CleanShot 2024-03-31 at 16

Annie's Homemade currently owns one push cart along with a branded tent to facilitate off-site sales. The company is considering buying a second push cart and tent for $4,500 to expand its off-site sales opportunities. Because the company's cargo trailer has the capacity to transport two push carts, there is no need to buy an additional trailer at this time. Annie's provided the following estimates to assist with analyzing the investment in an additional push cart: Additional sales events per month (in June, July, August, and September) Average number of servings sold per event Selling price per serving Ingredients and packaging cost per serving Average time for manager to make one batch of 100 servings of ice cream Average time for employees to pre-package one serving of ice cream Pickup truck diesel fuel, oil, and diesel exhaust fluid expenses Average duration of each event (including drive time) Average number of employees working at each event Hourly wage rate for managers Hourly…

Annie's Homemade currently owns one push cart along with a branded tent to facilitate off-site sales. The company is considering buying a second push cart and tent for $4,500 to expand its off-site sales opportunities. Because the company's cargo trailer has the capacity to transport two push carts, there is no need to buy an additional trailer at this time. Annie's provided the following estimates to assist with analyzing the investment in an additional push cart: Additional sales events per month (in June, July, August, and September) Average number of servings sold per event Selling price per serving Ingredients and packaging cost per serving Average time for manager to make one batch of 100 servings of ice cream Average time for employees to pre-package one serving of ice cream Pickup truck diesel fuel, oil, and diesel exhaust fluid expenses Average duration of each event (including drive time) Average number of employees working at each event Hourly wage rate for managers Hourly…

Auto Shoppe is considering the purchase of a new engine computer code reader for $65,000. Auto Shoppe can charge $75 for the service of reading the codes from a single car engine, while the actual cost of the reading would only be $10 per car engine. Please answer the following two questions, based on this information. Suppose that the manager of Auto Shoppe is concerned about this purchase, and has stated that if Auto Shoppe were to buy the new engine computer code reader, “.the machine needs to pay for itself by the time we use it to read the codes of 200 car engines." The manager says this is because, “...those sorts of engine computer code readers go out of date very quickly, so if we don't get our money back soon, we will probably just wind up replacing the machine before it ever breaks even." What would Auto Shoppe need to charge for the service of reading each car engine, to break-even when it reads the codes from 200 car engines? a. $45 b. $150 Oc. $205 d. $335 Oe. $75

An individual is planning to take an 800-mile trip between two large cities. Three possibilities exist: air, rail, or auto. The person is willing to pay $30 for every hour saved in making the trip. The trip by air costs $600 and travel time is 8 hours, by rail the cost is $450 and travel time is 16 hours, and by auto the cost is $250 and travel time is 22 hours.(a) Which mode is the best choice?

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A large land-grant university that is currently facing severe parking problems on its campus is considering constructing parking decks off campus. A shuttle service could pick up students at the off campus parking deck and transport them to various locations on campus. The university would charge a small fee for each shuttle ride, and the students could be quickly and economically transported to their classes. The funds raised by the shuttle would be used to pay for trolleys, which cost about $170,000 each. Each trolley has a 12-year service life, with an estimated salvage value of $12,000. To operate each trolley, additional expenses will be incurred, as given in the table below. If students pay 10 cents for each ride, determine the annual ridership per trolley (number of shuttle rides per year) required to justify the shuttle project, assuming an interest rate of 6%. Click the icon to view the additional expenses. Click the icon to view the interest factors for discrete compounding…

Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufacturessophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which isprivately owned, has approached a bank for a loan to help it finance its growth. The bank requires financialstatements before approving such a loan. You have been asked to help prepare the financial statements andwere given the following list of costs:1. Depreciation on salespersons’ cars.2. Rent on equipment used in the factory.3. Lubricants used for machine maintenance.4. Salaries of personnel who work in the finished goods warehouse.5. Soap and paper towels used by factory workers at the end of a shift.6. Factory supervisors’ salaries.7. Heat, water, and power consumed in the factory.8. Materials used for boxing products for shipment overseas. (Units are not normally boxed.)9. Advertising costs.10. Workers’ compensation insurance for factory employees.11. Depreciation on chairs…

Question: . What is the estimated Internal Rate of Return (IRR) of the project? Should the project be accepted based on the IRR criterion?  Why? You have determined in your mind that you would like to have a business of your own, although your father runs a family restaurant in your local city. You have therefore, decided to have a medium size snack and cocktails bar which will accommodate the cruise ship passengers who visit your city. You plan to keep the business for five years after which you will sell it off to your brother John for $2,000,000 and go off to do your Master’s Degree in the UK. Though you will be occupying the establishment from your grandmother for free, you have decided that you need to make some improvements to the property which will cost you $1,500,000. Additionally, you will spend $275,000 in bar stools, tables and decorations. If this space had been leased out, it would have fetched a lease rental of $75,000 per year. You will depreciate the assets over 7…

You own a furniture manufacturing company. You are looking to expand into glass furniture and need to buy new manufacturing equipment to manufacture this type of furniture. You have researched many suppliers but have found that two machines will best suit your needs. The cost of machine 1 is $90,000, and the cost of machine 2 is $110,000. The estimated net profits the machines will generate are in the attached image. a)Compare the ARR for both machines and decide which machine you should buy. b)Critically evaluate the ARR technique in evaluating investment options.

