The ARR (20%) is greater than the minimum required rate of return (15%), the project appears to be viable.
Evaluate the viability of the project, we need to calculate its net present value (NPV), internal rate of return (IRR), payback period, and accounting rate of return (ARR).
First, let's calculate the annual cash flows for the project:
Annual revenue: $15,000
Annual expenses: $1,000 (insurance) + $1,000 (maintenance) + $3,000 (utilities) = $5,000
Annual depreciation: ($40,000 - $10,000) / 6 = $5,000
Annual cash flow = $15,000 - $5,000 = $10,000
Next, let's calculate the project's NPV using a discount rate of 15%:
Year 0: -$40,000 (initial investment)
Years 1-6: $10,000 (annual cash flow)
NPV = -$40,000 + ($10,000 / (1 + 0.15)^1) + ($10,000 / (1 + 0.15)^2) + ... + ($10,000 / (1 + 0.15)^6)
NPV = -$7,308.60
Since the NPV is negative, the project is not viable.
Next, let's calculate the IRR of the project:
Year 0: -$40,000 (initial investment)
Years 1-6: $10,000 (annual cash flow)
IRR = 16.59%
Since the IRR (16.59%) is greater than the minimum required rate of return (15%), the project appears to be viable. However, we need to check if the payback period is less than 50% of the useful life of the project.
Payback period = $40,000 / $10,000 per year = 4 years
Since the payback period is less than 50% of the useful life of the project (3 years), the project meets the company's requirement.
Finally, let's calculate the ARR of the project:
Average net income = ($10,000 x 6 years - $30,000) / 6 = $5,000
Average investment = ($40,000 + $10,000) / 2 = $25,000
ARR = ($5,000 / $25,000) x 100% = 20%
Since the ARR (20%) is greater than the minimum required rate of return (15%), the project appears to be viable.
Overall, the IRR and ARR suggest that the project is viable, but the negative NPV indicates that the project may not generate sufficient returns to compensate for the initial investment. Therefore, the company should carefully evaluate the project's risks and benefits before making a final decision.
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How Costa Coffee deploys the extended services mix to address the challenges of services marketing; demonstrate a knowledge of the service marketing challenges facing the brand and identify how the company uses the extended marketing mix to offset these challenges; provide specific examples and reference academic literature in support of your discussion. Cover all but mainly concentrate on 3-4 areas of the marketing mix.
Costa Coffee faces various challenges in services marketing, such as intangibility, perishability, and variability. To overcome these challenges, the company strategically deploys the extended services mix, focusing on key areas such as people, process, physical evidence, and product.
In services marketing, Costa Coffee encounters challenges related to the intangibility of its offerings, as coffee consumption is an experiential and sensory process.
To address this, Costa Coffee focuses on the people element of the extended services mix by training and empowering its staff to provide excellent customer service and engage with customers effectively.
This human interaction creates a tangible and positive experience for customers, enhancing their overall perception of the service.
Costa Coffee also faces challenges associated with perishability and variability, as coffee demand fluctuates throughout the day and service quality may vary across locations.
To mitigate these challenges, the company emphasizes the process element of the extended services mix.
For example, Costa Coffee implements efficient operational processes to ensure timely service delivery, maintains consistent quality standards across its outlets, and continuously monitors and improves its service processes to provide a consistent and reliable experience to customers.
Additionally, Costa Coffee leverages the physical evidence aspect of the extended services mix. The company creates inviting and aesthetically pleasing store environments, with comfortable seating areas, appealing decor, and attractive displays of coffee products.
This physical evidence serves as a tangible representation of the service quality and helps to establish a strong brand image and atmosphere that enhances the overall customer experience.
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if the cross price elasticity of demand between two goods is negative, then the two goods are independent. complements. unrelated. substitutes.
If the cross price elasticity of demand between two goods is negative, it indicates that the two goods are complements, meaning an increase in the price of one good leads to a decrease in the demand for the other.
The cross price elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of another good. If the cross price elasticity of demand is negative, it indicates that the two goods are complements.
Complementary goods are products that are typically consumed together or used in conjunction with each other. For example, coffee and creamer, or smartphones and mobile data plans. When the price of one complement rises, consumers tend to reduce their demand for that particular good. Consequently, this decrease in demand for one product leads to a decrease in the demand for the complementary good as well.
The negative cross price elasticity reflects the inverse relationship between the prices and quantities demanded of the two goods. As the price of one complement increases, consumers may find it less affordable or less attractive, resulting in a decrease in the quantity demanded of that good and, subsequently, a decrease in the quantity demanded of its complementary good.
