last year, the pottery palace supplied 8,000 ceramic pots at $40 each. this year, the company supplied the same quantity of ceramic pots at $55 each. based on this evidence, the pottery palace has experienced
Answers
In a situation where last year, the pottery palace supplied 8,000 ceramic pots at $40 each, and this year, the company supplied the same quantity of ceramic pots at $55 each. As a result, based on this evidence, the pottery palace has experienced a decrease in supply. Therefore, the option B holds true.
What is the significance of supply?
The supply of a product can be referred to or considered as the quantity distributed by a seller at a given price prevailing in the market. Price and supply are indirectly related.
When the price of a product increases, but does not affect a change in the quantity supplied than the previous quantity, it ultimately leads to a decrease in supply.
Therefore, the option B holds true and states regarding the significance of supply.
Learn more about supply here:
https://brainly.com/question/19594049
#SPJ4
The missing options to the question have been added to complete it.
A. Increase in supply
B. Decrease in supply
C. Increase in demand
D. Decrease in demand
Related Questions
3. according to our class lecture on international/global pr, public relations develops more rapidly in nations that have:
Answers
According to our class lecture on international/global PR, public relations develops more rapidly in nations that have a strong democratic foundation.
Democracies have the advantage of allowing free flow of information and the ability to engage in dialogue with citizens. This means that the public relations industry can focus on the most effective methods for engaging with the public and developing campaigns that are tailored to their needs.
Additionally, democracies tend to be more open to criticism and feedback from the public, which further encourages the development of public relations. This kind of open dialogue and engagement creates a positive environment for public relations professionals to work in and encourages the growth of the industry.
Furthermore, democracies often have strong legal systems that protect the rights of the public, which helps to ensure that public relations campaigns are conducted ethically and without malicious intent. All of these factors contribute to the growth of public relations in nations with a strong democratic foundation.
Know more about democratic foundation here
https://brainly.com/question/28574177#
#SPJ11
Madelyn is calculating the present value of a bonus she will receive next year. The process she is using is called:_____
Answers
Madelyn is calculating the current value of a bonus she's going to receive next year. the method she is using is termed Discounting.
Discounting is that the process of determining this value of a payment or a stream of payments that's to be received within the future. Given the note value of cash, a dollar is worth more today than it might be worth tomorrow. Discounting is that the primary factor employed in pricing a stream of tomorrow's cash flows. Discounting is that the process of determining the current value of a future payment or stream of payments. A dollar is usually worth more today than it might be worth tomorrow, in keeping with the concept of the duration of cash. the next discount indicates a greater the amount of risk related to an investment and its future cash flows.
Learn more about Discounting.
https://brainly.com/question/7459025
#SPJ4
Jenna Parker owns and manages her single member LLC (which she taxes as a sole proprietorship) that provides services to her clients (i.e., specified service business). Her LLC reports net income of $100,000 after all applicable deductions, W-2 wages of $30,000, and assets with an unadjusted basis of $100,000. She is unmarried without dependents, and receives qualified dividends of $50,000. Assuming Jenna's itemize deductions are $10,000, what is her QBI deduction for the current year?
Answers
Answer:
am 30$ Jenny Parker owns and manqges
What alternative marketing strategies might Apple have followed?
Answers
Apple is a multinational tech company that is widely renowned for its premium quality products and innovative marketing strategies. However, despite its widespread success, there are a few alternative marketing strategies that Apple might have followed. Here are some of the alternative marketing strategies that Apple might have followed:
Offer more product customization: Another alternative marketing strategy that Apple might have followed is to offer more product customization options. By offering more customization options, customers would have more control over the product they purchased, which could have increased customer satisfaction.
Collaborate with other brands: Apple could have collaborated with other brands to cross-promote their products. For instance, it could have partnered with a popular fashion brand to create a limited-edition product line that would appeal to the fashion-conscious consumer.
