What is the opportunity cost of interest forgone from purchasing all 306,000 units at the start of the year instead of in 12 monthly purchases of 25,500 units per order? (b) Should Anti-Corona purchase 306,000 units at the start of the year or 25,500 units each month? Show your calculations with reasons 4(c) The company is a multinational company with many branches in different countries around the world. The 12% for return on cash is based on expected return of cash in US. The company is planning to deploy a new operation in Japan where interest rate is close to zero or sometimes even negative. Now interest rate of extra cash is negative one percent which is (-) 1%. How would your results in the part (b) change in case of the Japanese operation? Please calculate the results with explanations of why the result is same( or different)
Anti-Corona, a distributor of facial mask, predicts that it will purchase 306,000 masks next year. Anti-Corona estimates that 25,500 masks will be required each month. A supplier quotes a price of $10 per facial mask. The supplier also offers a special discount option: If all 306,000 masks are purchased at the start of the year, a discount of 3% off the $10 price will be given. Anti-Corona can invest its cash at 12% per year. It costs Anti-Corona $300 to place each purchase order.
(a)What is the
(b) Should Anti-Corona purchase 306,000 units at the start of the year or 25,500 units each month? Show your calculations with reasons
4(c) The company is a multinational company with many branches in different countries around the world. The 12% for return on cash is based on expected return of cash in US. The company is planning to deploy a new operation in Japan where interest rate is close to zero or sometimes even negative. Now interest rate of extra cash is negative one percent which is (-) 1%. How would your results in the part (b) change in case of the Japanese operation? Please calculate the results with explanations of why the result is same( or different) <Assumptions: interest rate is taken as return or opportunity cost>
Step by step
Solved in 3 steps