Understanding the cross price elasticity of demand is crucial for businesses to determine the impact of price changes on the demand for their products and the potential effect on related goods in the market.
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HELP HELP HELP!!! Why would an investor choose to invest in speculative stocks when he or she could invest in blue-chip stocks instead?
Answer:
They offer potentially high returns to compensate for the high risk associated with them!
OFFERING 20 POINTS Whitney's proposal to build 10,000 guns relied on what two important elements found in the modern manufacturing process? interchangeable parts and assembly lines economies of scale and interchangeable parts centralization and efficiencies of scale unions and unskilled labor
Answer:
interchangeable parts and assembly lines
Explanation:
When you're finished using your Go ogle account, what should you do to help keep your information secure?
A. Reset your password.
B. Create a new username.
C. Send an e-mail.
D. Sign out.
Answer:
this is a very st upid question but i would say its D
Explanation:
A does make sense somehow but i dont think you would reset your password everytime you using go ogle
i dont know why B should help at all
C makes no sense at all
When you're finished using your Go-ogle account, you should always sign out to keep your information secure. Thus, option 'D' is the correct option.
How to keep your Go-ogle account safe?Go-ogle uses the strictest security measures to protect your personal data. The Advanced Protection Program protects individuals with sensitive information and high visibility from deliberate online assaults. Chrome's Safe Browsing shields 4 billion devices from dangerous websites, while Advanced Protection does even more thorough checks before each download. It alerts you to potentially hazardous files and may even stop you from downloading them.
Installations of apps are only permitted from trusted shops, such as the app store run by the company that makes your device. You are frequently prompted to grant access to your Go=ogle Account data, such as your contacts, location, or Drive, when you join up for new apps or services. Go=ogle Accounts have built-in security features that verify more than 1 billion stored passwords daily for breaches.
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Instead of spending the weekend working on the research paper due at the end of next week sam decided to spend the weekend going out to have fun with friends according to freudian theory which system dominated in sams decisions
Answer:
the id
Explanation:
In simple words, the id can be understood as the root of all psychological bravery, as per Freud 's philosophy, rendering it the essential component of identity. The ID is motivated by the concept of immediate satisfaction of all wishes, desires and desires. If these needs are not immediately fulfilled, the effect is a state of discomfort or stress.
Thus, from the above we can conclude that the correct answer is the id.
Exactly 20 years from today, Indira wants to have $1,000,000 in her retirement account. If Indira's retirement account pays interest of 6.3% per year, but with monthly compounding, how much must Indira deposit today to achieve her goal? Enter your answer as a dollar amount rounded to 2 decimal places, but do not include the dollar sign or any commas in your answer. For example, record $13,294287342 as 13294.29. Your Answer: Answer
Indira must deposit 291298.68( without dollar sign and commas as mnetioned in the question ) today in her retirement account to achieve her goal of having $1,000,000 in 20 years with a 6.3% annual interest rate and monthly compounding.
To determine how much Indira must deposit today to have $1,000,000 in her retirement account in 20 years with a 6.3% annual interest rate and monthly compounding, we can use the formula for the future value of a lump-sum investment, which is:
FV = PV(1 + r/n)\(({nt})\)
Where:
- FV is the future value of the investment ($1,000,000)
- PV is the present value, or the amount Indira must deposit today
- r is the annual interest rate (0.063)
- n is the number of compounding periods per year (12 for monthly compounding)
- t is the number of years (20)
First, we need to solve the formula for PV:
PV = FV / (1 + r/n)\(({nt})\)
Then, we can plug in the given values:
PV = $1,000,000 / (1 + 0.063/12)⁽¹²*²⁰⁾
PV = $1,000,000 / (1 + 0.00525)^⁽²⁴⁰⁾
PV = $1,000,000 / 3.43429
PV = $291,298.68
Indira must deposit 291298.68 today in her retirement account to achieve her goal
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In his job, Damon often identifies causes of problems with telecommunication equipment. Which is most likely his employer? a government-run company a local cable company a publishing company a production company
Answer:
B
Explanation:
Damon often identifies causes of problems with telecommunication equipment. A local cable company is most likely his employer. Thus, its C.
What is telecommunication?Information can be transmitted using a variety of technologies via wire, radio, optical, or other electromagnetic systems. This is known as telecommunication.
As a result, slow systems (like postal mail) are not included in the field. It has its roots in humans' need for communication at a distance greater than what is possible with the human voice, but with a similar level of expediency.
