Ouestion 2
EloMax Company Ltd has carried out some research that shows that the business could
provide a standard service that it has recently developed. Provision of the service would
require investment in a machine that would cost GHé100,000, payable immediately. Sales of
the service would take place throughout the next five years. At the end of that time, it is
estimated that the machine could be sold for GH€20,000.
Inflows and outflows from sales of the service would be expected to be as follows:
Time
Immediately
1 years' time
2 years' time
3 years* time
4 years' time
5 years' time
5 years' time
Cost of machine
Operating profit before depreciation
Operating profit before depreciation
Operating profit before depreciation
Operating profit before depreciation
Operating profit before depreciation
Disposal proceeds from the machine
GHé000
(100)
20
40
60
60
20
20
EloMax Ltd has acceptable payback period of 3 years and expected returns on investment of
45%. It also uses straight-line method to depreciate fixed assets.
Advise the company whether or not to undertake the investment using the following appraisal
techniques:
a) Accounting Rate of Return (ARR)
[3marks]
b) Payback Period (PBP)
[3marks]
c) Net Present Value (NPV). Assume a discount rate of 10% per annum. I4marks]
Total marks 101

Answers

Answer 1

Since the ARR (4.8%) is below the expected return on investment (45%), the company should not undertake the investment.

How to solve

a) Accounting Rate of Return (ARR)

ARR = (Average Annual Profit / Initial Investment) x 100

Average Annual Profit = (Operating Profit Before Depreciation - Annual Depreciation) * Years + Disposal Proceeds / Years

Annual Depreciation = (Initial Investment - Residual Value) / Years = (100,000 - 20,000) / 5 = 16,000

Average Annual Profit = (20+40+60+60+20 - 5*16,000) / 5 = 24,000 / 5 = 4,800

ARR = (4,800 / 100,000) x 100 = 4.8%

Since the ARR (4.8%) is below the expected return on investment (45%), the company should not undertake the investment.

The Payback Period (PBP), calculated as the amount of time taken to recuperate the primary investment, is two years in addition to sixty-seven hundredths of a year due to cumulative cash flows.

During the initial year, funds amounting to $20,000 were gained, increasing to $40,00 and then further expanding to $60,000 during consecutive periods.

Cumulative cash flows revealed that $80,000 was offset within the first year, followed by figures between negative-$40,000 and positive-$20,000 as future financial occurrences descended to greater proportions than past earnings.

Despite this discovery, an estimated PBP remained quantified at 2.67 years, thereby closely adhering to a prescribed period of three years for acceptable rates of return on such investments made by the company.

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Related Questions

25
Select the correct answer.
Which question is likely to be asked by a life insurance company to determine the price of a policy?
OA.
OB.
O C.
O D.
OE.
Do you have any beneficiaries?
Do you have a current shot record?
Have you recently been out of the country?
Do you have a history of illness or other health conditions?
Have you recently purchased a vehicle?

Answers

The question that is likely to be asked by a life insurance company to determine the price of a policy is Do you have a history of illness or other health conditions?

What is life insurance?

A life insurance policy can be described as the policy that is been made by the insuarance company which helps in the processs of providing financial protection for  family  if one is in a situation where he pass away.

It should be noted that the beneficiaries base on the policy will be able to hace access to the money  so as to ensure security in a difficult time.

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Young Manufacturing uses the sum-of-the-years-digits method of depreciation. A piece of
heavy equipment costing $37,500 has an estimated life of five years and an estimated scrap
value of $2,700.
Refer to Young Manufacturing. Compute the amount of depreciation taken in the third year.

Answers

If Young Manufacturing uses the sum-of-the-years-digits method of depreciation. the amount of depreciation taken in the third year is $4640.

How to find the depreciation?

Total years of useful life = 1 + 2 + 3 + 4 + 5

Total years of useful life = 15

Sum of digits = 1 + 2 + 3 + 4 + 5

Sum of digits = 15

Fraction of depreciation = Remaining years of useful life / Sum of digits

Fraction of depreciation = (5 - 3) / 15

Fraction of depreciation = 2 / 15

Depreciation expense = Total depreciable cost x Fraction of depreciation

Depreciation expense = (Cost - Scrap value) x Fraction of depreciation

Depreciation expense = ($37,500 - $2,700) x (2 / 15)

Depreciation expense = $4,640

Therefore the  depreciation $4,640.

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Focusing on the primary goals of macroeconomic policy is the most effective way to identify problems and issues that need attention in the economy. Briefly explain the main macroeconomic objectives, making note of any adjustments that may have been necessary in terms of each objective since the corona virus pandemic took place.

