Concept explainers
a)
To determine: The present value profit or loss of the deal.
Introduction:
Present value (PV):
It is the value that is in present form of money in contrast to some future amount. This is achieved when it is invested in compound interest.
The NPV is the measurement of profit that is calculated by subtracting the present values of
b)
To determine: The special deal should be made or not made.
Introduction:
Present value (PV):
It is the value that is in present form of money in contrast to some future amount. This is achieved when it is invested in compound interest.
Net present value (NPV):
The NPV is the measurement of profit that is calculated by subtracting the present values of cash outflows and cash inflows. The NPV is used as a tool to measure the profitability of investing in a project.
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OPERATIONS MANAGEMENT W/ MYLAB <C> 2018
- James Lawson's Bed and Breakfast, in a small historicMississippi town, must decide how to subdivide (remodel) the largeold home that will become its inn . There are three alternatives:Option A would modernize all baths and combine rooms, leavingthe inn with four suites, each suitable for two to four adults.Option B would modernize only the second floor; the results wouldbe six suites, four for two to four adults, two for two adults only.Option C (the status quo option) leaves all walls intact. In this case,there are eight rooms available, but only two are suitable for fouradults, and four rooms will not have private baths. The details ofprofit and demand patterns that will accompany each option are: Which option has the highest expected monetary value?arrow_forwardTheory of Constraints for a Restaurant Taylor’s is a popular restaurant that offers customers alarge dining room and comfortable bar area. Taylor Henry, the owner and manager of the restaurant,has seen the number of patrons increase steadily over the last two years and is considering whetherand when she will have to expand its available capacity. The restaurant occupies a large home, andall the space in the building is now used for dining, the bar, and kitchen, but space is available on theproperty to expand the restaurant. The restaurant is open from 6 p.m. to 10 p.m. each night (exceptMonday) and, on average, has 24 customers enter the bar and 50 enter the dining room during each ofthose hours. Taylor has noticed the trends over the last 2 years and expects that within about 4 years,the number of bar customers will increase by 50% and the dining customers will increase by 20%.Taylor is worried that the restaurant will be not be able to handle the increase and has asked you tostudy…arrow_forward8. Janelle Heinke, the owner of Ha'Peppas!, is considering a new oven in which to bake the firm's signature dish, vegetarian pizza. Oven type A can handle 20 pizzas an hour. The fixed costs associated with oven A are $20,000 and the variable costs are $3.00 per pizza. Oven B is larger and can handle 40 pizzas an hour. The fixed costs associated with oven B are $32,500 and the variable costs are $1.50 per pizza. The pizzas sell for $15.00 each. Part 2 a) The break-even point in units for oven type A = _______units (round your response to the nearest whole number). b) What is the break-even point for each oven? c) If the owner expects to sell 9,000 pizzas, which oven should she purchase? d) If the owner expects to sell 12,000 pizzas, which oven should she purchase? e) At what volume should Janelle switch ovens?arrow_forward
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- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,