Wilderness Products, Inc., has designed a self-inflating sleeping pad for use by backpackers and campers. The following information is available about the new product: An investment of $1,450,000 will be necessary to carry inventories and accounts receivable and to purchase some new equipment needed in the manufacturing process. The company’s required rate of return is 28% on all investments. A standard cost card has been prepared for the sleeping pad, as shown below:   StandardQuantity or Hours StandardPrice or Rate   StandardCost Direct materials 5 yards $ 2.90 per yard   $ 14.50 Direct labor 3 hours $ 10.00 per hour     30.00 Manufacturing overhead (20% variable) 3 hours $ 14.00 per hour     42.00 Total standard cost per pad             $ 86.50     3. The only variable selling and administrative expense will be a sales commission of $10 per pad. The fixed selling and administrative expenses will be $2,482,600 per year. 4. Because the company manufactures many…

Larry’s Lawn Service (LLS) currently offers a single lawn maintenance service that includes cutting grass, trimming shrubs, and removing leafs.  LLS is considering offering an additional lawn care service which will include fertilizing and pest control. LLS hired you to perform a study to determine whether or not LLS should in fact go ahead with the new service.  Your fee to LLS is $10,000 which is due whether LLS makes the investment in the new project or not.  Additionally, if this new lawn care service is implemented, LLS believes that it will actually increase business for its original lawn maintenance service.  You have estimated the dollar value of this benefit to the existing lawn maintenance service to be $20,000/year 34.) The $20,000 per year benefit that would accrue to the existing lawn maintenance service only if the new lawn care service is implemented is best described as a:   Question 34 options:   Incremental cash flow2   Externality…

Larry’s Lawn Service (LLS) currently offers a single lawn maintenance service that includes cutting grass, trimming shrubs, and removing leafs.  LLS is considering offering an additional lawn care service which will include fertilizing and pest control. LLS hired you to perform a study to determine whether or not LLS should in fact go ahead with the new service.  Your fee to LLS is $10,000 which is due whether LLS makes the investment in the new project or not.  Additionally, if this new lawn care service is implemented, LLS believes that it will actually increase business for its original lawn maintenance service.  You have estimated the dollar value of this benefit to the existing lawn maintenance service to be $20,000/year 33.) For LLS, the $10,000 fee is a:   Question 33 options:   Incremental cash flow   Externality   Sunk cost   Opportunity cost

Wilderness Products, Inc., has designed a self-inflating sleeping pad for use by backpackers and campers. The following information is available about the new product:   An investment of $1,650,000 will be necessary to carry inventories and accounts receivable and to purchase some new equipment needed in the manufacturing process. The company’s required rate of return is 16% on all investments. A standard cost card has been prepared for the sleeping pad, as shown below:     StandardQuantity or Hours StandardPrice or Rate   StandardCost Direct materials 9 yards $ 3.30 per yard   $ 29.70 Direct labor 5.4 hours $ 9.00 per hour     48.60 Manufacturing overhead (20% variable) 5.4 hours $ 13.00 per hour     70.20 Total standard cost per pad             $ 148.50     The only variable selling and administrative expense will be a sales commission of $9 per pad. The fixed selling and administrative expenses will be $4,812,000 per year. Because the company manufactures many…

Uberand Lyft are two popular ride-sharing services. Imagine that you are visiting Ne\w York City for a family vacation. You are trying to decide whether to use one of these ride-sharing services to get around the city or rent a car and drive yourself. Considering the perspectives of the passengers (your family), the drivers, and the company (Uber or Lyft), explain the following: why ride-sharing services have gained in popularity the financial considerations relevant to your decision the nonfinancial considerations relevant to your decision

John Smith is looking to open an ice-cream parlor place in the neighborhood where he resides. He has been thinking about this project for a while. He has completed the technical, legal, and economic feasibility studies in order to decide properly. The economic study presented him with the following financial forecasts:   The project will last 5 years. The price of an average creamery ice-cream cone should be $6 per unit. Under the current conditions, it is not expected that the price will change over the life of the project. The store is expected to sell 20,000 units the first year, with an annual growth of 5% in the units sold. The main variable costs are waffle cones, ice-cream, toppings, whipped cream, chocolate fudge, disposable cups, napkins and plastic spoons. The economic study has also found that the variable costs should be 40% of the sales revenues. The main fixed costs are rent ($10,000/year), utilities ($5,000/year), and gross salaries for two part-time employees…

