Answer:
$15
Explanation:
In order to calculate the purchasing power lost the following formulae will be used:
Purchasing power lost = Loaned amount * (inflation rate - nominal rate)
Purchasing power lost = $500 * (0.07 - 0.04)
Purchasing power lost = $500 * 0.03
Purchasing power lost = $15
Hence, the purchasing power lost after Richard repays the loan in full is $15.
The typical goal used when developing a process-oriented layout strategy is to: minimize the distance between adjacent departments. minimize the material handling costs. maximize the number of different tasks that can be performed by an individual machine. minimize the level of operator skill necessary. maximize job specialization.
Answer:
minimize the material handling costs.
Explanation:
A process-oriented layout is a strategic method or technique used by manufacturing companies to organize and develop their work areas (factories) based on the processes and activities being performed at each factory rather than on the product being manufactured.
Hence, the typical goal used when developing a process-oriented layout strategy is to minimize the material handling costs for each factory.
Process costing can be defined as a cost accounting method used for assigning manufacturing or production costs to the units of goods produced by a business firm over a specific period of time. It is mostly used by firms that produce a large quantity of homogeneous or similar products on a continuous basis. Process costing typically uses more than one Work in Process Inventory account because costing at each stage of production or manufacturing process.
Consider your current uses of tap water. Think about some of the ways that you use water that are beyond what is necessary to sustain life.
a. If the price of tap water triples, what are some likely changes that you will make to your consumption of tap water?
A. decrease the length of your showers
B. turn water off while brushing your teeth
C. leave water running while brushing your teeth
D. increase the length of your showers
b. In general, the consumption of tap water _______obey the law of demand.
Answer:
a). A. decrease the length of your showers
B. turn water off while brushing your teeth
b). does
Explanation:
When the cost of the tap water increases and it gets triple, following some of the practices can help reduce the cost of the tape water used and it will also reduce the consumption of water. Some of the changes that I can include are:
-- I can lower the length of the shower so that less amount of water is used and more water is saved.
-- It is a good habit to turn off the water while we are brushing and only turn on the tape or open the tape whenever it is necessary. In this way we can prevent wasting water and reduce our water consumption.
Thus we can say that the consumption of the tape water does obey the law of demand.
If the price of tap water triples, we would most likely:
A. decrease the length of your showersB. turn water off while brushing your teethThis means that consumption of tap water does obey the law of demand.
Law of Demand Governs demand in relation to price. Posits that when prices rise for normal goods, their demand drops. The reverse is true.By turning off water when brushing or using less water to shower, we are demanding less water as a result of an increase in price. Water therefore abides by the Law of Demand.
Find out more on the law of demand at https://brainly.com/question/4803223.
a business receives 5000 for rent and deposits this amount into its bank account. how will this transaction be recorded?
Answer:
Dr bank 5,000
Cr rent revenue 5,000
Deposit
Explanation:
It is noteworthy that the rent received is rent revenue not rent expense , going by the fact that the giving account should be credited while the receiving account is debited, the bank account being the receiving account since cash was received from the rent account would be debited while the rent revenue account would be credited as the giving account.
In another way, rent account is a revenue account, an increase in revenue should be credited while the bank account being an asset account an increase in the asset should be debited.
Research the different types of body language the people use in different cultures.
Answer:
Explanation:
Body language is an extremely important form of communication in every single culture, yet every culture has differences. For example...
Korean's tend to greet individuals with a bow. This is a form of showing respect as well as saying hello. Other cultures such as the Swiss tend to greet others with three cheek kisses.
Body language can be for many occasions such as Americans using the middle finger to show their dislike of someone. There's also Italian's closing their fingers together in form of a pinecone to show their distraught over something.
Body language has always been a way of expressing oneself and their emotions.
Using the money demand and money supply model, an open market purchase of Treasury securities by the Federal Reserve would cause the equilibrium interest rate to
Answer:
C. decrease
Explanation:
In the case when the money demand and the money supply model is used so the open market purchase would result the interest rate of equilibrium to decrease as if there is an open market purchase so it rise the money supply due to which the supply curve of the money move shiftward
Therefore the rate of interest should be decreased
The dividend yield is: multiple choice annual cash dividends per share divided by market value per share. annual cash dividends per share multiplied by market value per share. market value per share divided by annual cash dividends per share. market value per share multiplied by annual cash dividends per share.
Answer:
Annual Cash divided by the Price per share
Explanation:
Dividends are paid out by a company's earnings (cash) and is distributed annually to shareholders price per share.