Answers

Answer:

The primary goals of macroeconomic policy are to promote economic growth, maintain price stability, achieve full employment, and maintain a stable balance of payments.

Economic growth is measured by the increase in a country's GDP over time. The pandemic significantly affected economic growth, as many countries experienced sharp declines in GDP due to lockdowns and reduced economic activity. Governments responded by implementing fiscal and monetary policies to support businesses and individuals during the crisis, including stimulus packages and low interest rates.

Maintaining price stability may also prevent inflation and ensure the purchasing power of a currency. Inflation was a concern during the pandemic due to supply chain disruptions and increased demand for certain goods. Central banks adjusted monetary policies to address inflation, such as raising interest rates.

Achieving full employment is a key macroeconomic objective. It promotes social stability and reduces income inequality. The pandemic has caused job losses and increased unemployment rates in many countries. Governments have responded with job creation programs and other measures to support workers during the crisis.

Maintaining a stable balance of payments ensures that a country's international trade is sustainable. The pandemic has disrupted global trade and caused a decrease in international tourism, leading to a decline in foreign currency reserves. Governments have implemented policies to address these challenges, such as increasing exports and reducing imports.

Overall, the pandemic has significantly affected the macroeconomic objectives of governments worldwide. Policy adjustments address the challenges posed by the crisis and promote economic recovery.

Explanation:

How does earning an A in an honors course benefit your GPA?

a
Honors course grades are weighted and keep your GPA from decreasing.

b
Honors course grades are weighted, increasing the points factored into your GPA.

c
Honors course grades are unweighted and keep your GPA from decreasing.

d
Honors course grades are unweighted, increasing the points factored into your GPA.

Answers

Answer:

i think its A

Explanation:

Explain how training can help develop entrepreneurial traits.

Answers

Entrepreneurial traits and training furnish people with the capacity to perceive business amazing open doors, confidence, information, and abilities to follow up on them.

Entrepreneurship development is the method for upgrading the information and ability of business visionaries through a few homerooms instructing projects and preparing. The central matter of the advancement cycle is to reinforce and build the number of business visionaries.

It assists them with teaching entrepreneurial skills.  It is solely after preparing that they gain proficiency with these abilities and can perceive their capacities and begin contemplating building a business. They can match their character, abilities, and inventiveness with client needs and market open doors.

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29.
An operation was closed because of an extended electricity failure. When can it
begin service again?

Answers

It can begin service again approval is obtained from the regulatory authority.

When can service start

The duration for an organization to recommence its services after enduring a foremost electricity malfunction relies on several elements, such as the character of the operation, the magnitude of destruction caused by the power cut-off, as well as the accessibility of supplies requisite to renew operations.

For instance, if the establishment is a minor retail outlet, it can possibly resume working once the power source is restituted and various necessary safeguards have been established. Conversely, if the business is a major production concern or informatics server, it could take longer to reinstate tasks due to the meticulously intricate facilities and networks entailed.

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*
This model of retailer grants a license to another party to market and sell its
products or services and each location is owned by a different person or
group.
Independent
Corporation
Franchise
Private Company

Answers

The answer is franchise

discuss five engagement-specific controls to be instituted by an audit firm to ensure quality control

Answers

The five key engagement-specific controls that an audit firm can implement to guarantee quality control throughout an engagement include adequate planning, risk assessment, supervision, documentation, and review.

These measures are taken to ensure the review is completed as per evaluating guidelines and that the ends came to are enough upheld by the accessible information. A survey likewise assists with guaranteeing that the review was completed as per inspecting norms.

Planning aids in characterizing the review's extension, laying out client assumptions, and successfully distributing assets and time. The foundation of fitting strategies to address potential dangers connected with the client's fiscal summaries is supported by risk appraisal.

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Cardinal Company is considering a five-year project that would require a $2,915,000 investment in equipment with a useful life of five years and no salvage value. The company’s discount rate is 16%. The project would provide net operating income in each of five years as follows:



Sales $ 2,863,000
Variable expenses 1,014,000
Contribution margin 1,849,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs $ 781,000
Depreciation 583,000
Total fixed expenses 1,364,000
Net operating income $ 485,000

15. Assume a postaudit showed that all estimates (including total sales) were exactly correct except for the variable expense ratio, which actually turned out to be 45%. What was the project’s actual simple rate of return? (Round your answer to 2 decimal places.)