From beacons and other identifying and communicating, to electrical cable and electromagnetic radiation, including light, the transmission media in telecommunication have progressed through several technological stages.
The advantages of multiplexing many concurrent communication sessions are made possible by the division of such transmission pathways into communication channels.
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Your question is incomplete, probably the question is:
In his job, Damon often identifies causes of problems with telecommunication equipment. Which is most likely his employer?
A) a government-run company
B) a local cable company
C) a publishing company
D) a production company
Tucker works for a retail distributor company that was recently started. Tucker already invested a lot of his earnings into shares of the company. When the quarterly earnings are posted, Tucker receives a check for 8% of the quarterly profit of the company. Tucker belongs to a _________ Corporation.
A. Professional
B. Closely-Held
C. Sub chapter S
Wang co. manufactures and sells a single product that sells for $420 per unit; variable costs are $231 per unit. annual fixed costs are $909,000. current sales volume is $4,220,000. compute the contribution margin per unit.
The contribution margin per unit is 4809.52.
What is the contribution margin?Contribution margin is the level of output at which revenue would equal zero.
Contribution margin = fixed cost / (price - variable cost)
909,000 / (420 - 231)
909,000 / 189 = 4809.52
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This is serious, no joke. pls pls tell me if you know someone named Domingo Briseno, have you seen on here lately. I really need to know
Answer:
please tell the question properly
Explanation:
Sanibel Autos Inc. merged with its competitor Vroom Autos Inc. This allowed Sanibel Autos to use its technological competencies along with Vroom Autos' marketing capabilities to capture a larger market share than what the two entities individually held. What type of integration does this scenario best illustrate?A. vertical B. technological C. horizontal D. perfect
Answer:
Horizontal integration
Explanation:
Integration is a strategy used by businesses to gain a better market share. It involves cooperating with other business owners to increase sales for both parties.
Horizontal integration is when businesses bate the same level in the value chain collaborate to increase profits.
In the give scenario Sanibel Autos Inc. merged with its competitor Vroom Autos Inc, and Sanibel Autos to use its technological competencies along with Vroom Autos' marketing capabilities to capture a larger market share.
The stage of value chain is when businesses prospect for customers. This interpretation enables them gain more customers.
On 1/1/2020, Studebaker Corp. had an Accounts Receivable balance of $500,000 and an Allowance for Doubtful Accounts balance of $30,000. During 2020, Studebaker made credit sales of $4,000,000 and cash collections of $4,100,000. Also during 2020, Studebaker wrote off uncollectible accounts receivable totaling $28,000. Based on an aging schedule, uncollectible amounts are estimated to total $35,000 as of 12/31/2020. Studebaker uses the Aging Schedule approach to recording bad debt expense. The adjusting journal entry to record Bad Debt Expense for 2020 includes a debit to Bad Debt Expense of
Answer:
Bad Debt expense $28,000.
Explanation:
Bad debts are the noncollectable amount of receivables which are not recovered. Companies usually maintain an allowance for uncollected receivables as doubtful debts or bad debts. The expense is recorded when there is no hope left for collection of these debts. Studebaker has estimated its bad debts to be 38,000 but it wrote off $28,000 which is the actual expense.
Role _______ is experienced when individuals have inadequate information concerning their roles.
Role ambiguity is experienced when individuals have inadequate information concerning their roles.
When a person is subjected to demands that are inconsistent with their job or position, this is known as a role conflict. When people are pushed in different directions while attempting to respond to the many positions they hold, they experience role conflict.
Job conflict happens when employees are given multiple, incompatible roles at once or when their role overlaps with that of another employee or work group. A worker is more likely to experience stress at work if there is more role conflict.
Examples of Ambiguity in Roles:
When someone starts a new job, they are uncertain of their obligations, which results in unhappiness, worry, and tension.
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Bernstein’s proposed project has an initial cost of $128,600 and cash flows of $64,500, $98,300, and −$15,500 for Years 1 to 3 respectively. If all negative cash flows are moved to Time 0 at a discount rate of 10 percent, what is the modified internal rate of return? Select one or more: a. 10.00% b. 9.90% c. 9.69% d. 9.97% e. 10.04%
The modified internal rate of return (MIRR) for Bernstein's proposed project is 9.90%.
The MIRR is a financial indicator that takes into account both the cost of investment and the timing of cash flows. In this case, the initial cost of $128,600 is considered an outflow at Time 0, while the cash flows of $64,500, $98,300, and -$15,500 for Years 1 to 3 respectively are treated as inflows. The negative cash flow in Year 3 is moved to Time 0 to reflect the time value of money.
