Transactions Costs and the Efficiency of Alternative RemediesScenario 1 (Assume it costs $300 to move Bridgman's equipment)No MoveMoveBridgman $1,000$700Sturges$500$1,200No move is the status quomoving equipment results in a cooperative surplus of $

Transaction costs play a significant role in determining the efficiency of economic transactions and…

Answered: Transactions Costs and the Efficiency…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 7EB: An auto repair company needs a new machine that will check for defective sensors. The machine has an...

See similar textbooks

Similar questions

A piece of production equipment is to be replaced immediately because it no longer meets quality requirements for the end product. The two best alternatives are a used piece of equipment (E1) and a new automated model (E2). The economic estimates for Alt E1 Alt E2 Capital Investment PhP 14,000 PhP 65,000 Aппual Expenses 14,000 9,000 each are shown in the accompanying table. Useful Life (years) 5 20 Market Value (at the end of useful life) 8,000 13,000 The MARR is 15% per year. Which alternative is preferred, based on the (a) coterminated assumption with a five-year study period and an imputed market value for Alternative b? Use FW. ANSWER: FW (E1) = PhP Blank 1 FW (E2) = PhP Blank 2 The best alternative is EBlank 3
Problem 3) Given 2 alternatives: ineleviupe erf B First Cost 4,000 1,000 2,000 6,000 500 Annual Cost Annual Benefit Life 2,200 5 10 aed tedt pnit owT dinom e Salvage If i 10%, find the better alternative computing NPW of both alternatives Assume alternative A is replaced at the end of its useful life. 3,000 1,000
2 Saalfrank Corporation is considering two alternatives that are code-named M and N. Costs associated with the alternatives are listed below: Supplies costs Assembly costs. Power costs Inspection costs. Alternative M Alternative N $ 49,000 $ 30,000 $ 15,500 $ 12,000 a. Supplies costs a. Assembly costs a. Power costs a. Inspection costs b. Differential cost $ 55,000 $ 30,000 $ 10,000 $ 23,000 3 Required: a. Which costs are relevant and which are not relevant in the choice between these two alternatives? b. What is the differential cost between the two alternatives?
10:13W WSP □ s25-7 Annual leasing fee for software Annual maintenance of trucks Priscilla Smiley manages a fleet of 250 delivery trucks for Daniels Corporation. Smiley must decide whether the company should outsource the fleet management function. If she outsources to Fleet Management Services (FMS), FMS will be responsible for maintenance and scheduling activities. This alternative would require Smiley to lay off her five employees. However, her own job would be secure; she would be Daniels's liaison with FMS. If she continues to manage the fleet, she will need fleet-management software that costs $9,500 per year to lease. FMS offers to manage this fleet for an annual fee of $300,000. Smiley performed the following analysis: Total annual salaries of five laid- off employees Fleet Management Service's annual fee Total differential cost of ⠀⠀⠀ со Retain In- House $ 9,500 147,000 185,000 $ 341,500 1409/ 1480 C QAA Outsource to FMS Word >> Bit Q5G 71% Ę $ 300,000 Difference $9,500…
Three alternatives have the following cost data associated with them: Data Alt. 1 Alt. 2 Alt. 3 Useful Life, Years 10 10 10 First Cost $1,125,000 $1,980,000 $1,650,000 Annual Benefit 265,000 589,000 435,000 Annual M&O Costs 95,000 97,000 91,000 Salvage Value 145,000 205,000 178,000 Determine whích machine is better to purchase, if i = 10%. 1. Use a B/C 2. Use a Payback Period
E DE OFind - Replace AaBbCc AaBbCc AaBI A 2- A- 川。三。| T Normal 1 No Spac. Heading 1 A Select Paragraph Styles Editing SQU LLC is considering purchasing the following new machines which relevant data is presented below. Albana Albanu 580,000 840,000 Life Span 5,000 Albana Albanu Cost 10 Salvage value 2,000 Yearly Cost Savings 185,000 195,000 Tax Rate 25% Discount Rate 10% (a) Evaluate the above capital expenditure proposal using the three different methods of Net Present Value, the Internal Rate of Return and the Payback Period. (Note: You are required to clearly indicate the appropriate decision and assume straight- line depreciation method) (b) Numerical analysis based on the above calculation methods forms only a part of the capital budgeting strategy. Do you agree? Explain. (c) Given the results in (a) above, do you agree that the IRR method is superior to the NPV method? Explain. ! 山
Sales Less variable expense Contribution margin Less fixed expense Direct salaries Direct advertising Utilities* Depreciation-fixture** Rent*** Insurance General administrative Total fixed expense Income/Profit Drugs 125,000 50,000 75,000 29,500 1,000. 500 1,000 10,000 2,000. 15,000 59,000 Requirement 2: To utilize the idle capacity. $16.000 Requirement 1: Not to utilize the idle capacity Should the Houseware line be terminated? Cosmetics 75,000 25,000 50,000 12,500 7,500 500 2,000 6,000 500 9,000 38.000 $12.000 Houseware 50,000 30.000 20,000 8,000 6,500 1,000 2,000 4,000 500 6,000 28,000 Allocated cost based on space occupied. ** Depreciation on fixtures used for display of the various product lines. ***Allocated cost based on sales dollars. Insurance-represents insurance carried on inventories maintained within each of the three product line areas... General administrative-allocated to the product lines on the basis of sales dollars. Total admin costs. will not change if the…
Given the two machines' data Machine A Machine B First Cost P8,000.00 P14,000.00 Salvage value Annual operation 2,000.00 3,000.00 2,400.00 Annual maintenance 1,200.00 1,000.00 Taxes and insurance 3% 3% Life, years 10 15 Money is worth at least 16% Using equivalent uniform annual cost method, determine the value of alternative A and alternative B: ANSWER for ALTERNATIVE A: Blank 1 ANSWER for ALTERNATIVE B: Blank 2
Calculate the modified benefit-cost ratio for the alternative: Initial Investment Cost : 350000 Revenues : 150000 Costs : 55000 Salvage : 120000 n : 7 MARR : 0.1 a.1.4599 b.1.4101 c.1.6035 d.1.7354 e.1.6480
Asset Replacement An uninsured boat costing $98,000 was wrecked the first day it was used. It can be either sold as-is for $9,800 cash and replaced with a similar boat costing $100,000 or rebuilt for $83,000 and be brand new as far as operating characteristics and looks are concerned. Required: What is the difference in cost between the two options? Based on financial considerations, what should the company do? multiple choice Sell as-is for $9,800 cash and replace with a similar boat costing $100,000. Rebuild for $83,000.
USE MANUAL SOLUTION An equipment has a first cost of ₱200,000 and has a maintenance cost of ₱10,000, 4 years from now and ₱30,000, ten years from now. Find the present worth of the machine. (use i = 16%) A. ₱112,323.42 B. ₱212,323.42 ( Answer ) C. ₱312,323.42 D. ₱412,323.42
In order to carry a new investment project, company A has to purchase a machine for OMR 400,000. Company A staff have enough capacity to carry out the production, no one new will need to be hired, they are currently paid OMR 20,000. Calculate the relevant cost? a. OMR 20,000 Ob. OMR 380,000 O c. OMR 400,000 d. OMR 420,000

SEE MORE QUESTIONS

Recommended textbooks for you

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

SEE MORE TEXTBOOKS

Transactions Costs and the Efficiency of Alternative Remedies Scenario 1 (Assume it costs $300 to move Bridgman's equipment) No Move Bridgman $1,000 Sturges $500 Move $700 $1,200 No move is the status quo -> moving equipment results in a cooperative surplus of $