Answers

Answer:

The initial investment is $2,915,000. The annual net operating income is $485,000. The project's simple rate of return is the annual net operating income divided by the initial investment.

The variable expense ratio is 45%, which means that the variable expenses are $2,863,000 x 45% = $1,288,350.

The contribution margin is $2,863,000 - $1,288,350 = $1,574,650.

The fixed expenses are $781,000 + $583,000 = $1,364,000.

The net operating income is $1,574,650 - $1,364,000 = $210,650.

The simple rate of return is $210,650 / $2,915,000 = 7.22%.

Therefore, the project's actual simple rate of return is 7.22%.

1. Use each of the three terms below in a sentence that illustrates the
meaning of the term.
a. check clearing
b. bank holding
company
c. required reserve
ratio

Answers

a. Check clearing is the process by which banks exchange and settle checks, ensuring that the funds are transferred from the payer's account to the payee's account.

b. A bank holding company is a corporation that owns and controls one or more banks, but does not directly engage in banking activities itself.

c. The required reserve ratio is the minimum amount of funds that banks must hold as reserves, as a percentage of their customers' deposits, which is determined by the central bank or regulatory authority.

For example, when you deposit a check at your bank, the check clearing process begins, with your bank sending the check to the payer's bank to verify and transfer the necessary funds.

An example could be: XYZ Corporation is a bank holding company that owns and oversees three different banks, each offering various financial products and services to their customers.

To illustrate this, if the required reserve ratio is 10%, a bank with $1 million in customer deposits would need to maintain at least $100,000 in reserves to comply with regulations

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A new entrepreneur has come to you for advice about marketing a product. Specifically, she wants to understand the idea of a total product concept. How would you describe it to her and why do you think this concept is important?

Answers

Answer: The total product concept is a marketing strategy that aims to create a comprehensive and satisfying customer experience by considering all aspects of the product and related services.

Explanation: The total product concept goes beyond the physical product to include packaging, promotion, and service. It is an approach that seeks to create a complete and valuable experience for the customer. By considering all aspects of the product and its related services, companies can differentiate themselves from competitors and build customer loyalty. This approach recognizes that customers are not just buying a product, but also an entire experience that includes the purchase process, the customer service, and the ongoing relationship with the company.

How do credit card companies use a person's credit report?
A. To determine if that person should be given a loan or credit card
B. To figure out if that person has been using a budget
C. To calculate how much interest the person is owed on their
account
OD. To help them figure out ways to pay off their outstanding debt

Answers

Answer:

answer is A

Credit card companies use a person's credit report to determine if that person should be given a loan or credit card.

2. Carson Inc.'s manager believes that economic conditions during the next year will be strong, normal, or weak, and she thinks that the firm's returns will have the probability distribution shown below. What's the coefficient variation for this firm’s returns??

Economic
Conditions Prob. Return
Strong 25% 30.0%
Normal 45% 12.0%
Weak 30% -14.0%

Answers

The coefficient variation for Carson Inc.'s returns is 4.06.

The coefficient of variation (CV) is a measure of relative dispersion or risk for a set of data. It is calculated as the standard deviation divided by the mean of the data, expressed as a percentage.

First, we need to calculate the expected return for Carson Inc.'s returns:

Expected return = (0.25 x 0.30) + (0.45 x 0.12) + (0.30 x -0.14) = 0.045 or 4.5%

Next, we need to calculate the standard deviation

Standard deviation = √((0.25 x (0.30 - 0.045)²) + (0.45 x (0.12 - 0.045)²) + (0.30 x (-0.14 - 0.045)²)) = 0.1828 or 18.28%

Finally, we can calculate the coefficient of variation

Coefficient of variation = standard deviation / expected return = 0.1828 / 0.045 = 4.06

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Calculate the company's current ratio as a percentage. Does the company have enough assets to pay its liabilities?

Answers

Current Ratio (in %) = 157.89473684211%  rounded off to 157.89%.

The corporation has 157.89% more current assets than current liabilities, or 100%, according to the current ratio. To put it more simply, the corporation has $1.5789 in current assets to cover every $1 in current liabilities. The corporation therefore has sufficient current assets to cover its current liabilities.

The current ratio serves as a gauge for a company's liquidity. It is determined by dividing the company's current assets by its current liabilities. In order to express current ratio as a percentage,

We use the formula [Current Assets / Current Liabilities] / 100 is the current ratio. * 100 [30000 / 19000] is the current ratio (in%). * 100 Current Ratio (in%) = rounded to the nearest whole number, 157.89473684211%.