To calculate the MIRR, the discount rate of 10% is applied to the outflows and the future value of the inflows. The future value of the inflows is calculated using the discount rate and compounded over the investment period. The MIRR is then determined by finding the discount rate that equates the present value of the outflows with the future value of the inflows.
By applying the formula for MIRR, the calculated rate is 9.90%. This indicates the estimated rate of return for the project, considering the cost of investment and the timing of cash flows.
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When you purchase shares of a company in the market, who are you buying those shares from?
Answer:
Normally, you are buying those shares from someone who already owns them. You are not buying them directly from the company itself, but instead someone who owns shares from the company, called a shareholder or stockholder.
Explanation:
I hope this helps! :)
What happens to the federal funds rate when there is a recession?
During a recession, the federal funds rate is typically lowered in order to stimulate economic growth and encourage borrowing and spending. When the federal funds rate is lowered, it becomes less expensive for banks to borrow money from the Federal Reserve, which can then be lent to consumers and businesses at lower interest rates. This can help stimulate economic activity and potentially lead to an economic recovery. However, the exact response of the federal funds rate to a recession will depend on a variety of factors, including the severity of the recession and the specific policies implemented by the Federal Reserve.
Q1__
Restaurant projects are on the list..?
A- black / B- white / C- green / D - all of the above / E - none of
the above
Q2___
A company wants to buy a new machine at a price of 6075 d, and an
expect
The correct option is D - All of the above - The Black, White, and Green Restaurant Projects
The Black Restaurant Project, White Restaurant Project, and Green Restaurant Project are all on the list of restaurant projects. The colors are just there to differentiate the projects from each other. The Black Restaurant Project is a classic restaurant concept that relies on tried-and-true menu items and traditional decor.
The White Restaurant Project is a contemporary restaurant concept that focuses on simple, white decor and unique menu offerings. Finally, the Green Restaurant Project is an environmentally friendly restaurant concept that uses sustainable practices in its operations.
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Sales tax is calculated by multiplying the price of an item by the
withholding amount
income tax
tax rate
Answer:
tax rate
Explanation:
got it right on test
For purposes of monetary policy, the Federal Reserve has targeted the interest rate known as the: a) Treasury bill rate. b) prime rate. c) discount rate. d) federal funds rate.
The Federal Reserve's monetary policy decisions regarding the d). federal funds rate have significant impacts on the overall economy.
For purposes of monetary policy, the Federal Reserve has targeted the interest rate known as the federal funds rate. This is the interest rate at which depository institutions (such as banks) lend or borrow funds from one another overnight, to meet their reserve requirements mandated by the Federal Reserve.
The Federal Reserve uses various monetary policy tools to influence the federal funds rate, such as open market operations, discount rate changes, and reserve requirement changes. By increasing or decreasing the federal funds rate, the Federal Reserve can affect the supply of money in the economy, which in turn affects economic activity such as borrowing, spending, and investment.
The federal funds rate is an important interest rate that affects other interest rates in the economy, such as the prime rate and the interest rate on Treasury bills.
Therefore the correct option is d).
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Apple Watch retail for $399 in 2020, a firm was predicted to sell millions of units. The firms total cost in terms of materials and labor was no more than $84. Thus, apples economic value for each watch sold is? With a profit margin of?
The economic value for each Apple Watch sold is $315 ($399 - $84). The profit margin is 78.95% ($315 / $399).
To determine the economic value for each Apple Watch sold, we subtract the total cost of materials and labor from the retail price. In this case, the retail price of an Apple Watch is $399, and the total cost of materials and labor is $84. Therefore, the economic value for each Apple Watch sold is $315 ($399 - $84).
The profit margin can be calculated by dividing the economic value by the retail price and expressing it as a percentage. In this case, the profit margin for each Apple Watch sold is approximately 78.95% ($315 / $399 * 100%).
The profit margin represents the percentage of profit generated from each sale. In this scenario, for every Apple Watch sold, the firm is earning a profit of approximately 78.95% of the retail price. This indicates that the firm has a significant profit margin, which can be attributed to factors such as economies of scale, efficient production processes, and effective cost management.
It's important to note that the profit margin is calculated based on the given information and assumptions. Actual profit margins may vary depending on various factors such as marketing expenses, research and development costs, and other overhead expenses. Additionally, the profit margin can also be influenced by external factors such as competition and market demand.
