Boatler Used Cadillac Co. requires $800,000 in financing over the next two years. The firm can borrow the funds for two years at 9 percent interest per year. Mr. Boatler decides to do forecasting and predicts that if he utilizes short-term financing instead, he will pay 6.75 percent interest in the first year and 10.55 percent interest in the second year. Determine the total two-year interest cost under each plan. Which plan is less costly?
Answers
Answer:
Explanation:
Amount required 800000
Plan-1 9% per Annum
Year -1 800000 9% 72000
Year -2 800000 9% 72000
Total interest 144000
Plan-2
Year -1 800000 6.75% 54000
Year -2 800000 10.55% 84400
Total interest 138400
Interset cost
Plan-1 144000
Plan-2 138400
Plan 2 is more benificial because interest cost is lesser than plan-1
Answer:
Plan1=$144000 Plan2= $138400
Plan two is lower than plan 1 interest so it is the better plan
Explanation:
First option
$800000×0.09 =72000
So for two years
$72000×2=$144000
Second option
first year
800000×0.0675=$54000
second year
800000×0.1055=$84400
adding the two
$54000+$84400
=$138400
Plan two is lower than plan 1 interest so it is the better plan
Related Questions
A put and a call have the following terms: Call: strike price $50 expiration date six months Put: strike price $50 expiration date six months The price of the stock is currently $55. The price of the call and put are, respectively, $9 and $1. What will be the profit from buying the call or buying the put if, after six months, the price of the stock is $40, $50, or $60?
Transfer Pricing, Idle Capacity Mouton & Perrier, Inc., has a number of divisions that produce liquors, bottled water, and glassware. The Glassware Division manufactures a variety of bottles that can be sold externally (to soft-drink and juice bottlers) or internally to Mouton & Perrier's Bottled Wat Division. Sales and cost data on a case of 24 basic 12-ounce bottles are as follows Unit selling price Unit variable cost Unit product fixed cost* Practical capacity in cases $350,000/500,000 During the coming year, the Glassware Division expects to sell 390,000 cases of this bottle. The Bottled Water Division currently plans to buy 100,000 cases on the outside market for $2.95 each. Ellyn Burridge, manager of the Glassware Division, approached Justin Thomas, manager of the Bottled Water Division, and offered to sell the 100,000 cases for $2.89 each. Ellyn explained to Justin that she can avoid selling costs of $0.12 per case by selling internally and that she would split the savings by offering a $0.06 discount on the usual price $2.95 $1.25 $0.70 500,000 Required 1. What is the minimum transfer price that the Glassware Division would be willing to accept? Round to the nearest cent. per unit What is the maximum transfer price that the Bottled Water Division would be willing to pay? Round to the nearest cent. per unit Should an internal transfer take place? Yes What would be the benefit (or loss) to the firm as a whole if the internal transfer takes place? Benefit V $ 2. Suppose Justin knows that the Glassware Division has idle capacity. Do you think that he would agree to the transfer price of $2.89? No Suppose he counters with an offer to pay $2.40. If you were Ellyn, would you be interested in this price? Yes 3. Suppose that Mouton & Perrier's policy is that all internal transfers take place at full manufacturing cost. What would the transfer price be? Round to the nearest cent. per unit
If we accept "consumer satisfaction" as the objective of our macro-marketing system, this means that: consumer educators should choose what products should be produced. "home economists" will be the best judges of what should be produced. each consumer should decide how best to satisfy his or her own wants. not every consumer should be allowed to decide his or her own wants. government planners should choose the kinds of products to be produced.
Which statement bestexplains the association between a risk factor and the development of adisease?a. Anyone with a risk factor will develop the disease.b. The absence of a risk factor guarantees freedom from the disease.c. The fewer risk factors for a disease, the better the chances for good health.d. Interventions must be targeted to each individual risk factor.e. Risk factors tend to be short-lived, so their presence does not predict long-term risk ofdisease.
Answers
Answer:
The correct answer is 3.
Explanation:
According to the scenario, the computation of the given data are as follows:
Variable cost = Cost of goods sold (variable) + Supplies
= $50,000 + $10,000 = $60,000
Fixed cost = Cost of goods sold (fixed) + Administrative salaries + Depreciation
= $8,000 + $42,000 +$10,000 = $60,000
So, we can calculate the operating leverage by using following formula:
Operating leverage = Contribution margin ÷ Net operating income
Where, Contribution Margin = Sales revenue - Variable cost
= $150,000 - $60,000 = $90,000
And Net operating income = Contribution Margin - Fixed Cost
= $90,000 - $60,000 = $30,000
By putting the value, we get
Operating leverage = $90,000 ÷ $30,000
= 3
Answers
Answer:
14.52%
Explanation:
The computation of the rate of return on the stock is shown below:-
The expected rate of return on the stock = Beta × (Rate of return - Market rate of return)
= 1.2 × (0.121 - 0.145)
= - 2.88%
So, the expected rate of return on the stock = Current percentage - expected rate of return on the stock
= 0.174 - 0.0288
= 14.52%
Therefore we simply applied the above formulas
Answers
Answer:
The correct answer is (D)
Explanation:
One of the most significant perspectives to be considered in connection is to frame a benchmark plan. Execution estimation and target-setting are essential to the development procedure, however a pattern plan is basic and is considered as an initial step. While numerous private companies can run themselves easily without target-setting, however every organisation must have a plan and a way to execute those plan.
