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- Vandelay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,140,000 and will last for six years. Variable costs are 36 percent of sales, and fixed costs are $280,000 per year. Machine B costs $5,364,000 and will last for nine years. Variable costs for this machine are 31 percent of sales and fixed costs are $205,000 per year. The sales for each machine will be $11.7 million per year. The required return is 9 percent, and the tax rate is 22 percent. Both machines will be depreciated on a straight-line basis. The company plans to replace the machine when it wears out on a perpetual basis. Calculate the EAC for each machine. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) Systeme A Systeme B Which machine should the company choose? multiple choice Machine B…You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $17,000 to purchase and which will have OCF of -$1,800 annually throughout the vehicle's expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $25,000 to purchase and which will have OCF of -$950 annually throughout that vehicle's expected 4-year life. Both cars will be worthless at the end of their life. You intend to replace whichever type of car you choose with the same thing when its life runs out, again and again out into the foreseeable future. If the business has a cost of capital of 12 percent, calculate the EAC. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) Scion's EAC Toyota's EAC Which one should you choose? O Scion XA O Toyota PriusJenny Tanaka wants to buy a new car, and the annual gasoline expense is a major consideration. Her present car gets 25 miles per gallon (mpg), and she is considering purchasing a new car that gets 40 mpg. Jenny now drives about 12,000 miles per year and pays $3.25 per gallon of gasoline. She therefore calculates an annual gasoline consumption of 480 gallons for her 25 mpg car (12,000 miles/25 mpg) compared to 300 gallons consumed per year for the 40 mpg car (12,000 miles/40 mpg). Since driving the higher- mileage car would use 180 gallons less per year, Jenny estimates the new car will save her $585 in gasoline expense per year (180 gallons 3 $3.25 per gallon). Suppose Jenny buys the 40 mpg car. According to economic theory, Jenny's actual annual savings on gasoline will be 7 1 C 1 U C VI 10 V K W S TACAZEC 10 GUNS TOMBER 2 than her initial estimate of $585.
- Cafe x is selling coffee in three different sizes at the prices and costs shown in the first table below. As shown in the second table, they are considering raising the price of their small margin based on the estimated changes in cups sold. You may find it helpful to use a spreadsheet for the calculations. Current Prices Increased Price for Small Coffee Cafe X is selling coffee in three different sizes at the prices and costs shown in the first table below. As shown in the second table, they are considering raising the price of their small to $2.75, and they project that sales of smalls will go down while sales of mediums and larges will go up slightly. Fill out the tables below to calculate the projected change in gross margin based on the estimated changes in cups sold. You may find it helpful to use a spreadsheet for the calculations. Current Prices Price per Cup Cost per Cup Cups Sold Small $2.50 50.20 2,500 Medium $3.50 50.35 1,400 $0 Revenue $ 0 $ 0 Large $4.50 50.50 700 0 $ 0…Odysseus is fascinated by Microsoft's new Surface Laptop Studio. He is happy to purchase this product at $2,200 but not likely to purchase it at $2,201. This product is currently available at Microsoft Online Store at $1,900. It is believed that Microsoft had spent $1,100 per unit to outsource its assembly to its supplier. This supplier will switch its production line towards Apple's iPad Pro if Microsoft does not guarantee at least $950 per unit (which is the amount Apple guarantees). Let's assume that Microsoft produced only one unit of Surface Laptop Studio. Odysseus purchased this product. Please fill in the blanks below: What is Odysseus' willingness to pay? What is Odysseus' surplus (consumer surplus)? What is the total value captured by Microsoft? What is supplier's opportunity cost? What is the total value created by Microsoft?Janet Foster bought a computer and printer at Computerland. The printer had a $600 list price with a $100 trade discount and 2/10, n/30 terms. The computer had a $1,600 list price with a 25% trade discount but no cash discount. On the computer, Computerland offered Janet the choice of (1) paying $50 per month for 17 months with the 18th payment paying the remainder of the balance or (2) paying 8% interest for 18 months in equal payments. a. Assume Janet could borrow the money for the printer at 8% to take advantage of the cash discount. How much would Janet save? (Use 360 days a year. Round your answer to the nearest cent.) Janet's savings b. On the computer, what is the difference in the final payment between choices 1 and 2? (Round your answer to the nearest cent.) Difference final payment Check my work