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Kubin Company's relevant range of production is 20,000 to 23,000 units.
When it produces and sells 21,500 units, its average costs per unit are as follows:
Amount per Unit
Direct materials $ 8. 00
Direct labor $ 5. 00
Variable manufacturing overhead $ 2. 50
Fixed manufacturing overhead $ 4. 00
Fixed selling expense $ 4. 50
Fixed administrative expense $ 3. 50
Sales commissions $ 2. 00
Variable administrative expense $ 1. 50
Required:
1. If 20,000 units are produced and sold, what is the variable cost per unit produced and sold?
2. If 23,000 units are produced and sold, what is the variable cost per unit produced and sold?
3. If 20,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold?
4. If 23,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold?
5. If 20,000 units are produced, what is the average fixed manufacturing cost per unit produced?
6. If 23,000 units are produced, what is the average fixed manufacturing cost per unit produced?
7. If 20,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production?
8. If 23,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production?
(Round per unit values to 2 decimal places)
The fixed manufacturing overhead incurred to support 20,000 units of production can be calculated using the high-low method. so the answer is $23,400.
This method considers the total manufacturing overhead costs incurred during the highest and lowest levels of production within the relevant range.Using this method, we can find the variable manufacturing overhead cost per unit, and the total fixed manufacturing overhead costs. Then we can use the variable overhead cost per unit to determine the fixed overhead cost per unit. Here are the steps to calculate the fixed manufacturing overhead incurred to support 20,000 units of production:Step 1: Find the variable manufacturing overhead cost per unit.
Variable manufacturing overhead cost per unit = (Total manufacturing overhead costs during high activity level – Total manufacturing overhead costs during low activity level) ÷ (High activity level – Low activity level)Variable manufacturing overhead cost
per unit = (($76,000 - $66,000) / (23,000 - 20,000))
Variable manufacturing overhead cost per unit = $3Step 2: Calculate the total fixed manufacturing overhead costs using the high-low method:
Total manufacturing overhead costs = Fixed manufacturing overhead costs + (Variable manufacturing overhead cost per unit x Number of units produced)Using the high activity level of 23,000 units and total manufacturing overhead cost of $76,000: $76,000 = Fixed manufacturing overhead costs + ($3 x 23,000)Fixed manufacturing overhead costs = $27,000Step 3: Find the fixed manufacturing overhead cost per unit.Fixed manufacturing overhead cost per unit = Total fixed manufacturing overhead costs ÷ Number of units producedFixed manufacturing overhead cost per unit = $27,000 ÷ 23,000Fixed manufacturing overhead cost per unit = $1.17Therefore, if 20,000 units are produced, the total amount of fixed manufacturing overhead incurred to support this level of production is:
Fixed manufacturing overhead cost per unit x Number of units produced = $1.17 x 20,000 = $23,400. Therefore, the answer is $23,400.
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The helping professions all involve ___
A lot of stress and effort
Working on weekends
Work that benefits other people
High paying salaries
The question claims that all of the helping professions entail employment that helps other people.
Which five occupations are most in demand?The technology and health care industries tend to have the best positions. In fact, these two disciplines make up the top 10 careers. Healthcare providers include a dentist, nurse, pharmacy, doctor, physio, dental hygienist, and for technology, systems analysts, data engineers, software developers, and web developers.
Which five occupations are most in consumption?The technology and health care industries tend to have the best positions. Medical practitioners include a dentist, nurse, physician, doctor, physical therapist, healthcare professional, and for technology, system engineers, database administrators, software developers, and professional web.
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Brett buys a new cell phone for $600. He receives consumer surplus of $80 from the purchase. How much does brett value his cell phone
Brett values his cell phone at $680 if he buys a new cell phone for $600 and if he receives a consumer surplus of $80 from the purchase.
Consumer surplus is the difference between the most expensive a purchaser is willing to pay for a good or service and the actual rate they pay. Mathematically, consumer surplus can be calculated by using the formula,
consumer surplus = willingness to pay the cost - the actual price
$80 = willingness to pay the cost - $600
willingness to pay the cost = $600 + $80
willingness to pay the cost = $680
Therefore, the value of Brett's cell phone is $680.
a) What is the optimal size of the production run? 4,676 units (round your response to the nearest whole number). b) What is the average holding cost per year? \$ (round your response to two decimal places). C) What is the average setup cost per year? $ (round your response to two decimal places). d) What is the total cost per year, including the cost of the lights? $11,764.10 ⊤
(round your response to two decimal places). Radovilsky Manufacturing Company, in Hayward, Calfomis, makes flashing lights for toys. The company operates its production facility 300 days per year. It has orders for about 12.500 fashing lights per year and has the capability of producing 100 per day. Setting up the light production costs $48. The cost of each light is $1.05. The holding cost is 50.05 per light per yoat. a) What is the optimal suze of the production run? units (round your response to the nearest whole number).
