Net Present Value MethodA series of equal cash flows at fixed intervals.—Annuity
Briggs Excavation Company is planning an investment of $153,700 for a bulldozer. The bulldozer is expected to operate for 1,000 hours per year for seven years. Customers will be charged $130 per hour for bulldozer work. The bulldozer operator costs $34 per hour in wages and benefits. The bulldozer is expected to require annual maintenance costing $10,000. The bulldozer uses fuel that is expected to cost $45 per hour of bulldozer operation.
| Present Value of an Annuity of $1 at Compound Interest | |||||
| Year | 6% | 10% | 12% | 15% | 20% |
| 1 | 0.943 | 0.909 | 0.893 | 0.870 | 0.833 |
| 2 | 1.833 | 1.736 | 1.690 | 1.626 | 1.528 |
| 3 | 2.673 | 2.487 | 2.402 | 2.283 | 2.106 |
| 4 | 3.465 | 3.170 | 3.037 | 2.855 | 2.589 |
| 5 | 4.212 | 3.791 | 3.605 | 3.352 | 2.991 |
| 6 | 4.917 | 4.355 | 4.111 | 3.784 | 3.326 |
| 7 | 5.582 | 4.868 | 4.564 | 4.160 | 3.605 |
| 8 | 6.210 | 5.335 | 4.968 | 4.487 | 3.837 |
| 9 | 6.802 | 5.759 | 5.328 | 4.772 | 4.031 |
| 10 | 7.360 | 6.145 | 5.650 | 5.019 | 4.192 |
a. Determine the equal annual net cash flows from operating the bulldozer. Use a minus sign to indicate cash outflows.
| Briggs Excavation | |||
| Equal Annual Net Cash Flow | |||
| Cash inflows: | |||
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$ | ||
|
$ | ||
| Cash outflows: | |||
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$ | ||
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$ | ||
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$ | ||
Feedback
b. Determine the net present value of the investment, assuming that the desired rate of return is 20%. Use the The sum of the present values of a series of equal cash flows to be received at fixed intervals.present value of an annuity of $1 table above. Round to the nearest dollar. If required, use the minus sign to indicate a negative net present value.
| Present value of annual net cash flows | $ |
| Amount to be invested | $ |
| Net present value | $ |
c. Should Briggs Excavation invest in the
bulldozer, based on this analysis?
d. Determine the number of operating hours such that the present value of cash flows equals the amount to be invested. Round interim calculations and final answer to the nearest whole number.
hoursIn: Accounting
Which of the following statements is correct about recording transactions in a journal?
Group of answer choices
The accounting equation must be in balance after each transaction is recorded.
Every transaction must affect at least one revenue account.
Every transaction must affect at least three accounts in the accounting equation.
There must be the same number of accounts debited as there are accounts that are credited.
In: Accounting
A tractor Unit for use Over-The-Road initially costing $350,000 will have a salvage value of $100,000 after three years. Revenue will be $150,000 per year: Maintenance will be $20,000 per year. Using MACRS depreciation with half-year convention, 40% tax rate, and 6% market rate, what will be the Present Value of all "After Tax Cash Flows"
In: Accounting
Questions about relationship*
1. Explain the relationship between correlation
analysis dan regression analysis( * is relationsip, not difference
)
2. Explain the relationship between correlation covariance
3. Explain the relationship on this three analysis
In: Statistics and Probability
Implementing change in any organization can be a daunting task. change is inevitable, and organizations need to embrace a culture of change for long term survival. However not all changes are worthwhile. Blindly implementing change can result in sub-optimal performance and in some cases, it can diminish performance. Change initiatives must be evaluated from a business perspective. Consider an example of an automobile dealership is evaluating a new protocol in their auto-service department. The service department generates more revenue than the sales department, on an annualized basis. Sales revenues have been down in recent years, and management would like to find ways to increase service revenue to offset any shortfalls from the sales department. The service department has proposed to senior management that they can make a change to their service offerings to increase revenue. Currently, the service department offers ala carte offerings for service. Patrons can opt for separate services on an as needed basis (e.g. oil, change, spark plug change, timing belt service, transmission service and so on). A key change proposed would involve offering packaged service solutions (e.g. 10K mileage service, 30K mileage service, 75K mileage service, and so on). Each package service would bundle many of the previously offered services. If implemented, the change could yield an extra $1M of service revenue for the dealership. Without this change, substantially growing service revenue would be very unlikely for the dealership. The change implementation will involve having to re-market its services appropriately, changing advertising, increasing promotions, training staff, and so on, They would have to do so without making long-time customers feel like they are being offered more services than then need at any given time. How should the dealership go about evaluating this change? Should they embark on this change? Please explain your answer sufficiently.
