considering expanding its territory. The company has the opportunity to purchase one of two different used airplanes. The first airplane is expected to cost $23,680,000; it will enable the company to increase its annual cash inflow by $6,400,000 per year. The plane is expected to have a useful life of five years and no salvage value. The second plane costs $27,880,000; it will enable the company to increase annual cash flow by $8,200,000 per year. This plane has an eight-year useful life and a zero salvage value. Required Determine the payback period for each investment alternative and identify the alternative Zachary should accept if the decision is based on the payback approach. (Round your answers to 1 decimal place.)
Answers
Answer: See explanation
Explanation:
For the first airplane:
Payback period will be:
= Cost of first airplane ÷ Annual cash inflow
= 23,680,000 / 6,400,000
= 3.7 years
For the second airplane:
Payback period will be:
= Cost of first airplane ÷ Annual cash inflow
= 27,880,000 / 8,200,000
= 3.4 years
Since the decision is based on the payback approach, Zachary Airline should select the second option since it has a lesser payback period.
Joseph and Mary, owners of Hotel Christmas have decided to sell their property. Hotel Christmas is a five-star full-service resort and has a trailing 12 months cash flow of $6,118,000. A neighboring limited-service property, The Motel, is valued at $16,000,000. The market cap rate for five-star, full-service properties in this area is 8.5%. Under standard market conditions, approximately how much would the sale price of the Christmas
Answers
Answer:
the amount that would be considered for the sale price of the Christmas is $71,976,470.59
Explanation:
The computation of the amount that would be considered for the sale price of the Christmas is given below;
We need to apply the following formula for the same
= Cash flow ÷ cap rate
= $6,118,000 ÷ 8.5%
= $71,976,470.59
By dividing the cash flow from the cap rate we simply determined the sale price
hence, the amount that would be considered for the sale price of the Christmas is $71,976,470.59
they check the inventory in their Office Supply Closet once every 10 days, placing an order with their supplier depending on the inventory level in the closet. This week, the operator has counted 180 highlighters in the closet. They have already placed an order with a supplier for 500 highlighters that should arrive in 3 days. What is the Office Manager's Inventory Position?
Answers
Answer:
680 highlighters
Explanation:
Inventory level = 180 highlighters
On-order inventory = 500 highlighters
Inventory position = Inventory level + On-order inventory
Inventory position = 180 highlighters + 500 highlighters
Inventory position = 680 highlighters
So, the Office Manager's Inventory Position is 680 highlighters
The following units of a particular item were available for sale during the calendar year:
Jan. 1 Inventory 4,000 units at $20
Apr. 19 Sale 2,500 units
June 30 Purchase 6,000 units at $24
Sept. 2 Sale 4,500 units
Nov. 15 Purchase 1,000 units at $25
The firm maintains a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale, assuming the first-in, first-out method.
Answers
Answer:
Cost of goods sold $152,000
Closing inventory $97,000
Explanation:
Under the FIFO system , inventories are priced using the price of the oldest batch in the stock, after which the price of the next oldest batch and this is done in turn. It is based on the principle that the first batch that arrives the store should be issued first.
Total units sold = 2,500+4,500= 7,000
Using the FIFO method of the perpetual inventory, the 7,000 units sold by will be priced as follows:
2500 units at a price of $20 = $50,000
Next 1500units at a price of $20 = $30,000
Next 3,000 units at a price of $24= $72,000
Cost of goods sold 152,000
Closing inventory = Total cost of goods available for sale- cost of goods sold
Total cost of goods available for sale =
(4,000× 20) + (6,000× 24) + (1,000× $25) = 249,000
Closing inventory = 249,000 - 152,000=$97,000
Cost of goods sold $152,000
Closing inventory $97,000
1. Assume that your company is considering the lease of one of these HP copiers, and you expect that the average price for a color copy for your company would be $0.110 because you would carefully prioritize color copy jobs and reduce the number of copies requiring a large amount of color. You expect that training your copy center staff to properly use the new copier would cost about $6,150 for materials and lost work time. What is the breakeven number of color copies per year that would make you indifferent between the new HP copier and your current copier
Answers
Answer: 246,000 color copies
Explanation:
Cost of printing color pages using the old machine is not included so we will infer that.
