Val is considering purchasing a new videoplasma display panel to use with hernotebook computer. One model, the XJ3,costs $4400 new, while another, the Y19,sells for $3000. Val has determined that thesalvage value after two years of service is$1900 for the XJ3 and $900 for the Y19. Bothpanels give similar service,except the Y19 is not suitable for clientpresentations. If she buys the Y19, about fourtimes a year she will have to rent one similarto the XJ3, at a total year-end costof about $250. Using the IRR method, whichdisplay panel is the better choice? Use a two-year study period. She must choose only oneof the alternatives. Val'sMARR is 10 percent.Theis the better choice becauseisthe IRR for the change frompercent, which is the MARR(Round to one decimal place as needed.)

IRR stands for Internal rate of return refers to the rate of interest at which the sum of all cash…

Answered: Val is considering purchasing a new…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 6PB: Karens Quilts is considering the purchase of a new Long-arm Quilt Machine that will cost $17,500 and...

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A refinisher of antiques named Constance has been so successful with her small business that she is planning to expand her shop. She is going to start enlarging her shop by purchasing the following equipment.(a) What would be the net cost to Constance to obtain this equipment? Assume that she can trade the old equipment in for 15% of its original cost. Assume there has been no inflation in equipment prices. (b) Suggest a green engineering approach to constance for disposing of the solvents and lacquers used in her business.
Gloria is planning on opening a cake shop. She has found a location that rents for $15,550 per year and it will cost her another $13,716 to furnish the shop and purchase all the necessary equipment. She plans on charging $20 for a cake and it will cost her $3 per cake for ingredients and $1.92 per cake for decorations and $1.59 per cake for the beautiful, colorful to-go boxes. What is the dollar breakeven point she will need to earn to cover her costs in the first year? Round to the nearest whole number.
William and Miller Brown run a real estate brokerage firm. They have just moved into a new building and want to add some outdoor digital signage to advertise the firm's services. The sign they are considering has two display areas that can display two different images at the same time and costs $104,800. It is expected to have a useful life of 4 years. In an effort to recoup the cost of the sign, William and Miller will rent one display panel to other tenants in the building for $39,646 a year. Electricity to power the sign is expected to be $870 per year. (a) Your answer is correct. Calculate the annual net operating income generated by the new sign. Annual net operating income 12576 eTextbook and Media Attempts: 1 of 3 used (b) Calculate the accounting rate of return of the new sign. Accounting rate of return %
William and Miller Brown run a real estate brokerage firm. They have just moved into a new building and want to add some outdoor digital signage to advertise the firm's services. The sign they are considering has two display areas that can display two different images at the same time and costs $104,800. It is expected to have a useful life of 4 years. In an effort to recoup the cost of the sign, William and Miller will rent one display panel to other tenants in the building for $39,646 a year. Electricity to power the sign is expected to be $870 per year. (a) Calculate the annual net operating income generated by the new sign. Annual net operating income 2$ eTextbook and Media
Natalie is thinking of buying a van that will be used only for business. The cost of the van is estimated at $36,500. Natalie would spend an additional $2,500 to have the van painted. In addition, she wants the back seat of the van removed so that she will have lots of room to transport her mixer inventory as well as her baking supplies. The cost of taking out the back seat and installing shelving units is estimated at $1,500. She expects the van to last about 5 years, and she expects to drive it for 200,000 miles. The annual cost of vehicle insurance will be $2,400. Natalie estimates that at the end of the 5-year useful life the van will sell for $7,500. Assume that she will buy the van on August 15, 2023, and it will be ready for use on September 1, 2023. Natalie is concerned about the impact of the van’s cost on her income statement and balance sheet. She has come to you for advice on calculating the van’s depreciation. Instructions (a) Determine the cost of the van. (b) Prepare…