In: Operations Management
Suppose you are part of the analytics team for the online retailer Macha Bucks which sells two types of tea to its online visitors: Rouge Roma (RR) and Emerald Earl (EE). Everyday approximately 10,000 people visit the site over a 24 hour period. For simplicity suppose we consider the “buy one or don’t buy” (BODB) market segment of customers which when they visit the site will conduct one of the following actions: (a) buy one order of RR, (b) buy one order of EE, or (c) don’t buy (DB) anything. You have been tasked with determining customer behavior on the website for the BODB segment using a random sample of 35 visits.
In the dataset for the random sample, each row corresponds to a random visitor. For each visitor we provide both the visitor’s action as well as the profit earned on the transaction. In the action column:
if the visitor buys one order of RR, we see a RR,
if the visitor buys one order of EE, we see an EE,
if the visitor doesn’t buy anything, we see a DB.
Note that even if two customers buy the same product, the profit can differ due to the shipping costs, promotions, or coupons that are applied
Random Sample of Data
1=yes, 0 = no
Transaction ID
Action
Profit ($)
Bought RR?
Bought EE?
Didn't Buy?
Profit RR ($)
Profit EE ($)
1
RR
8.43
1
0
0
.
0.00
2
DB
0.00
0
0
1
0.00
0.00
3
EE
1.75
0
1
0
0.00
1.75
4
DB
0.00
0
0
1
0.00
0.00
5
EE
4.37
0
1
0
0.00
4.37
6
EE
5.79
0
1
0
0.00
5.79
7
RR
6.27
1
0
0
6.27
0.00
8
RR
6.22
1
0
0
6.22
0.00
9
DB
0.00
0
0
1
0.00
0.00
10
EE
4.49
0
1
0
0.00
4.49
11
RR
10.54
1
0
0
10.54
0.00
12
EE
3.79
0
1
0
0.00
3.79
13
DB
0.00
0
0
1
0.00
0.00
14
DB
0.00
0
0
1
0.00
0.00
15
RR
9.03
1
0
0
9.03
0.00
16
EE
3.54
0
1
0
0.00
3.54
17
DB
0.00
0
0
1
0.00
0.00
18
DB
0.00
0
0
1
0.00
0.00
19
EE
5.02
0
1
0
0.00
5.02
20
DB
0.00
0
0
1
0.00
0.00
21
EE
3.60
0
1
0
0.00
3.60
22
DB
0.00
0
0
1
0.00
0.00
23
EE
2.61
0
1
0
0.00
2.61
24
RR
11.75
1
0
0
11.75
0.00
25
RR
12.22
1
0
0
12.22
0.00
26
DB
0.00
0
0
1
0.00
0.00
27
DB
0.00
0
0
1
0.00
0.00
28
EE
6.17
0
1
0
0.00
6.17
29
RR
8.83
1
0
0
8.83
0.00
30
DB
0.00
0
0
1
0.00
0.00
31
DB
0.00
0
0
1
0.00
0.00
32
DB
0.00
0
0
1
0.00
0.00
33
DB
0.00
0
0
1
0.00
0.00
34
RR
14.16
1
0
0
14.16
0.00
35
EE
6.06
0
1
0
0.00
6.06
PARTS
a) What could be an appropriate probability distribution to use for
modeling the number of visitors that the website has in an
hour?
b) What parameters would you use for the probability
distribution?
c) Using that distribution, determine the probability that more
than 600 people visit the site in an hour.
a) What could be an appropriate probability distribution to use for
modeling the number of seconds between customer visits?
b) What parameters would you use for the probability
distribution?
c) Using that distribution, determine the probability that the time
between customer visits to the website is less than 10 seconds.
a) What could be an appropriate probability distribution to use for
modeling the number of website visitors from 100 visitors that do
not buy anything?
b) What parameters would you use for the probability
distribution?
c) Using that distribution, determine the probability that from
among 100 customers, it turns out that 30 or more customers do not
buy anything.
d) What is the average number of visitors (from among 100
customers) that do not buy anything?
e) What is the standard deviation of the number of visitors (from among 100 customers) that do not buy anything?