Problems and Applications Q11 You are the curator of a museum. The museum is running short of funds, so you decide to increase revenue. When should you raise the admission price in order to increase revenue
Answer: Only when demand is inelastic
Explanation:
For a product that has an inelastic demand, the demand of a buyer with regards to a product has minimal changes when when there is a change in price. In such case, an increase in the price will lead to an increase in revenue.
On the other hand, for a product that has an elastic demand, there will be a greater change in the demand of the buyer when when there is a change in price. In such case, an inrease in the price will lead to an reduction in revenue as buyers will go for other products.
Therefore, the admission price should be increased when demand is inelastic in order to increase revenue.
SWH Corporation issued bonds on January 1, 2004. The bonds had a coupon rate of 5.5%, with interest paid semiannually. The face value of the bonds is $1,000 and the bonds mature on January 1, 2019. What is the yield to maturity for an SWH Corporation bond on January 1, 2010 if the market price of the bond on that date is $950
Answer:
6.23%
Explanation:
From Jan 2019 to Jan 2010 = 9 years
N = 9 years*2 = 18
PV = $950
Coupon payment = $27.5 (1000*5.5%/2)
FV = $1000
We need to solve for YTM using the MsExcel function
Yield to maturity = YTM(n, pv, pmt, fv) * 2
Yield to maturity = YTM(18, 950, 27.5, 1000) * 2
Yield to maturity = 0.03117 * 2
Yield to maturity = 0.06234
Yield to maturity = 6.23%
Required information Skip to question [The following information applies to the questions displayed below.] Hudson Co. reports the contribution margin income statement for 2019. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (9,600 units at $225 each) $ 2,160,000 Variable costs (9,600 units at $180 each) 1,728,000 Contribution margin 432,000 Fixed costs 324,000 Pretax income $ 108,000 1. Compute Hudson Co.'s break-even point in units. 2. Compute Hudson Co.'s break-even point in sales dollars.
Answer:
Results are below.
Explanation:
Giving the following information:
Fixed costs= $324,000
Unitary variable cost= $180
Selling price= $225
To calculate the break-even point in units and dollars, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 324,000 / (225 - 180)
Break-even point in units= 7,200
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 324,000 / (45/225)
Break-even point (dollars)= $1,620,000
Supply chain links are managed rather than the entire chain; therefore, a company can manage all the links in its chain.
a. Trueb. False
Answer:
True
Explanation:
3. Assume that on January 2, 2022, the copyrighted item was impaired in its ability to continue to produce strong revenues. The other intangible assets were not affected. Starn estimated that the copyright would be able to produce future cash flows of $22,100. The fair value of the copyright was determined to be $21,100. Compute the amount, if any, of the impairment loss to be recorded.
Answer:
The amount of the impairment loss to be recorded is $6,800.
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
On January 1, 2020, Starn Tool & Manufacturing Company purchased a copyright for $31,000 cash. It is estimated that the copyrighted item will have no value by the end of 10 years.
Assume that on January 2, 2022, the copyrighted item was impaired in its ability to continue to produce strong revenues. The other intangible assets were not affected. Starn estimated that the copyright would be able to produce future cash flows of $22,100. The fair value of the copyright was determined to be $21,100. Compute the amount, if any, of the impairment loss to be recorded.
The explanation of the answer is now provided as follows:
Amortization expenses for 2020 = Annual amortization expense = Copyright cost / Estimated useful life of the copyright = $31,000 / 10 = $3,100
Book value of copyright on January 2, 2022 = Copyright cost - Amortization expenses for 2020 = $31,000 - $3,100 = $27,900
Copyright fair value = $21,100
Impairment loss = Book value of copyright on January 2, 2022 - Copyright fair value = $27,900 - $21,100 = $6,800
Therefore, the amount of the impairment loss to be recorded is $6,800.
Vaughn Corporation had 303,000 shares of common stock outstanding on January 1, 2017. On May 1, Vaughn issued 31,200 shares.
Required:
a. Compute the weighted-average number of shares outstanding if the 31,200 shares were issued for cash.
b. Compute the weighted-average number of shares outstanding if the 29,700 shares were issued in a stock dividend.