In conclusion, these are some of the alternative marketing strategies that Apple might have followed. However, despite these alternative strategies, Apple has been immensely successful, and its marketing strategies have been a key factor in its success.
To know more about widespread visit:
https://brainly.com/question/28140571
#SPJ11
With ______, an organization can parcel out the entire complex work effort to be performed by specialists, which results in greater efficiency.
Answers
With division of labor, an organization can parcel out the entire complex work effort to be performed by specialists, which results in greater efficiency.
What is division of labor?Division of labor can simply be defined as the division of tasks in order to enable different person or individual to be involved in the tasks.
Division of labor tend to lead to efficiency when task are allocated to separate individual.
With division of labor an organization or company can allocate or assigned the whole tasks to be performed to different individual which are specialists in the field they are.
Inconclusion with division of labor, an organization can parcel out the entire complex work effort to be performed by specialists, which results in greater efficiency.
Learn more about division of labor here:https://brainly.com/question/7639934
Myla is in charge of producing 100 air conditioning units a day. Her team knows that if they do not meet this requirement they could possibly get a pay cut or lose their jobs. Thinking of the Blake Mouton Grid, Myla has a _____ concern for people and a ______ concern for production.
a. Low, high
b. High, low
c. Low, low
d. High, high
Answers
Myla has a high concern for production and a low concern for people.
Myla's primary focus is on meeting the production requirement of 100 air conditioning units per day. This indicates a high concern for production. The fact that her team faces the possibility of pay cuts or job loss if they fail to meet this requirement further emphasizes the significance of achieving production targets. Meeting the production goal takes precedence over other considerations, such as the well-being or job security of the team members. Therefore, Myla's concern for people is relatively low in this situation.
In the Blake Mouton Grid, which is a managerial grid model, the X-axis represents concern for production or task-oriented behavior, while the Y-axis represents concern for people or relationship-oriented behavior. The model suggests that the ideal leadership style is one that balances both concerns, promoting high productivity while also fostering a positive work environment. However, in this scenario, Myla's focus on production and the potential consequences for not meeting the target suggest a predominantly task-oriented approach with a lower emphasis on the well-being of her team.
Learn more about Production
brainly.com/question/30333196
#SPJ11
how did new consumer practices and leisure activites of the industrial age reshape americans gender, class and race relationships
Answers
Industrialization is a time of social and profitable change, transubstantiating humanity from an agricultural society to an artificial society.
Industrialization has created a definitive middle and working class. The new areas of pleasure were classified according to whether one was black or white, manly or womanish, rich or poor.
Industrialization is the process by which the frugality evolves from primarily agrarian product to mass product and technologically advanced goods and services. This phase is characterized by exponential hops in productivity, shifts from pastoral to civic work, and advanced living norms.
Industrialization contributes to negative externalities similar as pollution. The separation of capital and labor creates income inequality between workers and those who control capital coffers.
To know more about Industrialization,
brainly.com/question/13297091
#SPJ4
the first issue you chose to address with kenisha is that production cost of the product appears to be too high versus the price customers would be willing to pay. the overwhelming sentiment of the focus groups conducted by the marketing department was that, although customers liked some of the advanced features of the radio-drm, they would not be willing to pay a higher price for these features. the result is that the profit margin for the radio-drm would be too low to justify going into production. which of the following statements would be the best explanation for the rejection based on the fact that the profit margin for the radio-drm would be too low to justify going into production?
Answers
Profit margin gauges the diploma to which a organization or a commercial enterprise endeavor makes money, genuinely by using dividing earnings by revenues.
Expressed as a percentage, earnings margin suggests how many cents of earnings has been generated for each dollar of sale.
What is profit margin example?In short, your profit margin or proportion lets you recognize how lots income your enterprise has generated for each dollar of sale. For example, a 40% profit margin potential you have a internet profits of $0.40 for every greenback of sales.
