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MariettaO [177]
2 years ago
14

A company opting to boost its sales of branded footwear by offering buyers 500 models/styles to choose from should consider redu

cing the 15 million annual costs for production run setup costs associated with producing 500 models/styles at each production facility by:
A. doubling its expenditures for enhanced styling/features to also increase the S/Q ratings of its footwear brand.
B. cutting the percentage use of superior materials to help cover some (preferably all) of the costs of the $15 million in annual production run setup costs at each production facility producing 500 models/styles.
C. building production facilities in all four geographic regions and producing 500 models/styles at each location.
D. investing in production improvement option B at those production facility locations producing 500 models.
E. instituting production improvement options A and C at each production facility where 500 models are being produced.
Business
1 answer:
Pavel [41]2 years ago
4 0

Answer:

D. investing in production improvement option B at those production facility locations producing 500 models.

You might be interested in
Acme Sales calls its customers after they purchase an automobile from the dealership. In addition, every year customers are aske
iren [92.7K]

Answer:

open

Explanation:

Based on the description provided, it seems that Acme Sales is an example of an open system. This is a system that has external interactions which deals with information, energy, or material transfers into or out of the system boundary. In this scenario, Acme Sales is transferring information to and from the company by asking their customers questions over the phone which the clients are providing this information.

6 0
2 years ago
What is the present value of the future cash flows, if you also could earn $110,000 per year rent on the property? The rent is p
dem82 [27]

Answer:

a. The present value of the sales price is $1.657 million.

b. No. This is because an investment in the property will result in a negative net present value (NPV) of $0.443 million.

c-1. The present value of the future cash flows is $2.122 million.

c-2. Yes. Yes. This is because an investment in the property will result in a positive net present value (NPV) of $0.022 million.

Explanation:

Note: This question is not complete. The complete question is therefore presented before answering the question as follows:

You can buy property today for $2.1 million and sell it in 6 years for $3.1 million. (You earn no rental income on the property.)

a. If the interest rate is 11%, what is the present value of the sales price? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)

b. Is the property investment attractive to you?

c-1. What is the present value of the future cash flows, if you also could earn $110,000 per year rent on the property? The rent is paid at the end of each year. (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)

c-2. Is the property investment attractive to you now?

The explanation to the answers is now provided as follows:

a. If the interest rate is 11%, what is the present value of the sales price? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)

The present value of the sales price can be calculated using the simple present value formula as follows:

PV = FV / (1 + r)^n ……………………….. (1)

Where;

PV = Present value of the sales price = ?

FV = Future value or the sales price in 6 years = $3.1 million

r = interest rate = 11%, or 0.11

n = number of years = 6

Substitute the values into equation (1), we have:

PV = $3.1 / (1 + 0.11)^6

PV = $3.1 / 1.11^6

PV = $3.1 / 1.870414552161

PV = $1.65738659187525 million

Rounding to 3 decimal places, we have:

PV = $1.657 million

Therefore, the present value of the sales price is $1.657 million.

b. Is the property investment attractive to you?

No. This is because an investment in the property will result in a negative net present value (NPV) of $0.443 million.

The negative net present value (NPV) of $0.443 million is determined as follows:

NPV = Present value of the sales price - Acquisition cost = $1.657 million - $2.1 million = -$0.443 million

c-1. What is the present value of the future cash flows, if you also could earn $110,000 per year rent on the property? The rent is paid at the end of each year. (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)

The present value of the future cash flows can be calculated using the following steps:

<u>Step 1: Calculation of the present value of the $110,000 per year rent</u>

Since the rent is paid at end of each year, this can be calculated using the formula for calculating the present value of an ordinary annuity as follows:

PVR = P * ((1 - (1 / (1 + r))^n) / r) …………………………………. (2)

Where;

PVR = Present value of yearly rent = ?