Answer and Explanation:
The computation of the weighted-average number of shares outstanding in each cases is as follows:
a. At the time when the shares are issued at cash
= (303,000 × 12 ÷ 12) + (31,200 × 8 ÷ 12)
= 303,000 + 20,800
= 323,800 shares
b. At the time when the shares are issued in the stock dividend
= (303,000 × 12 ÷ 12) + (29,700 × 12 ÷ 12)
= 303,000 + 29,700
= 332,700 shares
When writing goals, it is helpful to remember the acronym SMART. Different people associate different words with each of the letters in the SMART acronym, but for the purposes of this problem, SMART means that effective goals are:
1. Specific. A good goal defines exactly what you expect to accomplish. When your goals are specific, the behaviors required to accomplish them are clear. Many people say that they want to recycle to save the environment, but a better goal would be "Place every used bottle or can in a recycling container within five minutes of finishing its contents."
2. Measurable. You can measure the outcomes of a good goal. When you measure how much of a goal you have attained, you get feedback on your work. For example, compare the goal "I want to be skinny" with "I want to lose 10 pounds by the end of the month." How can you measure skinny? But by measuring the pounds you have lost so far, you know exactly how close you are to meeting your goal.
3. Attainable. Good goals are hard to reach, but not impossible. If a goal is too easy, you will not have to work hard to attain it, and your overall performance will not improve. If a goal is too hard, you will be discouraged from attempting to reach it. One way of making sure that goals are attainable is to break larger, difficult goals into smaller, more easily accomplished subgoals.
4. Result-oriented. A good goal contains only one outcome or accomplishment. If you combine two or more outcomes in one goal, it will be difficult to decide where to focus your attention. For example, "To increase produce sales by 3% and to achieve a 5% market share" is a less effective goal than "To increase produce sales by 3%."
5. Time-bound. Good goals specify precisely when you will meet them. Doing so provides you with a deadline for your actions. For example, it is easy to say "I want to be a millionaire." but you are more likely to accomplish that goal if you say "I will have a million dollars in a bank account by January 1, 2020."
Using your knowledge of SMART goals, select the best goal. After the new product is released, I will hire some new salespeople.
a. I will hire three new salespeople prior to our next product release.
b. I will hire three new salespeople soon.
c. I will hire some salespeople to help with the new product release.
Answer:
a. I will hire three new salespeople prior to our next product release.
Explanation:
Smart goals are specific, measurable, attainable, result oriented and time bound. When a new product is released, new sales person will help boost sales of the product. The sales person will inform customers about the new product features and specifications. The customers will be able to choose the product based on their preference.
In its income statement for the year ended December 31, 2022, Sheffield Corp. reported the following condensed data.
Operating expenses $725,000
Interest revenue $38,000
Cost of goods sold 1,261,000
Loss on disposal of plant assets 22,000
Interest expense 76,000
Net sales 2,204,000
Income tax expense 50,000
Other comprehensive income (net of $1,200 tax) 8,800
Required:
Prepare a multiple-step income statement.
Answer:
Sheffield Corp.
Multiple-step income statement for the year ended December 31, 2022
Net sales $2,204,000
Less Cost of goods sold ($1,261,000)
Gross Profit $943,000
Less Operating Expenses :
Operating expenses $725,000 ($725,000)
Operating Profit $218,000
Less Non Operating Expenses :
Interest revenue ($38,000)
Loss on disposal of plant assets $22,000
Interest expense $76,000
Income tax expense $50,000 ($110,000)
Net Profit $108,000
Other Comprehensive Income
Other comprehensive income (net of $1,200 tax) $8,800
Total Profit and loss and comprehensive income $116,800
Explanation:
A multiple-step income statement shows separately profit derived from primary activities and that derived from secondary activities as shown above.
Taveras Corporation is currently operating at 50% of its available manufacturing capacity. It uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production 200,000 Fixed manufacturing overhead cost $ 2,800,000 Variable manufacturing overhead cost per machine-hour $ 2.00 Required: 1. Compute the plantwide predetermined overhead rate. 2. During the year, Job P90 was started, completed, and sold to the customer for $3,200. The following information was available with respect to this job: Direct materials $ 1,472 Direct labor cost $ 1,056 Machine-hours used 79 Compute the total manufacturing cost assigned to Job P90.