- Question 2 A common economic analysis objective is to find out whether it is more profitable to purchase an asset rather than rent it. A simple case of this dilemma is currently being analyzed by a private company which wants to procure a pick-up truck for regular operation. For the next 24 months, the truck can be leased or purchased. The truck costs $9,500 if purchased now in cash. If leased, the monthly lease is $358 with the first payment due by the end of the first month. At the end of the lease term, 24 months, the truck is returned to the auto dealer with expected final repair cost of $1,000 to be paid immediately before return to dealer. If purchased, the truck can be financed through monthly payments. The financing nominal interest rate is to be negotiated with the dealer. The financing will require $2,000 down payment (paid now) and monthly payments starting at the end of the first month. After 24 months, it is expected to be worth half its purchase price. [a] Over what range…Benny is the manager of an office-support business that supplies copying, binding, and other services for local companies. He must replace a worn-out copy machine that is used for black-and-white copying. He is considering two machines, and each of these has a monthly lease cost plus a cost for each page that is copied. Machine 1 has a monthly lease cost of $639, and there is a cost of $0.030 per page copied. Machine 2 has a monthly lease cost of $747, and there is a cost of $0.045 per page copied. Customers are charged $.08 per page copied. If Benny expects to make 75,000 copies per month, what would be the monthly cost for each machine? (round your answers to the highest whole number)Daily demand for a certain product is 60 and. The source of supply is reliable and maintains a constant lead time of six days. The cost of placing the order is $10 and annual holding costs are $0.50 per unit. There are no stock-out costs, and unfilled orders are filled as soon as the order arrives. Assume sales occur over the entire 365 days of the year. Find the order quantity and reorder point. ABC Analysis Percent of Annual S Volume Stock Number Annual Volume J24 12,500 46.2 R26 9,000 333 L02 3.200 11.8 M12 1,550 5.8 P33 620 2.3 T72 65 0.2 S67 53 0.2 Q47 32 0.1 V20 30 0.1 M=100.0 What are the appropriate ABC groups of inventory iten
- The profit on a product selling for P 8.20 is 10% of the selling price. What percentage increase in production cost will reduce the profit by 60%? 6.67% 6% 1.11% 10% 8.33% 5%You and one of your classmates are considering setting up a prescription delivery service for local residents in Mount Pearl. In order to start the business you will need to purchase a car for $7,200 which you expect you will be able to sell for $3,600 at the end of every two years (you'll have to purchase a new equivalent car at that time). Insurance costs are $560 for each six months of operation, starting immediately, and advertising costs (flyers, newspaper ads, etc.) are estimated to be $110 per month. All calculations are performed using 4 significant figures. The big question is how many customers you will have, but you figuring on setting a fee of $2 per delivery, which will be payable by your clients at the end of each month. Assuming a stable interest rate of 6% per year, compounded monthly what is the break even number of deliveries per month?You are considering adding a new software title to those published by your highly successful software company. If you add the new product, it will use capacity on your disk duplicating machines that you had planned on using for your flagship product, "Battlin' Bobby." You had planned on using the unused capacity to start selling "BB" on the West coast in two years. You would eventually have had to purchase additional duplicating machines 10 years from today, but using the capacity for your new product will require moving this purchase up to 2 years from today. If the new machines will cost $115,000 and can be expensed under Section 179, your marginal tax rate is 21 percent, and your cost of capital is 16 percent, what is the opportunity cost associated with using the unused capacity for the new product? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) Opportunity cost