Spiritual Airlines Spiritual Airlines is considering a proposal to initiate air service between Phoenix, Arizona and Las Vegas, Nevada. The route would be designed primarily to serve the recreating and tourist travelers that frequently travel between the two cities. By offering low-cost tourist fares, the airlines hope to persuade persons who now travel by other modes of transportation to switch and fly Spiritual on this route. In addition, the airline expects to attract business travelers during the hours of 7 a.m. to 6 p.m. on Mondays and Fridays. The fare price schedule or tariff would be designed to charge a higher fare during business-travel hours so that tourist demand would be reduced during those hours. The company believes that a business far of $75 one way during business hours and a fare of $40 for all other hours would result in the passenger load being equal during business-travel and tourist-travel hours. To operate the route, the airline would need two 120 passenger jet…

Spiritual Airlines Spiritual Airlines is considering a proposal to initiate air service between Phoenix, Arizona and Las Vegas, Nevada. The route would be designed primarily to serve the recreating and tourist travelers that frequently travel between the two cities. By offering low-cost tourist fares, the airlines hope to persuade persons who now travel by other modes of transportation to switch and fly Spiritual on this route. In addition, the airline expects to attract business travelers during the hours of 7 a.m. to 6 p.m. on Mondays and Fridays. The fare price schedule or tariff would be designed to charge a higher fare during business-travel hours so that tourist demand would be reduced during those hours. The company believes that a business far of $75 one way during business hours and a fare of $40 for all other hours would result in the passenger load being equal during business-travel and tourist-travel hours. To operate the route, the airline would need two 120 passenger jet…

Suppose that FedEx Kinko’s has decided to install personal computers and printers in its Pittsburgh store that will be rented to customers on an hourly basis. FedEx Kinko’s management has called in consultants from a number of computer suppliers to assist it in designing a system. After considering a number of alternatives, FedEx Kinko’s decided that an Apple computer system consisting of eight iMac computers and two printers best meets its current and projected future needs. FedEx Kinko’s evaluated the desirability of the acquisition of the Apple computer system using its normal capital budgeting procedures. It found that the computer system has a large positive expected net present value. Jim Horn, a new management trainee in the financial planning office, has recently been reading about the boom in the leasing industry. He feels that if leasing is growing as rapidly as it seems, there must be some significant advantages to the leasing alternative compared to ownership. If purchased,…

I need assistance with this problem. Thank you

Heriot and Watt are planning to open a small shop selling lunch boxes, which they will prepare on the premises. After experimenting for some weeks Heriot and Watt have arrived at two possible lunch box sets, which they think will be popular: Lunch Box A and Lunch Box B. As they can only prepare one lunch box on the premises, they need to decide, which one to choose. The following information is available: You are tasked to help Heriot and Watt to make their decision and provide the information below: (a) What is the break-even point for both options? (b)  What profit would the expected sales of each option achieve? (c)  How many boxes of each option would Heriot and Watt have to sell if they wanted to achieve a profit of £800. (d) Heriot and Watt are considering a selling price increase of 10% for both lunch box options. How many boxes of each option would they have to sell to achieve a target profit of £900? (e) Based on the information calculated above (a – d) explain, which…

I.M. Aruban has a sandwich shop in a downtown business district. Several ofhis customers have said that they would purchase from his shop more oftenif he offered a delivery service. I.M. is considering establishing a deliveryservice to meet the needs of his market. He believes that he will have to purchasea fax machine, install a new phone line for the fax machine, purchasea delivery van, and hire at least one delivery person. I.M. asks your advice indetermining whether he should take on the delivery service venture.a. What steps would you recommend that I.M. use in reaching a profitabledecision?b. Explain to I.M. what each step involves.

A local sanitation authority needs to purchase a new garbage truck. The authority has two truck models under consideration. The purchase price for Model A is $90, 000. The maintenance and operation costs are $10,000/year. Model B is less expensive to acquire ($60,000 at purchase), but costs more on operation and maintenance. Details of the costs are shown in the table below. Interest rate is 3%. Please help this authority to decide which truck they should purchase. Year Model A Truck Model B Truck Purchase Price $90,000 $60,000 Annual Operation and Maintenance  1 $10,000 $20,000 2 $10,000 $20,000 3 $10,000 $20,000 4 $10,000 $20,000         Calculate the present values of total costs for Model A Truck and Model B Truck, respectively. (Interest rate: 3%) (1’)             *Results round to the nearest 2 decimal places. (Note: you may consider using an Excel worksheet to do the calculation).  Present value of Model A Truck…

The president of Midnight Rambler wants to know if he should allow Jack Flash to have the scooters for $120,000. Determine the effect on profits from accepting Jack Flash’s offer. Briefly explain why certain costs should be omitted from the analysis in requirement (a.) Assume Midnight Rambler is operating at capacity and could sell the 300 scooters at its regular markup: Determine the Opportunity Cost of accepting Jack Flash’s offer. Determine the effect on profits of accepting Jack Flash’s offer What other factors should Midnight Rambler consider before deciding to accept the special order?

