Answer:
The correct answer is then it has required reserves of $110 and holds excess reserves of $190.
Explanation:
According to the scenario, computation of the given data are as follows:
Total deposit = $1,000 + $100 = $1,100
So, we can calculate the total reserve required by using following formula:
Total reserve required = 10% × Total deposit
= 10% × $1,100 = $110
And Previous excess = $100
Current access = $90
So, Excess reserve = Previous excess + Current access
= $100 + $90
= $190
Answer:
The company should make the components because incremental costs are $2 less than the purchase price
Explanation:
The cost of making each unit of component = Direct Labour + Direct Material + Variable Overhead*
*The overhead cost of $4 contains both a fixed and variable element. It has been mentioned that 25% of overhead cost is incremental i.e. it increases with each additional unit produced (marginal cost). The incremental cost is the variable element.
Variable element = $4 x 25% = $1
Fixed element = $4 x 75% = $3
Thus, the cost of making each unit of component = $5 + $2 + $1 = $8,
whereas the cost of purchasing each unit of complement is $10. Hence, the company should produce the component as it is less by $2 ($10 - $8) to produce than it is to purchase.
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Answer:
$153,000
Explanation:
The computation of the net present value is shown below:
= Present value of all cash inflows including salvage value after considering the discount factor - initial investment
where,
Present value is
= Four year cash inflows × PVIFA factor for 11.5% for 4 years + (one year cash inflow + salvage value) × discount rate for 11.50% at five year
= $300,000 × 3.0696 + ($300,000 + $100,000) × 0.5803
= $920,880 + $232,120
= $1,153,000
And, the initial investment is $1,000,000
So, the net present value is
= $1,153,000 - $1,000,000
= $153,000
