Answer:
<u> borrow for one year at 1.75% and then must borrow fixed.</u>
<u>Explanation:</u>
This option appears to be more economically advantageous and would save all jobs. Consider why this is the case from the interest paid in each option:
The Interest rate paid at 1.75%:
- for one year at 1.75% = $700, 000 (1.75%x40,000,000)
- for annually up to five years at 1.75%= $3,500,000 (1.75%x40,000,000x5 years).
The Interest rate paid at 4%:
- borrow fixed for 16 years at 4% = $25,600,000 (4% x 40,000,000 x 16)
- borrow fixed for 12 years (17-5) at 4% = $19,200,000 (4% x 40,000,000 x 1,600,000)
Total:
First option = $26,300,000 plus all jobs saved
Second option = $22,700,000
Therefore, the first option is more economically advantageous.
Answer:
$177,400
Explanation:
The computation of the cost of the land is shown below:
= Purchase value of land for cash + property taxes + title and attorney fees
= $174,800 + $1,700 + $900
= $177,400
Simply we added the purchase value of land, property taxes and the title and attorney fees.
The grading cost should not be considered for the cost of the land.
Answer:
$4500
Explanation:
We can calculate the total change in benefits by deducting the opportunity cost of spending the hours with your family by the annual salary.
Opportunity cost = $20/hour x 200 Additional hours
Opportunity cost = $4000
Total change in benefit = Annual salary - Opportunity cost
Total change in benefit = $8500 - $4000
Total change in benefit = $4500
Answer:
$7,190.40
Explanation:
The computation of the net present value for the investment A is shown below:
= Present value after considering the discount factor - initial investment
where
Present value after considering the discount factor is
= Annual year cash inflows × PVIFA factor for 15% at 3 years
= $9,500 × 2.2832
= $21,690.40
Refer to the PVIFA table
And, the initial investment is $14,500
So, the net present value is
= $21,690.40 - $14,500
= $7,190.40
Answer: Make Components as it is cheaper by $2 to do so
Explanation:
I see there are no multiple choice options and I could not seem to find any.
However I have a feeling what the answer could be.
It will probably be asking what the company should do. Should it buy the product for $10 or make it itself.
To solve this we would have to calculate the cost of making each unit of the component.
= Direct Labour + Direct Material + Overhead
25% of Overhead is said to be Incremental. This means that 25% of Overhead is the Marginal Cost of production. i.e, the cost per unit.
= 25% * 4
= 1
We would charge $1 per unit to overhead costs.
The total cost per unit is therefore,
= 2 + 5 + 1
= $8
Since it will cost $8 to product the component themselves, they should produce it instead of buy it for $10