P = Annual rent =$110,000

r = interest rate = 11%, or 0.11

n = number of years = 6

Substitute the values into equation (2) to have:

PVR = $110,000 * ((1 - (1 / (1 + 0.11))^6) / 0.11)

PVR = $110,000 * 4.23053785373826

PVR = $465,359.163911209

Converting to million and rounded to 3 decimal places, we have:

PVR = $0.465 million

<u>Step 2: Calculation of the present value of the future cash flows</u>

Present value of future cash flows = Present value sales price + Present value of annual rent ……. (3)

Where;

Present value sales price = $1.657 million, as already calculate in part a above

Present value of annual rent = PVR = $0.465 million

Substituting the values into equation (3), we have:

Present value of future cash flows = $1.657 million + $0.465 million = $2.122 million

Therefore, the present value of the future cash flows is $2.122 million.

c-2. Is the property investment attractive to you now?

Yes. This is because an investment in the property will result in a positive net present value (NPV) of $0.022 million.

The positive net present value (NPV) of $0.022 million is determined as follows:

NPV = Present value of tof the future cash flows - Acquisition cost = $2.122 million - $2.1 million = 0.0219999999999998 million

Converting to million and rounded to 3 decimal places, we have:

NPV = $0.022 million

6 0
2 years ago
Machinery purchased for $66,000 by Metlock Co. in 2016 was originally estimated to have a life of 8 years with a salvage value o
7nadin3 [17]

Answer:

Debit : Depreciation Expense   $4,510

Credit : Accumulated Depreciation $4,510

Explanation:

Straight line method charges a fixed amount of depreciation for the period the asset is used in the business.

<em>Depreciation expense = (Cost - Residual Value) ÷ Estimated Useful life</em>

therefore

Annual Depreciation Expense = ($66,000 -  $4,400) ÷ 8

                                                  = $7,700

2016

Annual Depreciation Expense = $7,700

2017

Annual Depreciation Expense = $7,700

2018

Annual Depreciation Expense = $7,700

2019

Annual Depreciation Expense = $7,700

2020

Annual Depreciation Expense = $7,700

2021

Beginning Accumulated depreciation Balance = $38,500

<u>Calculate New Depreciable amount</u>

Depreciable amount = Cost - Accumulated depreciation - New Salvage Value

                                   = $66,000 - $38,500 - $4,950

                                   = $22,550

<u>Calculate New Useful Life</u>

5 years have already expired so the remainder out of the new 10 years is 5 years

<u>Calculate New Depreciation Expense</u>

Depreciation Expense = $22,550 ÷ 5 = $4,510

6 0
2 years ago
Xerox, the U.S. Postal​ Service, and​ McDonald's have enjoyed significant market power in the past. List and explain three major
Elena L [17]

Answer:

Correct Answer:

E. fewer substitutes are available because consumers are more sensitive to prices.

Explanation:

<em>Market power is the ability of a company to successfully influence the pricing of its products or services in the overall marketplace. </em><em>This is common among most big corporations that produces consumer goods and offer services. </em>

This market power can be influenced by some factors. On the other-hand, the market power could be eroded leading to inability of the companies to influence prices do to the following:

1.<u> Number of companies in the market:</u> The lower the companies producing same product in the market, the higher the chances of the companies to be able to influence market prices. Otherwise, the market power will be eroded due to high number of companies.

2. <u>Elasticity of demand:</u> The persistent demand of a product by people helps to determine the market power of those companies. When this is lacking, the market power is eroded.

3. <u>Product differentiation:</u> The ability of a company to provide a unique product that offers good services in a market helps it to achieve market power. Lack of these erodes the market power.

3 0
2 years ago
The free cash flow to the firm is reported as $275 million. The interest expense to the firm is $60 million. If the tax rate is
alex41 [277]

Answer:

269 million

Explanation:

The free cash flow to the firm is 275 million

The interest expense is $60 million

The tax rate is 35%

The net debt of the firm increases by $33 million

Therefore the free cash flow to the equity holders of the firm can be calculated as follows

= 275 million-60 million(1-35/100) + 33 million

= 275 million- 60( 1-0.35) + 33 million

= 275 million- 60(0.65) +33 million

= 275 million - 39 million + 33 million

= 236 million + 33 million

= 269 million

7 0
2 years ago
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