We shall assume the cost of that to be $0.135.
In using this new copier made by HP, the cost saved per copy is:
= 0.135 - 0.110
= $0.025
The breakeven number of color copies that would make you indifferent would be the number of copies that would lead to a savings of $6,150 incurred on account of training the staff:
= 6,150 / 0.025
= 246,000 copies
Marriage between individuals who have similar social characteristics
Answers
Homogamy is the marriage between individuals who have similar social characteristics.
What is homogamy?Homogamy is the practice that involves individuals marrying each other because they have similar characteristics. It involves marriage between individuals who are, in some culturally important way, similar to each other.
The similar characteristics in homogamy include:
Race/ethnicityReligious backgroundAgeEucation backgroundSocial backgroundTherefore, marriage between individuals who have similar social characteristics is know as homogamy.
Learn more about homogamy here : https://brainly.com/question/25626127
Capable Golf Cart, Inc. (CGC) manufactures two models of golf cart: LX and EX. The budget data for next month is available. LX EX Total Units produced 50 30 80 Direct labor hours 2,000 3,000 5,000 Machine hours 1,500 1,200 2,700 Direct materials $125,000 $90,000 $215,000 Direct labor 90,000 60,000 150,000 Manufacturing overhead 202,500 Total $567,500 Required: 1. Compute the reported unit cost for each product if direct labor hours are used as the allocation base. 2. Compute the reported unit cost for each product if direct labor costs are used as the allocation base. 3. Compute the reported unit cost for each product if machine hours are used as the allocation base.
Answers
Solution :
1. Allocation on the basis of [tex]$\text{Direct labor hours}$[/tex]
LX EX
Direct Material 125000 90000
Direct [tex]$\text{labor}$[/tex] cost 90000 60000
Manufacturing overhead [tex]$81000$[/tex] [tex]$121500$[/tex]
(202500/5000 x 2000) (202500/5000 x 3000)
Total cost 296000 271500
Units produced 50 30
Cost per unit 5920 9050
2. Allocation on the basis of [tex]$\text{Direct labor costs}$[/tex]:
LX EX
Direct Material 125000 90000
Direct labor cost 90000 60000
Manufacturing overhead 121500 81000
(202500/150000 x 90000) (202500/150000 x 60000)
Total cost 336500 231000
Units produced 50 30
Cost per unit 6730 7700
3. Allocation on the basis of [tex]$\text{machine hours}$[/tex]
LX EX
Direct Material 125000 90000
Direct labor cost 90000 60000
Manufacturing overhead 112500 90000
(202500/2700 x 1500) (202500/2700 x 1200)
Total cost 327500 240000
Units produced 50 30
Cost per unit 6550 8000
Then match each of the examples below with important cash flow consideration - A project for a new holiday apprel company happen seasonality but are forecasted annually - Revenues or Costs that occur if and only if the project occurs - The Cardellas purchased tickets to Disneyland, but everyone woke up sick and no one wants to go. The tickets are said to be a... (I also hope this never happens). - A corporate jet was purchased 2 years ago. This could be utilized for a new project under consideration, but is considered a(n).... because it could be sold instead. - General Mills launched a new Pokemon Cereal so Andrew wanted to try it out instead of Lucky Charms. This is an example of a - Crayola launched a new color-stamping that only works on their ColorWonder paper. This new product is expected to also increase the sales of existing color-wonder paper. This is called a
Answers
Answer:
1. A project for a new holiday apparel company happen seasonality but are forecasted annually - TIMING OF CASH FLOWS.
This relates to the timing of cash flows chosen by the company for analysis. Even though the project is seasonal, the cashflows are considered annual.