Answer:
the total manufacturing cost assigned to Job P90 is $3,792
Explanation:
The computation of the total manufacturing cost assigned to Job P90 is given below:
But before that the predetermined overhead rate should be calculated
So,
= ($2,800,000 ÷ 200,000) + $2
= $16
Now the total manufacturing cost is
= $1,472 + $1,056 + 79 × $16
= $3,792
hence, the total manufacturing cost assigned to Job P90 is $3,792
Your review of the ledger reveals that each account has a normal balance. You also discover the following errors. 1. The totals of the debit sides of Prepaid Insurance, Accounts Payable, and Utilities Expense were each understated $100. 2. Transposition errors were made in Accounts Receivable and Service Revenue. Based on postings made, the correct balances were $2,570 and $8,960, respectively. 3. A debit posting to Salaries and Wages Expense of $200 was omitted. 4. A $1,600 cash dividend was debited to Common Stock for $1,600 and credited to Cash for $1,600. 5. A $450 purchase of supplies on account was debited to Equipment for $450 and credited to Cash for $450. 6. A cash payment of $530 for advertising was debited to Advertising Expense for $53 and credited to Cash for $53. 7. A collection from a customer for $540 was debited to Cash for $540 and credited to Accounts Payable for $540. Prepare a correct trial balance. (Hint: It helps to prepare the correct journal entry for the transaction described and compare it to the mistake made.)
Answer:
Debit side $29,660
Credit side $29,660
Explanation:
Preparation of a correct trial balance
DOMINIC COMPANY
Corrected Trial Balance May 31, 2015
DEBIT SIDE
Cash $5,023
($5,050 +$450 - $477)
($530-$53=$477)
Accounts Receivable $2,030
($2,570 - $540)
Prepaid Insurance $930
($830 + $100)
Supplies $450
Equipment $12,750
($13,200 - $450)
Salaries and Wages Expense $4,530
($4,330 + $200)
Advertising Expense $1,447
($970 + $477)
($530-$53=$477)
Utilities Expense $900
($800 + $100)
Dividends $1,600
TOTAL $29,660
CREDIT SIDE
Accounts Payable $5,510
($5,700 - $100 + $450 - $540)
Unearned Service Revenue $690
Common Stock $14,500
($12,900 + $1,600)
Service Revenue $8,960
TOTAL $29,660
Therefore the CORRECTED TRIAL BALANCE will be:
Debit side $29,660
Credit side $29,660
8. Why is the failure of a large bank more detrimental to the economy than the failure of a large steel manufacturer?
Answer:
Following are the responses to the given question:
Explanation:
Banks are just an integral aspect of an economy's flow of money. When a big steel factory fails, jobs and GDP will be lost, yet financing inside the economy would not be available because of the main banking collapse in decrease its availability of credit throughout the industry, a large bank is unable to do even more damage to the economy than a huge metal fabricator.
Victoria received $500 from customers in partial payment for accounting services performed
previously. The recording of this transaction would
A) increase Cash and increase Accounts Receivable $500.
B) decrease Accounts Receivable and increase Victoria's Capital $500.
C) increase Cash and decrease Accounts Receivable $500.
D) increase Cash and Victoria's Capital $500
Answer:
C) increase Cash and decrease Accounts Receivable $500
Victoria received $500 from customers in partial payment for accounting services performed previously, then he increases Cash and decrease Accounts Receivable $500.
What is Accounts Receivable?Accounts receivable, is often known as AR or A/R, are legally enforceable claims for payment held by a company for products or services provided but not paid for by consumers.
The amount of account receivables increases as the payment is due from some debtors, and it decreases as the payment is received from the debtors.
In the given case, Victoria received $500 from customers in partial payment for accounting services performed previously, then the amount of cash in hand increases and the account receivables decreases as the amount is received from the past debtors.
Therefore, option C is correct.
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Sam and Sally Green have a standard homeowners policy with no endorsements. The dwelling is insured for its full value. Indicate whether or not each of the following losses is covered and under what coverage. Specify why each loss is covered or not covered.
a. The Green's valuable dog is stolen from their back yard.
b. Sally takes off her wedding ring in a public restroom to wash her hands. She accidentally leaves the ring behind.
c. While the Green's are vacationing in Europe, their hotel room is robbed. The thief gets away with jewels and cash.
d. While practicing his chip shot in the yard, Sam accidentally sends a golf ball crashing through the dining room window.
Answer:
a. Not covered
b. Not covered
c. Covered
d. Covered
Explanation:
Sam and Sally have standard homeowner policy. There are no endorsements to the policy. The standard policy will cover the house damage due to accident or some other reasons unintentionally. When dog is stolen this is not covered in the policy as there is no endorsement for the dog security insurance in the policy. Sally has left her ring due to her carelessness and thus this is also not covered in the policy. When Sam accidentally breaks dining room window this will be covered in the basic policy.