Net profit margins vary by way of industry but in accordance to the Corporate Finance Institute, 20% is considered good, 10% average or standard, and 5% is regarded low or poor. Good earnings margins permit businesses to cover their fees and generate a return on their investment
Learn more about profit margin here:
https://brainly.com/question/15087231#SPJ4What can be said about the culture of services?
I. Processes are invisible
II. Processes are well defined
III. More scientific
IV. Not well defined or documented
A. I, II, and III only
B. I, II, and IV only
C. II, III, and IV only
D. All of the above
Answers
In the service culture, processes are invisible and procedures are not well defined or documented. This culture is focused on customer service, to provide the best experience.
Therefore, processes are invisible, that is, the customer is not able to identify internal processes if they are not useful, but they must perceive the service as a mystery where all their needs are promptly met.
In the service culture, this is also not well defined or documented, so as not to create standardization of the service, but a personalized service that meets the needs of each customer individually.
Therefore, in the service culture, the focus is on offering the best experience for the customer, through the creation of value, excellent service and employees capable of satisfying their needs.
The service culture is capable of generating greater competitiveness, customer loyalty and positioning for a company.
Learn more here:
https://brainly.com/question/15401740
Use these graphics to answer the question.
An association of medical researchers examined exercise trends among adults.
pls help need an answer fast
Which ratio shows the relationship between the total percent of people who exercised in 2014 to the percent of adults ages 18–24 who exercised in 2016?
47:42
58:45
48:59
48:50
Answers
The ratio that represents the relationship between the total percent of people who did exercise in 2014 compared to the the percent of adults ages 18–24 who exercised in 2016 is 48:59.
What is a ratio?A ratio is the comparison of two figures, this can be done with the past data, or can be done with the budgeted or any competitor. In the example given the data is compared with the past data, base year is 2014 and the current year is 2016.
The ratio that is calculated represents that the total percentage of people were 48% in 2014 and the adults in 2016 as a total represents a percentage of 59% and therefore the ratio is 48:59.
Learn more about ratios at https://brainly.com/question/27409131
#SPJ1
1. Imagine that you are part of your school's environmental club and that you have been asked to create a campaign to
raise student awareness of the new single-use plastics ban.
a) What information would you choose to share with students?
b) How would you choose to communicate that information?
Answers
Answer: Here are some ways you can encourage your students to reflect on how much plastic they use and how they can reduce their plastic consumption.
Explanation: i had this for home work
What can a boosted post help an advertiser achieve?
Answers
A boosted post helps an adviser to connect with the audience and gain trust.
Boosted post is a kind of post that is used on social media platforms in order to enhance the page of the platform and to attract audience to the page. Boosted post can help better communication with the audience along with the increase in a greater number of messages, calls and texts. Boosted posts help for better advertisements of the product. For example, A Chocolate brand may use Boosted posts to gain audience as well as consumers. Boosted posts helps an adviser to be discovered among people, to establish a benchmark in the market and to gain more and more customers. It's a kind of marketing strategy used for publicity purpose.
Learn more about Communication at:
brainly.com/question/25645043
#SPJ4
if you invest $10,000 in a bond that earns 8% interest per year, how many years will it take to double your money?
Answers
If you invest $10,000 in a bond that earns 8% interest per year it will take 8 yrs and 9 months to double your money
How long it takes to double your money depends on both the bond interest rate and the frequency of compounding. The Rule of 72 can be used to calculate how long it will take, assuming an annual compound interest rate of 8%, for your money to virtually double. The Rule of 72 states that to calculate the number of years it will take to double current money at a certain interest rate, you should divide 72 by the interest rate. In this case, you would get 9 after dividing 72 by 8. It would therefore take roughly 9 years for your initial $10,000 investment to double to $20,000 instead, assuming the interest rate continues at 8% per year and that the interest is compounded annually.
