BUSINESS COLLEGE

The plant manager has asked you to do a cost analysis to determine when currently owned equipment should be replaced. The manager stated that under no circumstances will the existing equipment be retained longer than two more years and that once it is replaced, a contractor will provide the same service from then on at a cost of $97,000 per year. The salvage value of the currently owned equipment is estimated to be $37,000 now, $30,000 in 1 year, and $19,000 two years from now. The operating cost is expected to be $85,000 per year. Using an interest rate of 10% per year, determine when the defending equipment should be retired. Annual Worth of Defender, Year 1

Answers

Answer 1
Answer:

Answer:

Year 1 Annual Worth of Defender -$95,700

Explanation:

Calculation to determine when the defending equipment should be retired

Year 1 Total Annual worth=-$37,000(AP 10%,1)-$85,000+($30,000 (AP 10%,1)

Year 1 Total Annual worth=-$37,000(1.10)-$85,000+$30,000(1.000)

Year 1 Total Annual worth= -$95,700

Therefore Total Annual worth of currently owned equipment for year 1 is -$95,700

Year 2 Total Annual worth=-$37,000(AP 10%,2)-$85,000+($30,000 (AP 10%,2)

Year 2 Total Annual worth=-$37,000(0.57619)-$85,000+$19,000(0.47619)

Year 2 Total Annual worth=-$97,217

Therefore the Total Annual worth of currently owned equipment for year 2 is $-97,271

Therefore Based on the above calculation the

the economic service life of equipment will be year 1 reason been that Year 1 Total annual worth of costs of the amount of -$95,700 is lesser in a situation where the equipment is been retained for 1 year.

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The Perez Company had a 12.5% return on a $100,000 investment in new equipment. The investment resulted in increased sales, and the resultant increase in income amounted to 5% of sales. The turnover (asset utilization) was:

Answers

Answer: 2.5

Explanation:

The Turnover (Asset Utilization) is calculated by dividing the business Turnover (Sales) by it's Assets.

We have the amount of assets (Investment). Now we have to calculate the Sales.

The Net Income was 12.5% of $100,000 so solving for that would be,

= 0.125 * 100,000

= $12,500

$12,500 was the Net Income.

It was said that the Net Income was 5% of sales so using algebra we have,

12,500= 0.05x

x = 12,500/0.05

= $250,000

With sales of $250,000 we can calculate the Turnover as,

Asset Turnover = Sales / Assets( Investment)

= 250,000/100,000

= 2.5

If you need any clarification do react or comment.

Answer:

The Turnover = 2.5

Explanation:

Step 1 : Find Net income

Return on Investment (ROA) = Net income/ Assets

12.5%=Net Income/$100,000

Net income = $100,000*12.5%

Net income= $12,500

Step 2 : Calculate Sales

Net income = Sales *5%

Therefore substitute known values

Sales = $12,500 *100/5

Sales = 250,000

Step 3 : Calculate Turnover ratio

Turnover = sales/ Assets

               = 250,000/100,000

              =2.5

The capital accounts of Harrison and Marti have balances of $160,000 and $110,000, respectively, on January 1, the beginning of the current fiscal year. On April 10, Harrison invested an additional $20,000. During the year, Harrison and Marti withdrew $96,000 and $78,000, respectively, and net income for the year was $264,000. The articles of partnership make no reference to the division of net income. Based on this information, the statement ofBased on this information, the statement of partners' equity would show what amount in the capital account for Harrison on December 31?a.$164,000b.$216,000c.$52,000d.$380,000

Answers

Answer:

b.$216,000

Explanation:

The computation of the balance in the capital account for Harrison is shown below:

= Opening balance + additional invested amount - withdrawn amount + net income distributed

= $160,000 + $20,000 - $96,000 + $132,000

= $216,000

We assume that the net income is equally distributed.

Since we have to determine for the Harrison only so we ignored the Marti data which is given in the question

​Jensen's Travel Agency has a 7 percent preferred stock outstanding that is currently selling for​ $48 a share. The preferred stock has a​ $100 par value. The market rate of return is 10 percent and the​ firm's tax rate is 34 percent. What is the​ Jensen's cost of preferred​ stock?

Answers

Answer:

$20.83

Explanation:

The computation of the cost of preferred stock is shown below:

Cost of preferred stock = (Dividend × par value) ÷ (current selling price) × 100

                                       = (10% × 100) ÷ ($48) × 100

                                       = 10 ÷ 48 × 100

                                       = $20.83

Simply we divide the dividend by the current selling price so that the cost of preferred stock can be computed

All other information which is given is not relevant. Hence, ignored it

15–1. Undue Influence. Juan is an elderly man who lives with his nephew, Samuel. Juan is totally dependent on Samuel’s support. Samuel tells Juan that unless he transfers a tract of land he owns to Samuel for a price 35 percent below its market value, Samuel will no longer support and take care of him. Juan enters into the contract. Discuss fully whether Juan can set aside this contract.

Answers

Answer: It is Voidable

Explanation:

Samuel took advantage of his fiduciary responsibility is taking care of Juan to unfairly influence him to sell him a piece of land at a price 35% below market price. Juan as an old man who is TOTALLY dependant on Samuel, felt he had no choice but to agree as failure to do so will lead to Samuel no longer taking care of him and this could be quite disadvantageous to him.

There was UNDUE INFLUENCE and Coercion in this scenario which means Voluntary consent was lacking.

For this reason, the contract can be voided.

An company buys a color printer that will cost $18,000 to buy, and last 5 years. It is assumed that it will require servicing costing $500 each year. What is the equivalent annual annuity of this deal, given a cost of capital of 12%? A. -$3983 B. -$4002 C. -$4957 D. -$5493

Answers

Answer:

The correct answer is option (D)

Explanation:

Solution

Given that:

The present value of equity factor for 5 years at 12% discount are = 3.60478

Then,

The present value of servicing costing = -$500 * 3.60478 = -$1802.39

Thus,

The present value of cost to buy =- $18000

The total Present value = -18000 + 1802.39 = -$19802.39

So,

The equivalent annual annuity = total Present value / present value of equity factor

= -$19802.39 / 3.60478

= -$5493.37

Therefore, the equivalent annual annuity of this deal is -$5493.37

oo, Inc., has arranged a line of credit that allows it to borrow up to $55 million at any time. The interest rate is .631 percent per month. Additionally, the company must deposit 5 percent of the amount borrowed in a non-interest bearing account. The bank uses compound interest on its line-of-credit loans. If the company needs $31 million for 8 months, how much will it pay in interest

Answers

Answer:

$1,684,084.19

Explanation:

If the company needs $31 million, and it must deposit 5% of what it borrows in a non-interest bearing account, then to have a net borrowing of $31 million, the amount it must borrow, B, is

B * (1 - 5%) = 31 million

= 0.95B = 31 million

and B = $32,631,578.95.

At 0.631% interest rate per month, for 8 months, the amount to be repaid after 8 months

= 32,631,578.95*(1.00631^(8))=34,315,663.14

Therefore, the amount paid in interest = 34,315,663.14 - 32,631,578.95

= $1,684,084.19.
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