Jolene Kendrick borrowed $24,000 for new computers for her software production company. Her bank granted her a single-payment loan of $24,000 for 144 days. Determine the maturity value to the nearest cent of the loan if the rate is 9% exact interest. Do not use comma in your answer.
Answer:
248521.6
Explanation:
Given:
Amount borrowed, P = 240,000
Interest rate, R = 9% = 0.09
period, n = 144 days
The maturity value :
Since it is an exact interest, number of days, T in a years is 365
Using the formula :
A =
P(1 + RT)
A = 240000(1 + 0.09*(144/365))
A = 240000(1 + 0.0355068)
A = 240000(1.0355068)
A = 248521.64
A = 248521.6
The five new production assistants at Hollywood Studios will attend an orientation meeting on their first day. During orientation, they will learn what is expected of them and how they fit into the ___ culture.
Answer: Corporate
Explanation:
Corporate culture simply refers to the standards, shared values, attitudes, and beliefs by which the members of an organization are characterized.
The corporate culture is important in guiding how the employees of an organization think and act as it symbolizes the personality of the company shows its core beliefs. New employees are expected to know the corporate culture of an organization.
What is the importance of desert in a meal?
Answer:
To enhance human satisfaction after taking a meal and makes up for low blood sugar
Explanation:
The importance of desserts in a meal cannot be overstated. One of which is "to enhance human satisfaction after taking a meal and makes up for low blood sugar."
This is simply because desserts are sweet courses usually taken at the end of a meal. They have a high quantity of sugar. Also, sugar or sugary foods have been confirmed to enhance people's mood as it is believed it elevates happiness hormones.
Eastwick produces and sells three products. Last month's results are as follows: P1 P2 P3 Revenues $ 100,000 $ 200,000 $ 200,000 Variable costs 40,000 140,000 80,000 Fixed costs total $200,000. What is Eastwick's break-even sales volume
Answer:
$416,667
Explanation:
Calculation to determine Eastwick's break-even sales volume
First step is to calculate the Contribution margin (CM)
CM = ($100,000 – $40,000) + ($200,000 – $140,000) + ($200,000 – $80,000)
CM=$60,000+$60,000+$120,000
CM = $240,000
Second step is to calculate CM%
CM% = $240,000/$500,000
CM% = 48%
Now let calculate the Break-even sales volume
Break-even sales volume = $200,000/.48
Break-even sales volume = $416,667
Therefore Break-even sales volume is $416,667
The amount of the estimated average income for a proposed investment of $60,000 in a fixed asset, giving effect to depreciation (straight-line method), with a useful life of four years, no residual value, and an expected total income yield of $21,600, is: Group of answer choices $10,800 $21,600 $ 5,400 $30,000
Answer:
$5,400
Explanation:
Calculation to determine the estimated average income
Using this formula
Estimated average income=Expected total income yield/Useful life
Let plug in the formula
Estimated average income= $21,600 ÷ 4
Estimated average income= $5,400
Therefore the estimated average income is $5,400
Wine and Roses, Inc. offers a 5.5 percent coupon bond with semiannual payments and a yield to maturity of 6.32 percent. The bonds mature in 11 years. What is the market price of a $1,000 face value bond?a. $1,008.79b. $1,431.32c. $1,504.37d. $935.69e. $1,367.02
Answer:
d. $935.69
Explanation:
The computation of the market price of the bond is shown below:
Given that
Future value be $1,000
RATE = 6.32% ÷ 2 = 3.16%
NPER = 11 × 2 = 22
PMT = $1,000 × 5.5% ÷ 2 = $27.50
The formula is shown below:
=-PV(RATE,NPER,PMT,FV,TYPE)
After applying the above formula, the market price of the bond is $935.69
Tutor, Inc. (TI) provides instructional services to its customers. TI charges $330 per student. The Company expects to serve 1,150 students during the coming year. All of the Company's expenses are fixed. Total annual fixed cost are projected to be $125,000. If the estimated number of students increase by 20%, net income will increase by: (Round your final answer to the nearest percent.)
Answer:
Net income will increase by 30%.
Explanation:
Projected total fixed cost = $125,000
Fee per student = $330
Percentage increase in the old number of students = 20%
Old number of students = 1,150
New number of students = Old number of students * (100% + Percentage increase in the old number of students) = 1,150 * (100% + 20%) = 1,380
Old revenue = Fee per student * Old number of students = $330 * 1,150 = $379,500
New revenue = Fee per student * New number of students = $330 * 1,380 = $455,400
Old net income = Old revenue - Projected total fixed cost = $379,500 - $125,000 = $254,500
New net income = New revenue - Projected total fixed cost = $455,400 - $125,000 = $330,400
Therefore, we have:
Percentage increase in net income = ((New net income – Old net income) / Old net income) * 100 = (($330,400 - $254,500) / $254,500) * 100 = 30%
Therefore, net income will increase by 30%.