To learn more about bond refer here:
https://brainly.com/question/23266047
#SPJ1
In 1983, a hardcover dictionary cost $145. 75. If the CPI is currently 209, what would a hardcover dictionary cost today? Round to the nearest cent. A. $354. 75 b. $304. 62 c. $254. 75 d. $209. 00 Please select the best answer from the choices provided A B C D.
Answers
Therefore, the best answer is B. $304.62, which is the rounded value of $306.06 to the nearest cent.
The Consumer Price Index (CPI) helps to calculate the inflation rate that is used to adjust the value of currency.
We can use the following formula to calculate the current cost of a hardcover dictionary:
New cost = (Cost at the old time * Current CPI) / CPI at the old time
Let's solve for the new cost of the hardcover dictionary:
New cost = (145.75 * 209) / 99.6
New cost = 306.06
So, the hardcover dictionary would cost approximately $306.06 today.
To know more about CPI visit:
https://brainly.com/question/32374615
#SPJ11
Steadily injecting new money into the economy can eventually cause a decline in aggregate demand. a decline in long-term output. a decline in price levels. a rise in unemployment. a rise in inflation
Answers
Steadily injecting new money into the economy can eventually cause a rise in inflation, as well as a decline in price levels. Injecting more money in the economy is not a permanent solution for economic growth.
It can boost aggregate demand for a while, but when there is no real increase in productivity, this can lead to inflation. Additionally, it can cause a decrease in the value of currency leading to price inflation.Therefore, increasing money supply can lead to inflation, and as prices go up, the real value of money goes down. When this happens, aggregate demand decreases because people cannot afford to buy as much. It is also worth noting that this can lead to a decline in long-term output, as less money is invested in productive projects. Finally, a rise in unemployment can occur because of the decreasing aggregate demand for goods and services.Thus, while injecting new money into the economy can have short-term benefits, it is not a sustainable solution for economic growth.
To know more about economic growth visit:
https://brainly.com/question/11679822
#SPJ11
Terry invested $2,000 today in an investment that pays 6.5 percent annual interest. Which one of the following statements is correct, assuming all interest is reinvested?
a. terry will earn the same amount each year
b. terry will earn simple interest
c. terry will earn an increasing amount of interest each and every year
d. terry could have the same future value and invest less than $2000 initially if he could earn more than 6.5 percent interest.
e. terry's interest for year two will be equal to $2000
Answers
Solved Terry made an investment today worth $2,000 in business finance answers to his questions. Terry put $2,000 into an investment today that yields 6.5 percent a year.
What is Business Finance?
business groups raise and manage finances using business finance. The finance manager, who typically occupies a position towards the top of the internal hierarchy of a company, is responsible for planning, analyzing, and controlling operations. Significant financial decisions are frequently made by a budget committee in very large companies. The owner-manager typically oversees the financial operations in small businesses. Lower-level employees handle a large portion of the day-to-day tasks associated with business finance, such as managing cash receipts and payments, regularly and continuously borrowing from commercial banks, and creating cash budgets. Both the profit and the risk of a company's operations are impacted by financial decisions.
To know more about above topic visit:
https://brainly.com/question/30159818
#SPJ1
Barton health services provided care to a patient worth $1,200. Because the patient was over the age of 65, barton granted the patient a 20% discount and the customer paid the correct amount in cash. How would barton record the service transaction?.
Answers
If Barton health services provided care to a patient worth $1,200. Because the patient was over the age of 65, barton granted the patient a 20% discount and the customer paid the correct amount in cash. How would barton record the service transaction is : Debit Cash, 960; Credit Service Revenue 960.
Journal entrySince the company provide care to patient that worth the amount of $1,200 in which the company as well gives 20% discount to its patient. The appropriate journal entry to record the transaction is :
Barton health services journal entry
Debit Cash 960
Credit Service Revenue 960
[ 1,200 - ( 1,200 × .20) ]
( 1,200 -240 = $960)
( To record sales revenue )
Therefore we can conclude that the company will debit cash of the amount of $960 and credit sales revenue of the amount of $960.