Answers
Answer:
present worth A: 513,821.51
present worth B: 431,013.1
We should choose option B as the present worth is lower.
the IRR cannot be calculated when all teh cashflow are negative as it the rate which makes the present value equal to zero. that means it will discount either the negative or postive subsequent cashflow to match an initial of the opposite sign.
Explanation:
For the intenal rate of return we must look for which rate makes the cost equal to zero.
For the opportunity cost, we solve for the present value of eahc discounted at the given rate of 9%
Method A
discount rate 0.09
# Cashflow Discounted
0 300000 300000
1 66000 60550.46
2 66000 55550.88
3 66000 50964.11
4 66000 46756.06
NPV 513821.51
Method B
# Cashflow Discounted
0 120000 120000
1 96000 88073.39
2 96000 80801.28
3 96000 74129.61
4 96000 68008.82
NPV 431013.1
B) This represents what happens to a business when a major change takes place due to the introduction of new technology
C) This represents what happens to a business when a major change takes place due to a change in customers' values or a change in what customers prefer
D) This represents what happens to a business when a major change takes place due to a differentregulatory environment
E) A new CEO is an example of a strategic inflection point.
Answers
Answer:
The correct anwer is E) A new CEO is an example of a strategic inflection point.
Explanation:
The statement that "A new CEO is an example of a strategic inflection point" is false since to determine a strategic inflection point we rely on other factors that affect companies such as the power of competitors, the power of customers, the power of potential competitors, the power of suppliers and the power of substitutes.
For example, if my product or service is exceeded 10 times more by the competition in quality or price; we are talking about a strategic inflection point.
Answers
Answer:
The change in each transaction is indicated by the bold letter. Also the numerical value has benn added or subtracted. At each transaction the total of the assets and the total of the liabilities and Owner's equity remains the same.
Explanation:
Keystone Computer Timeshare Company
Assets = Liabilities + Owner's Equity
1. + Computers = + Accounts Payable
+$20,000= +$20,000 +Owner's Equity
2. -Cash + Computers = + Accounts Payable +Owner's Equity- Expense
-3000 + 20,000= + 20,000 + OE - 3000
3. + Cash + Computers- Accounts Receivable = + Accounts Payable +Owner's Equity- Expense
12,000 + 20,000 - (15000) = + 20,000 + OE - 3000
4. + Cash + Computers- Accounts Receivable = + Accounts Payable +Owner's Equity- Expense+ revenue
12,000+2700 + 20,000 - (15000) = + 20,000 + OE - 3000+ 2700
5. - Cash + Computers- Accounts Receivable = + Accounts Payable +Owner's Equity- Expense+ revenue
1,000+2700 + 20,000 - (15000) = + 20,000 + OE - 3000+ 2700- 11000
6. + Cash + Computers- Accounts Receivable = + Accounts Payable + Owner's Equity- Expense+ revenue
33000+2700 + 20,000 - (15000) = + 20,000 + 32000 - 14000+ 2700
7. -Cash + Computers- Accounts Receivable = - Accounts Payable +Owner's Equity- Expense+ revenue
13000+2700 + 20,000 - (15000) = 32000 - 14000+ 2700
8. Cash + Computers- Accounts Receivable = +Accounts Payable Owner's Equity- Expense+ revenue
13000+2700 + 20,000 - (15000) = 840 +32000 - 14000+ 2700- 840
13000+2700 + 20,000 - (15000) =840 + 19,860
Assets = Liabilities + Owner's Equity
20,700 = 840 + 19,860
The bold letter in each transaction denotes the change. Additionally, the numerical value has been increased or decreased. The totals of the assets, liabilities, and owner's equity remain constant from transaction to transaction.
Timeshare company Keystone Computer
Assets are equal to Liabilities plus Owner's Equity.
1. Accounts Payable plus computers
$20,000 + Owner's Equity = $20,00
2. Owner's equity + Cash + Computers = + Accounts Payable + Expense
-3000 + 20,000= + 20,000 + OE - 3000
3. Accounts Payable + Owner's Equity + Cash + Computers - Accounts Receivable = Expense
12,000 + 20,000 - (15000) = + 20,000 + OE - 3000
4. Owner's equity + Cash + Computers + Accounts Receivable equals + Accounts Payable + Revenue + Expense
12,000+2700 + 20,000 - (15000) = + 20,000 + OE - 3000+ 2700
5. Owner's equity + Cash + Computers + Accounts Receivable + Accounts Payable = Expense + Revenue
1,000+2700 + 20,000 - (15000) = + 20,000 + OE - 3000+ 2700- 11000
6. Cash Computers = Accounts Payable + Accounts Receivable + Owner's Equity = Cost + Income
33000+2700 + 20,000 - (15000) = + 20,000 + 32000 - 14000+ 2700
7. Cash + Computers + Accounts Receivable = Owner's Equity + Accounts Payable + Expense + Revenue
13000+2700 + 20,000 - (15000) = 32000 - 14000+ 2700
8. Cash + Computers - Accounts Receivable - Accounts Payable = + Accounts Payable Owner's Equity - Expense + Revenue
13000+2700 + 20,000 - (15000) = 840 +32000 - 14000+ 2700- 840
13000+2700 + 20,000 - (15000) =840 + 19,860
Assets are equal to Liabilities plus Owner's Equity.
20,700 = 840 + 19,860
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