What is the average profit from among 100 random customers that
visit the site?
Please explain your answer or show your calculations.
In: Statistics and Probability
Suppose you are part of the analytics team for the online retailer Macha Bucks which sells two types of tea to its online visitors: Rouge Roma (RR) and Emerald Earl (EE). Everyday approximately 10,000 people visit the site over a 24 hour period. For simplicity suppose we consider the “buy one or don’t buy” (BODB) market segment of customers which when they visit the site will conduct one of the following actions: (a) buy one order of RR, (b) buy one order of EE, or (c) don’t buy (DB) anything. You have been tasked with determining customer behavior on the website for the BODB segment using a random sample of 35 visits.
In the dataset for the random sample, each row corresponds to a random visitor. For each visitor we provide both the visitor’s action as well as the profit earned on the transaction. In the action column:
if the visitor buys one order of RR, we see a RR,
if the visitor buys one order of EE, we see an EE,
if the visitor doesn’t buy anything, we see a DB.
Note that even if two customers buy the same product, the profit can differ due to the shipping costs, promotions, or coupons that are applied
Random Sample of Data
1=yes, 0 = no
Transaction ID
Action
Profit ($)
Bought RR?
Bought EE?
Didn't Buy?
Profit RR ($)
Profit EE ($)
1
RR
8.43
1
0
0
.
0.00
2
DB
0.00
0
0
1
0.00
0.00
3
EE
1.75
0
1
0
0.00
1.75
4
DB
0.00
0
0
1
0.00
0.00
5
EE
4.37
0
1
0
0.00
4.37
6
EE
5.79
0
1
0
0.00
5.79
7
RR
6.27
1
0
0
6.27
0.00
8
RR
6.22
1
0
0
6.22
0.00
9
DB
0.00
0
0
1
0.00
0.00
10
EE
4.49
0
1
0
0.00
4.49
11
RR
10.54
1
0
0
10.54
0.00
12
EE
3.79
0
1
0
0.00
3.79
13
DB
0.00
0
0
1
0.00
0.00
14
DB
0.00
0
0
1
0.00
0.00
15
RR
9.03
1
0
0
9.03
0.00
16
EE
3.54
0
1
0
0.00
3.54
17
DB
0.00
0
0
1
0.00
0.00
18
DB
0.00
0
0
1
0.00
0.00
19
EE
5.02
0
1
0
0.00
5.02
20
DB
0.00
0
0
1
0.00
0.00
21
EE
3.60
0
1
0
0.00
3.60
22
DB
0.00
0
0
1
0.00
0.00
23
EE
2.61
0
1
0
0.00
2.61
24
RR
11.75
1
0
0
11.75
0.00
25
RR
12.22
1
0
0
12.22
0.00
26
DB
0.00
0
0
1
0.00
0.00
27
DB
0.00
0
0
1
0.00
0.00
28
EE
6.17
0
1
0
0.00
6.17
29
RR
8.83
1
0
0
8.83
0.00
30
DB
0.00
0
0
1
0.00
0.00
31
DB
0.00
0
0
1
0.00
0.00
32
DB
0.00
0
0
1
0.00
0.00
33
DB
0.00
0
0
1
0.00
0.00
34
RR
14.16
1
0
0
14.16
0.00
35
EE
6.06
0
1
0
0.00
6.06
PARTS
a) What could be an appropriate probability distribution to use for
modeling the number of visitors that the website has in an
hour?
b) What parameters would you use for the probability
distribution?
c) Using that distribution, determine the probability that more
than 600 people visit the site in an hour.
a) What could be an appropriate probability distribution to use for
modeling the number of seconds between customer visits?
b) What parameters would you use for the probability
distribution?
c) Using that distribution, determine the probability that the time
between customer visits to the website is less than 10 seconds.
a) What could be an appropriate probability distribution to use for
modeling the number of website visitors from 100 visitors that do
not buy anything?
b) What parameters would you use for the probability
distribution?
c) Using that distribution, determine the probability that from
among 100 customers, it turns out that 30 or more customers do not
buy anything.
d) What is the average number of visitors (from among 100
customers) that do not buy anything?
e) What is the standard deviation of the number of visitors (from among 100 customers) that do not buy anything?