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Why is it important to stick to a study schedule even if you are caught up with everything? a It guarantees higher grades on your exams. b It helps to create good study habits. c It is time set aside so you can take a break from watching television. d It gives you more time to play your favorite game without interruption.

Answers

Answer:

Explanation:

B - It helps to create good study habits.

The debt-to-equity ratio:

Multiple Choice

Is a measure used to assess the risk of a company's financing structure.


Must be calculated from the market values of assets and liabilities.


Can always be calculated from information provided in a company's income statement.


Is calculated by dividing book value of secured liabilities by book value of pledged assets.


Is not relevant to secured creditors.

Answers

Answer: A

Explanation:

Solomon Company is considering investing in two new vans that are expected to generate combined cash inflows of $34,500 per year. The vans’ combined purchase price is $98,000. The expected life and salvage value of each are seven years and $21,700, respectively. Solomon has an average cost of capital of 14 percent. (PV of $1 and PVA of $1)



Calculate the net present value of the investment opportunity.

Note: Negative amount should be indicated by a minus sign. Round your intermediate calculations and final answer to 2 decimal places.

Indicate whether the investment opportunity is expected to earn a return that is above or below the cost of capital and whether it should be accepted.

Answers

The net present value of the investment opportunity is $140,992.40. Since the net present value is positive, the investment opportunity is expected to earn a return that is above the cost of capital. Therefore, it should be accepted.

To calculate the net present value of the investment opportunity, we need to find the present value of cash inflows and cash outflows.

First, let's calculate the present value of cash inflows

PV of cash inflows = $34,500 × (PVA of $1, n=7, i=14%) = $34,500 × 4.685 = $161,682.50

Next, let's calculate the present value of cash outflows

PV of cash outflows = $98,000 - $21,700 × (PV of $1, n=7, i=14%) = $98,000 - $21,700 × 3.433 = $20,690.10

Now, let's calculate the net present value

Net present value = PV of cash inflows - PV of cash outflows = $161,682.50 - $20,690.10 = $140,992.40

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demarco and tanya have received information about the separate mortgage offers. In two or three paragraphs describe your recommendation for the best financial choice in their situation.

Answers

There are a few fundamental elements to be kept in mind when assessing potential mortgage offers, which include:

How to make the recommendation

Interest rate: This is one of the key components to ponder upon when evaluating different mortgages. A lower interest rate entails smaller monthly payments as well as a decrease in sum spent on interest overall during the duration of the loan.

Loan term: The length of the loan is another aspect that should not go unnoticed. When opting for a briefer loan, more money will be spent towards monthly payments but correspondingly less towards interest. However, if you desire a longer period, then the opposite is true with fewer monthly payments but expenditure on interest increases.

Closing costs: It is essential to take closing fees into consideration since they can end up reaching staggering heights. Closing costs refer to every single amount related to taking out a mortgage and ought to be given due thought before deciding on an offer.

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What are costs called that are anticipated but may change from month to month. Examples may include entertainment, hobbies or certain educational expenses. a b O c Od medical costs. income costs. fixed costs. variable costs.​

Answers

Answer: Varied (Variable) Costs

Explanation: Varied (Variable) costs are costs that change from month to month, hince the word "Varied" or "Variable" in it's name.

How do you find a monthly payment on auto loans?​

Answers

Answer:

Explanation:

m

To find the monthly payment on an auto loan, you will need to know the principal amount of the loan, the interest rate, and the length of the loan. Once you have this information, you can use a loan calculator or a mathematical formula to calculate the monthly payment.

The formula for calculating the monthly payment on an auto loan is:

M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]

Where:
M = monthly payment
P = principal amount of the loan
i = interest rate (per month)
n = number of months of the loan

Alternatively, you can use an online calculator to determine the monthly payment. Many banks and financial institutions offer online loan calculators that allow you to input the loan amount, interest rate, and length of the loan to determine the monthly payment.

It is important to note that the interest rate on an auto loan can vary depending on a number of factors, including the borrower's credit score, the length of the loan, and the type of vehicle being financed. It is also important to shop around to find the best interest rate and loan terms before committing to an auto loan.

How can organisations handle debtors?

Answers

Organizations handle debtors by using various legal and ethical practices such as maintaining accurate records and setting payment terms etc.

Establishing precise payment terms, keeping accurate records, sending timely reminders, providing payment plans and working with debt collection agencies are all ways that businesses can manage their debtors. Organizations can assist in preventing past due payments by establishing clear payment terms and ensuring that debtors understand these terms.

