Your friend Jose is trying to decide whether to buy or lease his next vehicle (A+)

Your friend Jose is trying to decide whether to buy or lease his next vehicle. He has gathered information about each option but is not sure how to compare the alternatives. Purchasing a new vehicle will cost $26,500, and Jose expects about $500 per year in maintenance costs. He would keep the vehicle for five years and estimates the salvage value to be $8,500. Alternatively, Jose could lease the same vehicle for five years at a cost of $4,200 per year including maintenance. Assume a discount rate of 10 percent.

Requirement 1:

Determine the net present value of Jose’s options.

Requirement 2:

Determine which option Jose should choose.

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Lenny’s Limousine Service (LLS) is considering the purchase of two Hummer limousines (A+)

Lenny’s Limousine Service (LLS) is considering the purchase of two Hummer limousines. Various information about the proposed investment follows:

Initial investment (2 limos) $608,000

Useful life 8 years

Salvage value $108,000

Annual net income generated 43,168

LLS’s cost of capital 10 %

Required:

Help LLS evaluate this project by calculating each of the following:

1. Accounting rate of return.

2. Payback period.

3. Net present value

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Lancer Corp. has the following information available about a potential capital investment (A+)

Lancer Corp. has the following information available about a potential capital investment:

Initial investment $1,426,550

Annual net income $ 210,000

Expected life 9 years

Salvage value 356,000

Lancer’s cost of capital 9 %

Requirement 1:

Calculate the project’s net present value.

Requirement 2:

Calculate the net present value using a 19 percent discount rate.

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Midway Printing Co. is considering the purchase of new electronic printing equipment (A+)

Midway Printing Co. is considering the purchase of new electronic printing equipment. It would allow Midway to increase its net income by $51,220 per year. Other information about this proposed project follows:

Initial investment $260,000

Useful life 5 years

Salvage value $105,000

Requirement 1:

Calculate the accounting rate of return for Midway.

Requirement 2:

Calculate the payback period for Midway.

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The Paradise Shoes Company has estimated its weekly TVC function from data collected over the past several months (A+ Guaranteed)

The Paradise Shoes Company has estimated its weekly TVC function from data collected over the past several months, as TVC = 3450 + 20Q + 0.008Q2 where TVC represents the total variable cost and Q represents pairs of shoes produced per week. And its demand equation is Q = 4100 – 25P. The company is currently producing 1,000 pairs of shoes weekly and is considering expanding its output to 1,200 pairs of shoes weekly. To do this, it will have to lease another shoe-making machine ($2,000 per week fixed payment until the lease period ends).
Show all of your calculations and processes. Describe your answer for each item below in complete sentences, whenever it is necessary.

a. Describe and derive an expression for the marginal cost (MC) curve.
b. Describe and estimate the incremental costs of the extra 200 pairs per week (from 1,000 pairs to 1,200 pairs of shoes).
c. What are the profit-maximizing price and output levels for Paradise Shoes? Describe and calculate the profit-maximizing price and output.
d. Discuss whether or not Paradise Shoes should expand its output further beyond 1,200 pairs per week. State all assumptions and qualifications that underlie your recommendation

 

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Jennifer William is the owner of a small pizza shop and is thinking of increasing products and lowering costs (A+ Guaranteed)

Jennifer William is the owner of a small pizza shop and is thinking of increasing products and lowering costs. William’s pizza shop owns four ovens and the cost of the four ovens is $1,000. Each worker is paid $500 per week.

 

Workers employed

Qty of pizzas produced per week

0

1

2

3

4

5

6

7

8

0

75

180

360

600

900

1140

1260

1360

Show all of your calculations and processes. Describe your answer for each question in complete sentences, whenever it is necessary.
a. Which inputs are fixed and which are variable in the production function of William’s pizza shop? Over what ranges do there appear to be increasing, constant, and/or diminishing returns to the number of workers employed?
b. What number of workers appears to be most efficient in terms of pizza product per worker?
c. What number of workers appears to minimize the marginal cost of pizza production assuming that each pizza worker is paid $500 per week?
d. Why would marginal productivity decline when you hire more workers in the short run after a certain level?
e. How would expanding the business affect the economies of scale? When would you have constant returns to scale or diseconomies of scale? Describe your answer.

 

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BUS 640 Week 3 Assignment – Production Cost Analysis and Estimation Applied Problems (A+ Guaranteed)

Assignments
1. Due by Day 7. Production Cost Analysis and Estimation Applied Problems. Please complete the following two applied problems:

Problem 1: Jennifer William is the owner of a small pizza shop and is thinking of increasing products and lowering costs. William’s pizza shop owns four ovens and the cost of the four ovens is $1,000. Each worker is paid $500 per week.

 

 

 

Workers employed

Qty of pizzas produced per week

0

1

2

3

4

5

6

7

8

0

75

180

360

600

900

1140

1260

1360

Show all of your calculations and processes. Describe your answer for each question in complete sentences, whenever it is necessary.
a. Which inputs are fixed and which are variable in the production function of William’s pizza shop? Over what ranges do there appear to be increasing, constant, and/or diminishing returns to the number of workers employed?
b. What number of workers appears to be most efficient in terms of pizza product per worker?
c. What number of workers appears to minimize the marginal cost of pizza production assuming that each pizza worker is paid $500 per week?
d. Why would marginal productivity decline when you hire more workers in the short run after a certain level?
e. How would expanding the business affect the economies of scale? When would you have constant returns to scale or diseconomies of scale? Describe your answer.

Problem 2: The Paradise Shoes Company has estimated its weekly TVC function from data collected over the past several months, as TVC = 3450 + 20Q + 0.008Q2 where TVC represents the total variable cost and Q represents pairs of shoes produced per week. And its demand equation is Q = 4100 – 25P. The company is currently producing 1,000 pairs of shoes weekly and is considering expanding its output to 1,200 pairs of shoes weekly. To do this, it will have to lease another shoe-making machine ($2,000 per week fixed payment until the lease period ends).
Show all of your calculations and processes. Describe your answer for each item below in complete sentences, whenever it is necessary.

a. Describe and derive an expression for the marginal cost (MC) curve.
b. Describe and estimate the incremental costs of the extra 200 pairs per week (from 1,000 pairs to 1,200 pairs of shoes).
c. What are the profit-maximizing price and output levels for Paradise Shoes? Describe and calculate the profit-maximizing price and output.
d. Discuss whether or not Paradise Shoes should expand its output further beyond 1,200 pairs per week. State all assumptions and qualifications that underlie your recommendation

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In 2011, Bantham County incurred $80 million in costs to construct a new highway

P7-8 If governments do not preserve their infrastructure assets, they must depreciate them.

In 2011, Bantham County incurred $80 million in costs to construct a new highway. Engineers, estimate that the useful life of the highway is 20 years.

AND SO ON

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What is the balanced scorecard? What perspectives are considered in selecting performance measures for the balanced scorecard

What is the balanced scorecard? What perspectives are considered in selecting performance measures for the balanced scorecard, and why is each of these perspectives important?

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How does a product’s life cycle stage influence production cost management?

How does a product’s life cycle stage influence production cost management?

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