What is the average profit from among 100 random customers that
visit the site?
Please explain your answer or show your calculations.
In: Statistics and Probability
Krey Distributing Company completed these merchandising transactions in the month of April. At the beginning of April, the ledger of Krey showed Cash of $10,000 and Common Stock of $10,000.
Apr. 2 Purchased merchandise on account from Am-Bev Co. $8,700,
terms 2/10, n/30.
4 Sold merchandise on account to Gata, Inc. $6,000, terms 2/10,
n/30, FOB Destination. The cost of the merchandise sold was
$3,700.
5 Paid $200 freight by check on April 4 sale.
6 Received credit from Am-Bev Co. for merchandise returned
$400.
11 Paid Am-Bev Co. in full, less discount.
13 Received collections in full, less discounts, from Gata, Inc.,
billed on April 4.
14 Purchased merchandise from Flug, Inc. for cash $4,700. No
shipping costs incurred.
16 Received refund of $500 from Flug, Inc. for returned merchandise
on cash purchase of April 14.
18 Purchased merchandise from Lohr Distributors $5,500, terms 2/10,
n/30, FOB Shipping Point.
20 Paid freight by check on April 18 purchase $180.
23 Sold merchandise for cash to Kirkja, Inc. for $8,300. The cost
of the merchandise sold was $5,580.
26 Purchased merchandise for cash from Silung, Inc. for
$2,300.
27 Paid Lohr Distributors in full, less discount.
29 Made refunds to various cash customers for returned merchandise
$180. The returned merchandise had a cost of $120.
30 Sold merchandise on account to Frimirki, Inc. $3,980, terms
n/30. The cost of the merchandise sold was $2,500. No shipping
charges.
Krey Distributing Company’s chart of accounts includes Cash, Accounts Receivable, Inventory, Accounts Payable, Common Stock, Sales Revenue, Sales Returns and Allowances, Sales Discounts, Cost of Goods Sold, and Freight-Out. Instructions
(a) Journalize the transactions.
(b) Prepare the income statement through gross profit for the month of April 2014.
In: Accounting
Ramp metering is a traffic engineering idea that requires cars entering a freeway to stop for a certain period of time before joining the traffic flow. The theory is that ramp metering controls the number of cars on the freeway and the number of cars accessing the freeway, resulting in a freer flow of cars, which ultimately results in faster travel times. To test whether ramp metering is effective in reducing travel times, engineers conducted an experiment in which a section of freeway had ramp meters installed on the on-ramps. The response variable for the study was speed of the vehicles. A random sample of 15 cars on the highway for a Monday at 6 p.m. with the ramp meters on and a second random sample of 15 cars on a different Monday at 6 p.m. with the meters off resulted in the following speeds (in miles per hour).
Ramp_Meters_On Ramp_Meters_Off
27 24
38 33
43 47
35 29
42 37
47 25
32 36
47 39
56 22
27 51
57 41
26 31
51 17
40 41
46 42
Determine the P-value for this test.
P-value equals=.? (Round to three decimal places as needed.)
In: Statistics and Probability
The article “Estimating Population Abundance in Plant Species With Dormant Life-Stages: Fire and the Endangered Plant Grevillea caleye R. Br.” (T. Auld and J. Scott, Ecological Management and Restoration, 2004:125-129) presents estimates of population sizes of a certain rare shrub in areas burnt by fire. The following table presents population counts and areas (in m^2) for several patched containing the plant:
|
Area |
Population |
Area |
Population |
|
3739 |
3015 |
2521 |
707 |
|
5277 |
1847 |
213 |
113 |
|
400 |
17 |
11958 |
1392 |
|
345 |
142 |
1200 |
157 |
|
392 |
40 |
12000 |
711 |
|
7000 |
2878 |
10880 |
74 |
|
2259 |
223 |
841 |
1720 |
|
81 |
15 |
1500 |
300 |
|
33 |
18 |
228 |
31 |
|
1254 |
229 |
228 |
17 |
|
1320 |
351 |
10 |
4 |
|
1000 |
92 |
In: Statistics and Probability