Maintaining accurate records and sending reminders on a regular basis can also assist debtors in keeping up with their payments. Offering payment plans to customers who are having trouble making their payments can be helpful and working with a debt collection agency can help businesses collect past due debts more effectively.

When managing debtors it is crucial for businesses to adhere to legal and moral standards and to treat debtors with professionalism.

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Through____, managers get to know employees and their work ethics, and they can determine which employees will help the business achieve its goals and meet its objectives
A.Planning
B.organizing
C.controlling
D.leading

Answers

Answer:

The answer is D. leading.

Which of the following plans generally identifies the basic
purpose of an organization?
(A) Competitive strategy
(B) Corporate policy
(C) Mission statement
(D) Long-range plan

Answers

Answer:

Explanation:

A mission statement is a concise statement that describes the fundamental purpose of an organization, including its key stakeholders, the products or services it provides, and the values that guide its operations. It is an essential component of an organization's strategic planning process and serves as a guiding principle for decision-making and goal-setting.

Competitive strategy refers to the methods and techniques that a company uses to gain a competitive advantage in the marketplace, while corporate policy refers to the rules and guidelines that govern an organization's operations. Long-range plans are strategic plans that extend several years into the future and outline an organization's goals and objectives over that time period.

Therefore, the answer is (C)- Mission statement

Discuss why positive thinking is critical in starting the entrepreneurship journey

Answers

Positive thinking is critical in the entrepreneurial journey for several reasons:

1. Motivation: Starting a business can be challenging, and there will be times when things don't go as planned. Positive thinking can help entrepreneurs stay motivated and focused on their goals, even when faced with obstacles.

2. Resilience: Entrepreneurship is a journey filled with ups and downs. Positive thinking helps entrepreneurs build resilience and bounce back from setbacks quickly. It enables them to focus on solutions rather than dwelling on the problems.

3. Creativity: Positive thinking encourages entrepreneurs to think creatively and come up with innovative solutions to problems. Positivity can help entrepreneurs see possibilities where others may only see challenges.

4. Confidence: A positive mindset can help entrepreneurs approach challenges with confidence, which can be critical when making important business decisions. It helps entrepreneurs believe in their abilities and their vision, which can be contagious and attract others to their business.

5. Networking: Positive thinking can also help entrepreneurs build strong relationships with others. People are naturally drawn to positive individuals, and this can help entrepreneurs build a strong network of supporters, mentors, and partners.

In summary, positive thinking is critical in the entrepreneurial journey because it helps entrepreneurs stay motivated, builds resilience, encourages creativity, boosts confidence, and enables entrepreneurs to build strong relationships with others.

discuss five engagement-specific controls to be instituted by an audit firm to ensure quality control

Answers

Answer:

The quality control policies and procedures applicable to a firm's accounting and auditing practice should encompass the following elements:

Independence, Integrity, and Objectivity.

Personnel Management.

Acceptance and Continuance of Clients and Engagements.

Engagement Performance.

Monitoring.

what are some good names for a animal trainer business

Answers

Some good names for a animal trainer business are:

Canine Mentors.Better Pups.The Pooch Whisperer.

What is  animal trainer business?

Animal trainer business can be described as the business which involves the professional training of the animals in a way that they can related better with their owners.

It should be noted that this business is based on the process wwhereby the trainer will be paid some fee so that they can provide the training to the domestic animals such as dog cat as well as other domestic animals and this usually help to establish a smooth communication between them.

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Select the correct answer.
What are factors of production?
O A
OB.
OC
O D.
all the human efforts involved in the production process
all the resources used to produce any goods and services
all the physical tools and equipment used in the production process
all the naturally occurring resources found in land, air, and water

Answers

Answer: B. all the resources used to produce any goods and services

B is the correct answer for this question

A sample of 392 adult travelers were shown a list of 6
different ecolabels, and asked "How familiar are you with
this ecolabel, on a scale of 1 (not familiar at all) to 5 (very
familiar)." The mean and standard deviation of the responses for
each ecolabel are provided in the table. Which of the ecolabels.
had the most variation in numerical responses? Explain.
Ecolabel
value of the
Ecolabel
Energy Star
TripAdvisor Greenleaders
Audubon International
US Green Building Council
Green Business Bureau
Green Key
Mean
4.436
3.567
2.407
2.282
2.245
2.011
had the most variation in numerical responses because it has the
Std. Dev.
0.823
1.383
1.441
1.386
1.393
1.298

Answers

A sample of 392 adult travelers were shown a list of 6

different ecolabels, and asked "How familiar are you with

this ecolabel, on a scale of 1 (not familiar at all) to 5 (very

familiar)." The mean and standard deviation of the responses for

each ecolabel are provided in the table. Which of the ecolabels.

had the most variation in numerical responses? Explain.

