In: Accounting
The cost in dollars of operating a jet-powered commercial
airplane Co is given by the following equation
Co = k*n*v^(3/2)
where
n is the trip length in miles,
v is the velocity in miles per hour, and
k is a constant of proportionality.
It is known that at 590 miles per hour the cost of operation is
$300 per mile. The cost of passengers' time in dollars equals
$226,000 times the number of hours of travel. The airline company
wants to minimize the total cost of a trip which is equal to the
cost of operating plus the cost of passengers' time.
At what velocity should the trip be planned to minimize the total
cost?
HINT: If you are finding this difficult to solve, arbitrarily
choose a number of miles for the trip length, but as you solve it,
you should be able to see that the optimal velocity does not depend
on the value of n
In: Advanced Math
Barney Marina is considering the purchase of a new
winch. Fully installed, the
winch will cost $42,000. It will be depreciated at the rate of 20%
(reducing
balance) and have a life of three years, at which time the salvage
value will be
$1,000. The following before tax cash flows are forecast:-
Year 1 $31,000
Year 2 $25,000
Year 3 $20,000
Barney Marina cannot pay franked dividends, it has a required rate
of return of
12% and pays tax at the rate of 30%.
Should the company purchase the machine?
In: Economics
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Reducing scrap of 4-foot planks of hardwood is an important factor in reducing cost at a wood-flooring manufacturing company. Accordingly, engineers at Lumberworks are investigating a potential new cutting method involving lateral sawing that may reduce the scrap rate. To examine its viability, samples of 500 and 400 planks, respectively, were examined under the old and new methods. Sixty-three of the 500 planks were scrapped under the old method, whereas 30 of the 400 planks were scrapped under the new method. |
| a. |
Construct the 99% confidence interval for the difference between the population scrap rates between the old and new methods, respectively. (Negative values should be indicated by a minus sign. Round intermediate calculations to at least 4 decimal places. Round your answers to 2 decimal places.) |
| Confidence interval is % to %. |
| b. |
Select the null and alternative hypotheses to test for differences in the population scrap rates between the old and new cutting methods, respectively. |
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| c. |
Using the part a results, can we conclude at the 1% significance level that the scrap rate of the new method is different than the old method? |
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We (Click to select)rejectdo not reject H0. At the 1% significance level, we (Click to select)cancannot conclude the proportions are different between the old and new methods. |
In: Statistics and Probability
Spider Lamp is considering the manufacture of a new lamp. Equipment necessary for production will cost $9 million and be depreciated on a straight-line basis over the eight-year life of the product to $1 millions salvage value. The lamp will retail for $110. The company expects to sell 100,000 lamps per year. Fixed costs will be $2,000,000 per year and variable costs are $45 per lamp. Production will require an investment in net working capital of $500,000. The tax rate is 40 percent Perform a scenario analysis using 10 percent, 20 percent, and 30 percent cost of capital. Calculate IRR and NPV for each case.
In: Finance
1.) Ajax corporation has a project with a 10 year life and a $200,000 cost. The project is depreciated straight life over the life of the project. Other fixed costs amount to $400,000 and variable costs per unit are $30. If the company intends on selling 50,000 units and has a 10% return requirement, calculate the company’s financial break-even price
2.) Scorpio Inc. is a seafood company specializing in crayfish. Each pound of crayfish cost $25 to produce and can be sold for $100. The company has fixed overhead costs of $300,000 per year, and can claim depreciation of $50,000 per year. What is the cash break-even quantity of sales for Scorpio Inc.
In: Finance
Pablo owns a yoga studio that has a cost of capital of 6.19 percent. The yoga studio is expected to produce annual cash flows of 59,900 dollars for 5 years. The first annual cash flow of 59,900 dollars is expected later today. In addition to the annual cash flows of 59,900 dollars, the yoga studio is also expected to produce a special, one-time cash flow of 67,267 dollars in 2 years from today. How much is Pablo’s yoga studio worth?
In: Finance
Calculate the NPV of a 20-year project with a cost of $300,000 and annual cash flows of $25,000 in years 1-10 and $50,000 in years 11-20. The company's required rate of return is 10%
In: Finance
Opportunity cost is an interesting concept that has a potential impact on our everyday lives. For this discussion think about what you do on a regular basis that has an opportunity cost. Explain what the events are and the opportunity costs involved with those activities. List and explain at least five. It is important to note that opportunity costs are often confused with consequences.
In: Economics
As an economist, assume that you are asked to perform a cost-benefit analysis of meat production and consumption. What is the costs of producing industrialized meat? Explain who bears each of the costs. List the benefits of producing industrialized meat. Who bears the benefits?
In: Economics