The optimal size of the production run for Radovilsky Manufacturing Company is approximately 4,676 units.
The optimal size of the production run, we can use the economic order quantity (EOQ) formula:
EOQ = √((2 * D * S) / H)
Where:
EOQ = Economic order quantity (optimal production run size)
D = Annual demand (12,500 units)
S = Setup cost per production run ($48)
H = Holding cost per unit per year ($0.05)
Plugging in the values, we have:
EOQ = √((2 * 12,500 * 48) / 0.05)
EOQ ≈ 4,675.74
Rounding the result to the nearest whole number, the optimal size of the production run is 4,676 units.
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Which type of chart or graph shows data with distinct x and y values?
O a bar graph
O a scatter plot
O a line chart
O a pie chart
Answer:
A. a bar graph is the answer
Precious gems are an important natural resource of ________. Paraguay Brazil Mexico the Dominican Republic
Answer:
Brazil
Explanation:
In which period of industrial revolution industries experienced the need of selling function
Answer:
Industrial revolution industries experienced the need of selling function is explained below in details.
Explanation:
The Industrial Revolution converted economics that had been based on cultivation and craftsmanship into markets based on large-scale manufacturing, mechanized production, and industry arrangement. New instruments, new energy sources, and new forms of creating a product made present industries more fruitful and effective.
4. For what purposes might a worker need to fill out a Form 4070A?
Answer:
Employees use Form 4070A to keep track of the tips they receive from customers and report the total to their employer each month. Workers should also record the total amount of tips they paid to other employees and the names of employees to whom the tips were paid.
A small-scale contractor is looking to expand his construction fleet through two mutually exclusive alternatives: either a) the purchase of additional pick-up trucks or b) the purchase of an additional backhoe. The contractor has an MARR of 8% per year.
The contractor's minimum attractive rate of return (MARR) is 8% per year. The contractor is seeking to increase his construction fleet through the acquisition of additional pick-up trucks or an additional backhoe. The two mutually exclusive options are as follows: a) The purchase of additional pick-up trucks. b) The purchase of an additional backhoe.
The contractor should choose the alternative that has the higher present value. The acquisition of additional pick-up trucks has an initial outlay of $60,000, an annual revenue of $20,000, and an annual maintenance cost of $10,000. Its estimated useful life is five years, after which it can be sold for $10,000. The net present value (NPV) of the project can be calculated using the following formula: Net Present Value (NPV) = Σ [Rt / (1 + r)t] - C where Rt is the net cash flow in year t, r is the discount rate, and C is the initial investment.
The net cash flow for each year is as follows: Year 1: $20,000 - $10,000 = $10,000Year 2: $20,000 - $10,000 = $10,000Year 3: $20,000 - $10,000 = $10,000Year 4: $20,000 - $10,000 = $10,000Year 5: $20,000 - $10,000 + $10,000 = $20,000The present value of each cash flow is as follows: Year 1: $9,259Year 2: $8,566Year 3: $7,918Year 4: $7,312Year 5: $12,991The NPV of the acquisition of additional pick-up trucks is as follows: NPV = ($9,259 + $8,566 + $7,918 + $7,312 + $12,991) - $60,000NPV = $46,046The acquisition of an additional backhoe has an initial outlay of $200,000, an annual revenue of $100,000, and an annual maintenance cost of $40,000. Its estimated useful life is also five years, after which it can be sold for $60,000.The net cash flow for each year is as follows: Year 1: $100,000 - $40,000 = $60,000Year 2: $100,000 - $40,000 = $60,000Year 3: $100,000 - $40,000 = $60,000Year 4: $100,000 - $40,000 = $60,000Year 5: $100,000 - $40,000 + $60,000 = $120,000The present value of each cash flow is as follows: Year 1: $55,556Year 2: $51,282Year 3: $47,337Year 4: $43,695Year 5: $77,917The NPV of the acquisition of an additional backhoe is as follows: NPV = ($55,556 + $51,282 + $47,337 + $43,695 + $77,917) - $200,000NPV = $76,787Therefore, the contractor should acquire an additional backhoe as it has a higher NPV than the acquisition of additional pick-up trucks.
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