Ecolabel

value of the

Ecolabel

Energy Star

TripAdvisor Greenleaders

Audubon International

US Green Building Council

Green Business Bureau

Green Key

Mean

4.436

3.567

2.407

2.282

2.245

2.011

had the most variation in numerical responses because it has the

Std. Dev.

0.823

1.383

1.441

1.386

1.393

1.298

Based on the information provided, the ecolabel with the most variation in numerical responses was TripAdvisor Greenleaders.

It has the largest standard deviation of the responses (Std. Dev. = 1.383).

A larger standard deviation means there is more variability or spread in the responses. The responses to TripAdvisor Greenleaders ranged from 1 to 5, showing a wider range compared to the other ecolabels.

Some key points to consider:

TripAdvisor Greenleaders has the highest standard deviation, so it has the most variability/spread in the responses.A standard deviation of 1.383 indicates the responses were fairly spread out over the range of values from 1 to 5.In contrast, ecolabels like Energy Star (Std. Dev. = 0.823) had more concentrated responses clustered around the mean.The means also provide context, showing TripAdvisor Greenleaders was less familiar on average compared to ecolabels like Energy Star.

In summary, TripAdvisor Greenleaders exhibited the most variation in how familiar travelers were with that particular ecolabel. The range of responses, from 1 to 5, and the larger standard deviation supported this.

Please let me know if you need any clarification or have additional questions!

The dean of the School of Fine Arts is trying to decide whether to purchase a copy machine to place in the lobby of the building. The machine would add to student convenience, but the dean feels compelled to earn an 10 percent return on the investment of funds. Estimates of cash inflows from copy machines that have been placed in other university buildings indicate that the copy machine would probably produce incremental cash inflows of approximately $13,000 per year. The machine is expected to have a three-year useful life with a zero salvage value.



Use Present Value Appendix PV of $1, to determine the maximum amount of cash the dean should be willing to pay for a copy machine.

Note: Round your intermediate calculations and final answer to 2 decimal places.

Use Present Value Appendix PVA of $1, to determine the maximum amount of cash the dean should be willing to pay for a copy machine.

Answers

The dean should be willing to pay up to $32,324.40 for the copy machine, given the expected incremental cash inflows and the three-year useful life of the machine.

To determine the maximum amount of cash the dean should be willing to pay for a copy machine, we need to calculate the present value of the incremental cash inflows.

Using the Present Value of $1 table with a 10% discount rate, we can find the present value factor for a three-year period: 0.751.

Therefore, the present value of the incremental cash inflows is:

$13,000 x 0.751 = $9,763

This means that the maximum amount of cash the dean should be willing to pay for the copy machine is $9,763.

To calculate the present value of an annuity of $1, we can use the Present Value of an Annuity of $1 table. In this case, we need to use the same 10% discount rate and a three-year period.

The present value factor for an annuity of $1 for three years at 10% is 2.4868.

So, the maximum amount of cash the dean should be willing to pay for the copy machine, taking into account the incremental cash inflows over the three-year useful life of the machine, is

$13,000 x 2.4868 = $32,324.40

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Barans Company purchased merchandise on account from Springhill Company for $9,300, terms 2/10, n/30. Barans returned merchandise with an invoice amount of $1,500 and received full credit.
a. If Barans Company pays the invoice within the discount period, what is the amount of cash required for the payment? If required, round the answer to the nearest dollar.

Answers

Barans Company purchased $9,300 worth of merchandise from Springhill Company and received a credit of $1,500 for returned merchandise. If they pay the invoice within the discount period, they will need $9,114 in cash after deducting the discount amount.

If Barans Company pays the invoice within the discount period, they can take advantage of the 2% discount offered by Springhill Company. The invoice amount is multiplied by the discount rate to determine the discount amount.

Discount amount is calculated by multiplying the invoice amount by the discount rate.

Discount amount = $9,300 x 0.02

Discount amount = $186

The total amount of the payment can be calculated by subtracting the discount amount from the invoice amount.

Total payment = Invoice amount - Discount amount

Total payment = $9,300 - $186

Total payment = $9,114

Therefore, if Barans Company pays the invoice within the discount period, they will need $9,114 in cash to make the payment.

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