2. Revenues or Costs that occur if and only if the project occurs - INCREMETAL REVENUE.
Incremental revenue refers to the revenue that will come to a company if they further pursue a project.
3. The Cardellas purchased tickets to Disneyland, but everyone woke up sick and no one wants to go. The tickets are said to be a... (I also hope this never happens). - SUNK COSTS
Sunk costs are costs that have already been incurred and cannot be changed so do not matter in further decision making.
4. A corporate jet was purchased 2 years ago. This could be utilized for a new project under consideration, but is considered a(n).... because it could be sold instead. - OPPORTUNITY COST.
Opportunity costs are the other options that can be chosen as an alternative to the current action. This plane could be sold or used so it the options presented make it an opportunity cost.
5. General Mills launched a new Pokemon Cereal so Andrew wanted to try it out instead of Lucky Charms. This is an example of a - NEGATIVE EXTERNALITY CALLED CANNIBALIZATION.
Cannibalization occurs when a company releases a new product and sales of this new product leads to a reduction in the sales of the company's older products.
6. Crayola launched a new color-stamping that only works on their ColorWonder paper. This new product is expected to also increase the sales of existing color-wonder paper. This is called a POSITIVE EXTERNALITY.
A positive externality occurs in sales when the new product increases the sale of the older products as is the case here.
Discuss the significance of the structure of the STAIRCASE in the home Vincent shared with Jerome in terms of the theme of this film.
Answers
Answer:
The staircase in Vincent and Jerome's apartment is spiral-shaped, representing the shape of the double-helix model of DNA. This is a focal point of many scenes, as it symbolizes the society founded upon genetics and scientific ideals. It is also a powerful symbol for life and humanity, key themes explored in the film.2
A firm is considering two different capital structures. The first option is an all-equity firm with 42,000 shares of stock. The levered option is 29,000 shares of stock plus some debt. Ignoring taxes, the break-even EBIT between these two options is $56,000. How much money is the firm considering borrowing if the interest rate is 7.9 percent
Answers
Answer:
The amount the firm considering borrowing is $244,725.74.
Explanation:
At the break-even point, we have:
Break-even EBIT / Number of shares under all-equity = (Break-even EBIT - Interest) / Number shares under lever option ..................... (1)
Substituting all the relevant values into equation (1) and solve for interest, we have:
$56,000 / 42,000 = ($58,000 - Interest) / 29,000
$1.33333333333333 = ($58,000 - Interest) / 29,000
$1.33333333333333 * 29,000 = $58,000 - Interest
$38,666.67 = $58,000 - Interest
Interest = $58,000 - $38,666.67
Interest = $19,333.33
Therefore, we have:
Amount of debt = Interest / Interest rate = $19,333.33 / 7.9% = $244,725.74
Therefore, the amount the firm considering borrowing is $244,725.74.
Wexpro, Inc., produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $62,000 per ton, one-fourth of which is allocated to product X15. Eight thousand three hundred units of product X15 are produced from each ton of clypton. The units can either be sold at the split-off point for $16 each, or processed further at a total cost of $9,800 and then sold for $19 each.
Required:
1. What is the financial advantage (disadvantage) of further processing product X15?
2. Should product X15 be processed further or sold at the split-off point?
Answers
Answer:
1) Financial advantage = $15,100
2) X15 should be processed further because it would generate 15,100
Explanation:
A company should process a product further if the additional revenue from the split-off point is greater than than the further processing cost.
Also note that all cost incurred up to the split-off point are irrelevant to the decision to process further .
$
Sales revenue after further processing
(19×8,300) 157,700
Sales revenue at the split-off point
(16×8,300) 132,800
Additional sales revenue from further processing 24,900
Less further processing cost (9,800)
Financial advantage 15,100
Financial advantage = $15,100
X15 should be processed further because it would generate 15,100