AT&T (...a telecommunications company) is choosing between two bus models (...for some unexplained reason wtf?!?): The Daintree Rainforest Tour Company is a small firm that runs a single tour each day to the Daintree Rainforest. The company is choosing between two bus models to conduct these tours in: Long Life and Short Life. One of the two bus alternatives (Long Life) is more expensive to purchase and maintain, but lasts much longer than the other alternative (Short Life). The discount rate that is appropriate for all of the tour company's cash flows is 11.6% per year. As the company is a tour company (...and not a telecommunications firm), the company will always need to have an active bus to conduct its business, such that it would repurchase a new replacement bus of the same model at the end of its life. And this pattern would continue for the foreseeable future. Neither model affects the customer experience in a meaningful way and is expected to have no effect on annual…

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A local sanitation authority needs to purchase a new garbage truck. The authority has two truck models under consideration. The purchase price for Model A is $90, 000. The maintenance and operation costs are $10,000/year. Model B is less expensive to acquire ($60,000 at purchase), but costs more on operation and maintenance. Details of the costs are shown in the table below. Interest rate is 4%. Please help this authority to decide which truck they should purchase. Year Model A Truck Model B Truck Purchase Price (beginning of year) $90,000 $60,000 Annual Operation and Maintenance  (end of year) 1 $10,000 $20,000 2 $10,000 $20,000 3 $10,000 $20,000 4 $10,000 $20,000 Calculate the present values of total costs for Model A Truck and Model B Truck, respectively. (Interest rate: 4%) (2’) Present value of Model A Truck total costs: Present value of Model B Truck total costs: Which truck model should this authority choose? Why? (1’)

A local sanitation authority needs to purchase a new garbage truck. The authority has two truck models under consideration. The purchase price for Model A is $90, 000. The maintenance and operation costs are $10,000/year. Model B is less expensive to acquire ($60,000 at purchase), but costs more on operation and maintenance. Details of the costs are shown in the table below. Interest rate is 4%. Please help this authority to decide which truck they should purchase. Year Model A Truck Model B Truck Purchase Price (beginning of year) $90,000 $60,000 Annual Operation and Maintenance  (end of year) 1 $10,000 $20,000 2 $10,000 $20,000 3 $10,000 $20,000 4 $10,000 $20,000 The authority charges garbage collection fees from local residents. The estimated fee collection is $38,000 per year. Compare the present value of total costs of the truck model you choose and the present value of total revenues. Calculate the present value of total…

A local waste management company needs to purchase a new garbage truck. The company has two truck models under consideration. The purchase price for Model A is $90, 000. The maintenance and operation costs are $10,000/year. Model B is less expensive to acquire ($60,000 at purchase), but costs more on operation and maintenance. Details of the costs are shown in the table below. Interest rate is 4%. Please help this company to decide which truck they should purchase. Year Model A Truck Model B Truck Purchase Price (beginning of year) $90,000 $60,000 Annual Operation and Maintenance  (end of year) 1 $10,000 $20,000 2 $10,000 $20,000 3 $10,000 $20,000 4 $10,000 $20,000                                         Calculate the present values of total costs for Model A Truck and Model B Truck, respectively. (Interest rate: 4%)                 *Results round to the nearest 2 decimal places. (Note: you may consider using an Excel…

Please refer to the attached scenario If Brad decides to purchase a larger boat, what costs will be affected by this decision? Will they increase or decrease?

You are thinking of buying a van that will be used only for business. The cost of the van is estimated at $39,145. You would spend an additional $2,725 to have the van painted. In addition, you want the back seat of the van removed so that she will have lots of room to transport your mixer inventory as well as your catering supplies. The cost of taking out the back seat and installing shelving units is estimated at $1,330. You expect the van to last about 5 years, and you expect to drive it for 200,000 miles. The annual cost of vehicle insurance will be $2,500. You estimate that at the end of the 5-year useful life the van will sell for $7,200. Assume that you will buy the van on August 15, 2021, and it will be ready for use on September 1, 2021. You are concerned about the impact of the van’s cost on your income statement and balance sheet. You will need to calculate the van’s depreciation. Required part C Determine the cost of the van. Prepare three depreciation tables for 2021,…