. Compute the requested value(s) for each scenario. Show all component numbers that factor into determination of the final answer(s) a. On January 1, 1963, a kid from Sioux Falls purchased a limited edition Superman comic at the original market price of 12 cents. On January 1, 1997 (34 years later), the comic was sold at auction for $2,500. What annual rate of return did this kid earn on the comic? Give typing answer with explanation and conclusion

. Compute the requested value(s) for each scenario. Show all component numbers that factor into determination of the final answer(s) a. On January 1, 1963, a kid from Sioux Falls purchased a limited edition Superman comic at the original market price of 12 cents. On January 1, 1997 (34 years later), the comic was sold at auction for $2,500. What annual rate of return did this kid earn on the comic? Give typing answer with explanation and conclusion

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 20P: Alexander Industries is considering purchasing an insurance policy for its new office building in...

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Alexander Industries is considering purchasing an insurance policy for its new office building in St. Louis, Missouri. The policy has an annual cost of $10,000. If Alexander Industries doesn’t purchase the insurance and minor fire damage occurs, a cost of $100,000 is anticipated; the cost if major or total destruction occurs is $200,000. The costs, including the state-of-nature probabilities, are as follows: Using the expected value approach, what decision do you recommend? What lottery would you use to assess utilities? (Note: Because the data are costs, the best payoff is $0.) Assume that you found the following indifference probabilities for the lottery defined in part (b). What decision would you recommend? Do you favor using expected value or expected utility for this decision problem? Why?
Brendan & Kelly purchased an item valued at $147,000. They paid $22,050 down and financed the rest at 2.8% compounded annually. To reduce the amount owing to $32,490 at the end of 3 years, what size of equal payments must Brendan & Kelly make at the end of each three months? Enter the present value as a positive value in the PV box below. Enter PMT and FV as positive or negative values based on PV being positive. Report PMT accurate to the nearest cent. P/Y = C/Y = N = I/Y = PV = PMT = FV= The size of each equal payment is (enter a positive value) $ .__________________
Luis is responsible for buying some specialized manufacturing equipment that has a purchase price of $10,000 and annual operating costs of $1000. The vendor is offering a special buyer incentive that provides free maintenance for the first four years. After that time, the maintenance is $500 per year over the 10-year life, and there is an overhaul expense in year 5 of $2000. The equipment has a salvage value of $1000. If the interest rate is 8%, what is the present value?
As part of a promotion campaign, Funzy Cereal includes one coupon in each issue of various national magazines and offers a toy car in exchange for $1.00 and three coupons. The cars cost Funzy $1.50 each. Experience indicates that 4% of the coupons eventually will be redeemed. During the last month of 2021, the first month of the offer, 12 million coupons were distributed and 240,000 of the coupons were redeemed. Funzy recognizes coupon promotion expense in the period coupons are issued. What amount should Funzy report as coupon promotion expense on its income statement for the year ended December 31, 2021?
Consider the following scenario involving an existing asset. Which of these values would be used in the replacement analysis of this asset? Your company purchased a new construction vehicle 4 years ago for $300,000. Last year, the vehicle required a major overhaul costing $25,000. Today, a local dealer offers you a trade-in allowance of $175,000 for the vehicle. The current market-value for the 4-year-old vehicle is $147,000. a. Use $300,000 original purchase price only.b. Use only $147,000 market value.c. Use only $175,000 trade-in allowance.d. Use all four of these costs.
On March 10, 2020, Steele Company sold to Barr Hardware 200 tool sets at a price of $50 each (cost $30 per set) with terms of n/60, f.o.b. shipping point. Steele allows Barr to return any unused tool sets within 60 days of purchase. Steele estimates that (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2020, Barr returned six tool sets and received a credit to its account. Instructions a. Prepare journal entries for Steele to record (1) the sale on March 10, 2020, (2) the return on March 25, 2020, and (c) any adjusting entries required on March 31, 2020 (when Steele prepares financial statements). Steele believes the original estimate of returns is correct. b. Indicate the income statement and balance sheet reporting by Steele at March 31, 2020, of the information related to the Barr sales transaction. . Assume that instead of selling the tool sets on credit, that…
On March 10, 2020, Steele Company sold to Barr Hardware 200 tool sets at a price of $50 each (cost $30 per set) with terms of n/60, f.o.b. shipping point. Steele allows Barr to return any unused tool sets within 60 days of purchase. Steele estimates that (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2020, Barr returned six tool sets and received a credit to its account. Instructions a. Prepare journal entries for Steele to record (1) the sale on March 10, 2020, (2) the return on March 25, 2020, and (c) any adjusting entries required on March 31, 2020 (when Steele prepares financial statements). Steele believes the original estimate of returns is correct. b. Indicate the income statement and balance sheet reporting by Steele at March 31, 2020, of the information related to the Barr sales transaction.
A company owns a 6-year-old gear hobber that has a book value of $60,000. The present market value of the hobber is $80,000. A new gear hobber can be purchased for $450,000. Using an outsider’s point of view, what is the net first cost of purchasing the new gear hobber? a. $310,000 b. $370,000 c. $390,000d. $450,000.
Assume that a company is considering buying a new piece of equipment for $240,000 that would have a useful life of five years and no salvage value. The equipment would generate the following estimated annual revenues and expenses: Revenues $ 105,500 Less operating expenses: Commissions $ 15,000 Insurance 5,000 Depreciation 48,000 Maintenance 30,000 98,000 Net operating income $ 7,500 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided.The internal rate of return for this investment is closest to:
Alexander Industries is considering purchasing an insurance policy for its new officebuilding in St. Louis, Missouri. The policy has an annual cost of $10,000. If Alexander Industriesdoesn’t purchase the insurance and minor fire damage occurs, a cost of $100,000is anticipated; the cost if major or total destruction occurs is $200,000. The costs, includingthe state-of-nature probabilities, are as follows: a. Using the expected value approach, what decision do you recommend?
Give only typing answer with explanation and conclusion Tony’s Racing Engines, Inc. wants to replace a 10-year-old cylinder boring machine with a new machine that is more efficient. The old machine cost $30,000 when new and has a current book value of $9,500. TRE can sell the machine to a buyer for its current book value. TRE’s tax rate is 25%. What is the effect of the sale of the old machine on the initial outlay for the new machine?
Harold, the owner of Sweet Tunes Music, purchased acoustic guitars for $90 each and has marked them up by 19.00% of the cost. The overhead expenses were 9.00% of the cost. a. What is the regular selling price of each guitar? Round to the nearest cent b. What is the profit made on each guitar sold? Round to the nearest cent c. If he decides to offer a markdown of 6.00%, what would be the reduced selling price? Round to the nearest cent d. What profit or loss he would make on the sale of each guitar?