Learn more about journal entry here: https://brainly.com/question/28390337
#SPJ1
Byron Books Inc. recently reported $9 million of net income. Its EBIT was $16.1 million, and its tax rate was 25%. What was its interest expense
Answers
To find the interest expense of Byron Books Inc., we can start with the formula for calculating net income:
Net Income = EBIT - Interest Expense * (1 - Tax Rate)
Rearranging the formula, we can solve for interest expense:
Interest Expense = (EBIT - Net Income) / (1 - Tax Rate)
Given that Byron Books Inc. reported a net income of $9 million, EBIT of $16.1 million, and a tax rate of 25% (or 0.25), we can substitute these values into the formula:
Interest Expense = (16.1 million - 9 million) / (1 - 0.25)
Interest Expense = 7.1 million / 0.75
Interest Expense = $9.4667 million or approximately $9.47 million
Therefore, the interest expense of Byron Books Inc. is approximately $9.47 million.
Learn more about interest expense here:
https://brainly.com/question/29492215
#SPJ11
The interest expense of Byron Books Inc. is $7.1 million.
Explanation:Interest expense is a financial cost that a company or individual incurs when borrowing money. It's typically associated with loans, bonds, or credit lines. This expense represents the amount paid to the lender as compensation for the use of their funds. For businesses, it's a deductible expense, reducing taxable income. Monitoring and managing interest expense is crucial for financial health, as excessive interest payments can strain cash flow and negatively impact profitability. Byron Books Inc. recently reported $9 million in net income. Thus,
To find the interest expense, we can use the formula:
Interest Expense = EBIT - Net Income
Substituting the given values:
Interest Expense = $16.1 million - $9 million
= $7.1 million
Learn more about Interest Expense here:https://brainly.com/question/33177136
#SPJ12
2. Which of the following is not an effective way for a manager to imple-
ment change?
a. Do not move too quickly to implement change.
b. Do not communicate with employees about the change until a final
decision has been made.
101
C. Ask employees for ideas on effective solutions and procedures.
d. Be less critical of mistakes made by employees while changes are
being made.
Answers
John borrows $100 dollars from ed. They agree that john will pay back the loan in two months at a rate of 10 percent monthly. If john pays back exactly $120, then the interest was.
Answers
Since john pays back the amount of $120, then, the interest is known as Simple interest.
The Simple interest is the easiest method of calculating an interest rate on a loan.
However, the compound interest is entails interest derived on a loan based on initial principal and the accumulated interest over period of timeHence, since john pays back the amount of $120, then, the interest is known as Simple interest because the interest is not accumulated.
Read more about this here
brainly.com/question/7508525
jim has created a search ad with a bid of $5. two other advertisers in an auction have bids of $2.50 and $2. how much would jim pay for the first spot in the auction?
Answers
Jim would bid £2.51, or $2.51, for the first auction spot. Bidders are aware of other bids in an open auction, like a livestock auction.
What exactly do auctions mean?A sale in which bidders compete for an asset is known as an auction. Bidders are unaware of competing bids in a closed auction, such as a company sale. Bidders are aware of other bids in an open auction, like a livestock auction.
All bidders are aware of the offers made in an open format. Live auctions can take place or they can be held online. In an open auction, the asset or service in question is sold to whoever makes the highest bid, and in a closed auction, typically to the highest bidder.
To learn more about auction visit :
https://brainly.com/question/17288557
#SPJ1
to obtain a salesperson license in arizona, an individual must complete a total of hours of approved qualifying education.
Answers
To obtain a salesperson license in Arizona, an individual must complete a total of 90 hours of approved qualifying education. The process involves the following steps:
Complete 90 hours of pre-licensing education from an approved real estate school. Pass the school's final examination. Apply for and take the Arizona salesperson license exam with a testing center.
