Which is profitable, to buy the new generator set or retain the present set? Support your answer by showing your computation.
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1. A recapping plant is planning to acquire a new Diesel generating set to replace its present unit which they run during brownouts. The new set would cost P135,000 with a five (5) year-life, and no estimated salvage value. Variable cost would be P150,000 a year.
The present generating set has a book value of P75,000 and a remaining life of 5 years. Its disposal value now is P7,500, but it would be zero after 5 years. Variable operating cost would be P187,500 a year. Money is worth 10%.
Which is profitable, to buy the new generator set or retain the present set? Support your answer by showing your computation.
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- Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. Is Ben Gibson acting legally? Is he acting ethically? Why or why not?Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. As the Marketing Manager for Southeastern Corrugated, what would you do upon receiving the request for quotation from Coastal Products?Company QXL has generated $1 million in gross sales for Q4, 2021, which is 5% higher than its gross sales for Q3, 2021. However, Q4 is considered as the peak season for QXL. Comparing with the previous peak season, its current Q4 gross sales are 2% lower than the gross sales for Q4 2020. When a client asks Winona (who is a financial planner) for investment advice on QXL, Winona suggests the client to invest in QXL. She only presents the percentage change in gross sales from Q3 to Q4 2021 (i.e. 5% increase) and tells the clients that this is a positive signal of increase in its future price. You are required to establish what is unethical and which Standard is most likely violated.
- Alternative X has a first cost of 33000 an annual operating cost of 6300 , and a salvage value of 10125 after 16 year. Alternative Y has a first cost of 34000 an annual operating cost of 6400 , and a salvage value of 16340 after 16 year. If MARR of 16% per year, approximately what is the PW of each alternative?4 (Using the same problem) A vendor for the local ballpark food stand is questioning whether to stock his concession with a large or small inventory. He believes that it will depend upon the size of the crowd. He has developed a payoff matrix for the various alternatives (stocking decision) and states of nature (size of crowd). What is the Expected Monetary Value (EMV)? Alternatives Large Inventory Small Inventory Probability A) $68,400 O B)-$20,000 O C) $10,000 O D) $51,500 O E) $78,400 Large Crowd $220,000 $90,000 .20 PROFIT ($) Average Crowd $50,000 $70,000 .50 Small Crowd -$2,000 -$5,000 30Questions 2 – Capital budgeting and NPV Responsible Testing Company may buy DNA‐testing equipment A costing $60,000 now (at year 0). This equipment is expected to reduce labor costs of the clinical staff, net of all staff training expenditures, by $20,000 annually in the subsequent years following the investment. Equipment A has a useful life of 8 years and can be straight‐line‐depreciated over its years of operations. No salvage value is expected at the end. The corporate tax rate (combined federal and state) is 40% and the company’s required rate‐of‐return is 15%. (2a) Describe the company’s “investment project”. Calculate the relevant cash flows and use the NPV method to determine the attractiveness of this project. (2b) Suppose that in the second year (year 2) a more efficient and effective DNA‐testing equipment B is expected to enter the market. The new equipment costs $90,000, will have an effective operating life of 6 years, can be straight‐line‐depreciated but…
- A local bus company has decided to purchase a new bus for RO 75,000 with a trade in of their old bus. The old bus has a BV of RO 15,000 at the time of the trade-in, The estimated useful life of the new bus is 10 years. Its estimated SV at that time is expected to be RO 7,000. Compute: 1. Depreciation amount in the 3rd year of life, 2. Book value at the end of the 5th year of life, 3. Cumulative depreciation amount up to the 8th year, 4. Book value at the beginning of the 4th year. By each of these methods: a) The SL method. b) 150% DB with Switchover to SLA suburban retail property in Arlington, Virginia with 60,000 square feet and 600 surface parking spaces was purchased for $6,000,000 at a cap rate of 6.0% with a 60% LTV interest-only loan at a 6% annual interest rate. If after six years the property appreciated by 60%, what would be the amount of the owner’s equity in the property at that time? a. $6,000,000 b. $2,400,000 c. $3,600,000 d. $9,600,000Tamara is considering venturing into the public transport system although she is unsure on whether to purchase a 35-seater minibus, a 14-seater matatu or a taxi cab. These respective vehicles have a cost of price of Sh.2.5 million, Sh.2 million and Sh. 1.2 million. The monthly collections from the vehicles would depend on the state of the economy which can be an economic boom, stagnation or recession. The probabilities of these states are 0.25, 0.45 and 0.3 respectively. The estimated monthly collections (in Shillings) are indicated in the table below: Economic Boom Economic Stagnation Economic Recession Taxi Cab 60,000 50,000 30,000 Matatu www 90,000 75,000 60,000 Mini bus 120,000 90,000 70,000 Tamara would have to borrow 80% of the money required to buy any of the vehicles at an annual interest rate of 12%. In addition, all the vehicles are depreciated at a rate of 20% p.a. on a straight line basis. No other expenses are expected apart from the tax of 30% of the annual profit.…
- As of January 1, 2023, outstanding account receivable (sales made the previous year pending collection) amounted to 20,000. Throughout 2023, sa;es totalling 180,000 euros (income statement) were made. As of December 31, 2023, outstaning receivables from customers amounted to 32, 000 euros. What was the total collection in 2023 for sales made both in that year and in previous year? a. 168,000 euros b 184,000 euros c. 132,800 eurosSELECT THE BEST ALTERNATIVE IN THE GIVEN DECISION TABLE USING: • MAXIMAX STRATEGY • MAXIMIN STRATEGY • MAXIMAX REGRET STRATEGY • LAPLACE STRATEGY HURWICZ STRATEGY WITH ALPHA (a = 0.4) Possible Future Demand Facility Size LOW MODERATE HIGH Small Php 500 Php 600 Php 700 Medium Php 700 Php 1200 Php 1100 Large Php -400 Php 200 Php 1600 |Geoff Gullo owns a small firm that manufactures “Gullo Sunglasses.” He has the opportunity to sell a particular seasonal model to Land’s Start, a catalog retailer. Geoff offersLand’s Start two purchasing options.• Option 1: Geoff offers to set his price at $65 and agrees to credit Land’s Start $53 foreach unit Land’s Start returns to Geoff at the end of the season (because those unitsdid not sell). Because styles change each year, there is essentially no value in thereturned merchandise.• Option 2: Geoff offers a price of $55 for each unit, but returns are no longer accepted.In this case, Land’s Start throws out unsold units at the end of the season.This season’s demand for this model will be normally distributed with a mean of 200and a standard deviation of 125. Land’s Start will sell those sunglasses for $100 each.Geoff’s unit production cost is $25.a. How much would Land’s Start buy if it chose option 1? b. How much would Land’s Start buy if it chose option 2? c. Which option will…