Natalie is thinking of buying a van that will be used only for business. The cost of the van is estimated at $36,500. Natalie would spend an additional $2,500 to have the van painted. In addition, she wants the back seat of the van removed so that she will have lots of room to transport her mixer inventory as well as her baking supplies. The cost of taking out the back seat and installing shelving units is estimated at $1,500. She expects the van to last about 5 years, and she expects to drive it for 200,000 miles. The annual cost of vehicle insurance will be $2,400. Natalie estimates that at the end of the 5-year useful life the van will sell for $7,500. Assume that she will buy the van on August 15, 2023, and it will be ready for use on September 1, 2023. Natalie is concerned about the impact of the van’s cost on her income statement and balance sheet. She has come to you for advice on calculating the van’s depreciation. Instructions (a) Determine the cost of the van. (b) Prepare…
Ashley is a fresh graduate and is now planning to start a new business. She would run an online shop to sell snacks imported from Japan. She expects the annual purchase cost would be $380,000 and the annual sales would be $790,000. Four sets of computers are needed, which cost $7,000 each and could be sold at half price in the second-hand market after one year. She has to rent a small office, which costs her $19,000 per month. (i) Calculate the annual accounting profit of Ashely's snack business. (ii) Ashley will be involved in the daily operations of this snack business and has to give up the opportunity to get a full-time job. În consideration of annual economic profit, in what condition should Ashley start this business? Explain with relevant figures.
Dr. Magneto is evaluating whether to open a private MRI clinic in leased office space in a local strip mall. The clinic will run for two years and then close. Before the clinic opens, the offices require $200,000 of renovations. Dr. Magneto will buy $20,000 of computer equipment and one MRI machine. The MRI machine (GE 3.0T Signa Excite HD) costs $2.4M. Assume that the renovations, computer equipment, and MRI are paid for at the beginning of the first year (t=0) and that all three are classified as 15-year property (with depreciation rates of 5% and 9.5% in the first two years). Assume that the MRI machine will be sold for $500,000 at the end of the second year of business at which time the computer equipment will be worthless. The clinic can perform 72 scans per week for 49 operational weeks per year and will charge $600 per scan. The clinic will need two technicians, two receptionists, and one office manager. Wages, salaries, and other payroll costs (i.e., health insurance premiums)…
Natalie is also thinking of buying a van that will be used only for business. The cost of the van is estimated at $36,500. Natalie would spend an additional $2,500 to have the van painted. In addition, she wants the back seat of the van removed so that she will have lots of room to transport her mixer inventory as well as her baking supplies. The cost of taking out the back seat and installing shelving units is estimated at $1,500. She expects the van to last about 5 years, and she expects to drive it for 200,000 miles. The annual cost of vehicle insurance will be $2,400. Natalie estimates that at the end of the 5-year useful life the van will sell for $7,500. Assume that she will buy the van on August 15, 2022, and it will be ready for use on September 1, 2022. Natalie is concerned about the impact of the van’s cost on her income statement and balance sheet. She has come to you for advice on calculating the van’s depreciation. Instructions (c) What impact will the three methods of…
Dekentra sells boxes of note cards imprinted with her sketches of bird life along the South Carolina coast. If it costs $625 to produce 75 box of cards and she wants to earn a profit of at least $2,000, what should she charge per box?
Maria, a single individual with wage income of $170,000 and no other income, is considering purchasing a new electric car. What are some of the features she should look for to be able to claim the clean vehicle credit? Maria must be sure the vehicle is brand new, meets the critical minerals and battery components requirements, was built by a qualified manufacturer, was assembled in North America, has a MSRP of Sfill in the blank 3 or less, and the seller provides the required information about the car to her and the IRS.
Marsha Jones has bought a used Mercedes horse transporter for her Connecticut estate. It cost $35,000. The object is to save on horse transporter rentals. Marsha had been renting a transporter every other week for $200 per day plus $1.00 per mile. Most of the trips are 80 or 100 miles in total. Marsha usually gives the driver, Joe Laminitis, a $40 tip. With the new transporter she will only have to pay for diesel fuel and maintenance, at about $0.45 per mile. Insurance costs for Marsha’s transporter are $1,200 per year. The transporter will probably be worth $15,000 (in real terms) after eight years, when Marsha’s horse Spike, will be ready to retire. Assume a nominal discount rate of 9% and a 3% forecasted inflation rate. Marsha’s transporter is a personal outlay, not a business or financial investment, so taxes can be ignored. Calculate the NPV of the investment.

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