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damaskus
2 months ago
5

​greg, a​ landscaper, is planning on opening his own landscaping company. he currently earns​ $40,000 per year working for his u

ncle but he will need to quit that job. he plans to use​ $10,000 in savings to pay for the equipment he​ needs, though even after use he could sell the equipment for what he​ paid, $10,000. the current interest rate on savings is 5 percent. what is the total economic cost incurred by greg in running his own​ business?
Business
1 answer:
marusya05 [3.7K]2 months ago
5 0

Answer:

The annual total economic cost amounts to $40,500

Explanation:

This figure is derived from adding:

* The lost opportunity cost from Greg leaving his current job, equating to his salary of $40,000.

* The opportunity cost from forfeiting the interest from $10,000 in savings, now designated for equipment purchase, calculated as: 10,000 * the current savings interest rate = 10,000 * 5% = $500 (the actual equipment cost is not included since he could resell it for the same amount he spent).

=> Therefore, the total annual economic cost is $40,000 + $500 = $40,500.

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1 month ago
Assignment: Capital Budgeting Decisions Your company is considering undertaking a project to expand an existing product line. Th
Katen [3525]

Response:

A. Payback Period

  • The payback period is calculated to be 2.875 years, hence the project is deemed acceptable since this period is under the 3-year limit.

B. Internal Rate of Return (IRR)

  • With an IRR of 22.69%, the project should be pursued as this rate exceeds the minimum required return of 8%.

C. Simple Rate of Return

  • The simple rate of return is 18%, indicating the project should be accepted since it surpasses the required return rate.

D. Net Present Value

  • The NPV is calculated at $4,647.85, thus the project should be approved as the NPV is greater than zero.

Clarification:

Year Cash Flow

0 -$10,000

1 $2,400

2 $4,800

3 $3,200

4 $3,200

5 $2,800

6 $2,400

Discount Rate 8%

I employed a financial calculator to find both the NPV and IRR.

Payback period is determined as follows: $10,000 - $2,400 - $4,800 = $2,800 / $3,200 = 0.875

Thus, the payback period is 2.875 years

For simple rate of return:

Average cash flow = ($2,400 + $4,800 + $3,200 + $3,200 + $2,800 + $2,400) / 6 = $3,467

Annual depreciation expense = $10,000 / 6 = $1,667

Simple rate of return = ($3,467 - $1,667) / $10,000 = 18%

3 0
1 month ago
A catalog company that receives the majority of its orders by telephone conducted a study to determine how long customers were w
marusya05 [3725]

Answer:

The ratio of callers on hold for more than 2.8 minutes is 0.3679

Explanation:

μ = 2.8, λ = 1/2.8,

Using the exponential distribution:

P(x>k) = exp(-λk)

          = exp(-2.8/2.8)

          = 0.3679

Thus, the fraction of callers who are placed on hold for over 2.8 minutes is 0.3679

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2 months ago
Roger remembers from a business class he took years ago in college that there are several business forms to choose from. Each fo
stepan [3596]

Answer:

This question lacks options. Here are the available ones:

a) Partnership

b) C Corporation

c) S Corporation

d) Limited Liability Company

e) Limited Liability Partnership

The correct answer is option D: Limited Liability Company.

Explanation:

The term "Limited Liability Company" describes a type of business structure in business law that is beneficial for owners, offering specific characteristics. This form integrates features of both corporations and partnerships, allowing flexibility depending on the owner's situation. It's important to note that a significant aspect of this form is that the owner's personal assets are protected from company liabilities.

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