Ace Industries manufactures high quality auto parts. Recently Ace found that auto repair shop owners were talking customers into buying lower quality goods. Ace invited the shop owners to a meeting in Florida and showed them how to make more money selling high quality auto parts. This is a good example of expert channel power.
Answer:
True
Explanation:
The capacity of a channel member to influence or affect the judgement and behavior of yet another distribution channel, or one network member's capacity for affect with another distribution channel, is referred to as channel power.
The idea that a business in a political relationship possesses important expertise, knowledge, or abilities in a relevant field to its distribution network partner is referred to as expert authority in marketing channel writing.
Thus, from the above we can conclude that the given statement is true.
Assign each of the following to a category of GDP. Assume products are made domestically unless indicated otherwise:
You buy a carmultiple:____.
1. Consumption
2. Investment
3. Govt. Purchases
4. Imports or Exports
A bakery buys a new:_____.
A. Consumption
B. Investment
C. Govt. Purchases
D. Imports or Exports
You get a haircut:_____.
A. Consumption
B. Investment
C. Govt. Purchases
D. Imports or Exports
Your town buys a fire truck:_____.
A. Consumption
B. Investment
C. Govt. Purchases
D. Imports or Exports
You buy shoes made in Thailand:_____.
A. Consumption
B. Investment
C. Govt. Purchases
D. Imports or Exports
The Federal Government builds a bridge:_____.
A. Consumption
B. Investment
C. Govt. Purchases
D. Imports or Exports
A private hospital buys a new MRI machine:_____.
A. Consumption
B. Investment
C. Govt. Purchases
D. Imports or Exports
You stay in a hotel in Italy:_____.
A. Consumption
B. Investment
C. Govt. Purchases
D. Imports or Exports
Answer:
*Buy Car = Consumption
*A bakery buys a new = Investment
*You get a haircut = Consumption
*Fire truck = Govt. purchase
*Buy shoes made in Thailand = Import or export
*Government build bridge = Govt. purchase
*Buy new MRI machine = Investment
*Stay in hotel in Italy = Import or Export
Explanation:
The component of GDP is Consumption, Investment, Government Expenditure, and import-export. Here, consumption is denoted by C, Investment is denoted by I, Government expenditure is denoted by G and Import-export is denoted by NX. Since the car bought for use that means the person is consuming it. While the haircut includes the consumption of service and buying a new bakery is an investment. Similarly below is the list for which the following product belongs.
*Buy Car = Consumption
*A bakery buys a new = Investment
*You get a haircut = Consumption
*Fire truck = Govt. purchase
*Buy shoes made in Thailand = Import or export
*Government build bridge = Govt. purchase
*Buy new MRI machine = Investment
*Stay in hotel in Italy = Import or Export
A firm that purchases electricity from the local utility for $300,000 per year is considering installing a steam generator at a cost of $260,000. The cost of operating this generator would be $210,000 per year, and the generator will last for five years. If the firm buys the generator, it does not need to purchase any electricity from the local utility. The cost of capital is 11%. For the local utility option, consider five years of electricity purchases. For the generator option, assume immediate installation, with purchase and operating costs in the current year and operating costs continuing for the next four years. Assume payments under both options at the start of each year (i.e., immediate, one year from now,..., four years from now). What is the net present value of the more attractive choice?
Answer:
The net present value of the more attractive choice is:
= $1,108,800 (paying for local utility)
Explanation:
a) Data and Calculations:
Project period = 5 years
Cost of capital = 11%
Local Utility Steam Generator
Operating cost per year $300,000 $210,000
Cost of steam generator $260,000
PV (annuity factor
at 11% for 5 years) 3.696
PV (annuity factor
at 11% for 4 years) 3.102
Present value $1,108,800 ($300,000 * 3.696)
Present value of steam generator/
operating cost for the 1st year $470,000
Present value of operating cost for 4 years 651,420 ($210,000 * 3.102)
Net present value $1,108,800 $1,121,420
Paying for the local utility is more attractive with a net present value savings of $12,620 ($1,121,420 - $1,108,800)
Explain the 5 marketing objectives?
Answer:
creation of demand
customer satisfaction
market share
generation for profits
public image