Pass both the national and state portions of the exam. Apply for the Arizona salesperson license through the Arizona Department of Real Estate (ADRE). Complete the required fingerprinting and background check process.
By fulfilling these requirements, an individual can successfully obtain a salesperson license in Arizona.
To know more about salesperson license, refer to the link:
https://brainly.com/question/15829119#
#SPJ11
Popularity increases a product’s
A. price
B. utility
C. life cycle
D. trial period
Answers
Answer:
life cycle
Explanation:
When a product has been popularized with adverts, people will know d product and will wanna try it out.Once this happens,the product will still be in existence prolonging the life cycle
Your gross income is 10,000 a month before taxes, and income taxes are estimated at a rate of 20%. In addition, your debt is $2,000 per month. What is your monthly personal debt ratio.
A. 85%
B. 25%
C. 40%
D. 30%
I’m in between B and C because if you take away the 20% for taxes, you get 8,000 and 2000/8000 is 25%, BUT 2000 is 20% of 10000 and plus the 20% for taxes is 40%. What do I do?
Answers
Answer:
c because isnt 2000=20% of 10000 so 40%
Explanation:
Which of the following decisions is most likely to create a temporary diseconomy of
scale? (Select the best answer.)
A)Buying supplies in bulk
B)Buying an expensive piece of machinery
C)Hiring employees who specialize
D)Using division of labor
Answers
Answer:
Buying an expensive piece of machinery
Explanation:
In "Excerpt from printers ink"and "Excerpt from young Ben Franklin," what quality about Ben franklin is emphasized in both articles? How does each author support this quality about Ben Franklin? Use details from both articles to support your response
Answers
The quality emphasized about Ben Franklin in both "Excerpt from Printers Ink" and "Excerpt from Young Ben Franklin" is his strong work ethic and his dedication to self-improvement.
In "Excerpt from Printers Ink," the author describes Franklin as a man who was always working, even during his leisure time. The author notes that Franklin used his free time to read and study, constantly seeking to improve his knowledge and skills. The author supports this quality by providing examples of Franklin's many accomplishments, including his work as a printer, inventor, and statesman. The author also highlights Franklin's famous quote, "time is money," which emphasizes his belief in the value of hard work and efficiency.
In "Excerpt from Young Ben Franklin," the author describes Franklin as a young boy who was always looking for ways to improve himself. The author notes that Franklin taught himself to read and write, and that he spent much of his free time reading books and studying. The author supports this quality by providing specific examples of Franklin's self-improvement, such as when he taught himself to write in a more sophisticated style by reading and copying essays from the Spectator. The author also notes that Franklin's commitment to self-improvement was a lifelong pursuit, and that he continued to read and learn throughout his life.
Overall, both authors emphasize Ben Franklin's strong work ethic and his dedication to self-improvement. They support this quality by providing specific examples of Franklin's many accomplishments and his commitment to learning and self-improvement throughout his life.
To know more about self-improvement:
https://brainly.com/question/1657752
#SPJ4
Give the names of different types of offices. Why are they necessary?
Answers
Answer:
Private Office.
Coworking Desk.
Virtual Office.
Enterprise Office.
Explanation:
The primary reason to have an office is collaboration. Every business needs its employees to work together as a team to create and innovate. in addition to productivity, a functional workspace or office contributes to the value of a company and also helps in attracting quality workforce and clients.
Which of the following is one reason that construction lenders typically prefer the cost approach to valuation over the income approach? (A) The cost approach provides a more conservative estimate of value (B) The cost approach provides a more optimistic estimate of value (C) The cost approach is a good indication of the expected value of an income-producing property once construction is complete and it has been leased-up (D) The cost approach is a better estimate of actual market value of the project a
Answers
Construction lenders typically favor the cost approach to valuation over the income approach because it provides a more conservative estimate of value.
The cost approach is a method for valuing real estate that predicts the price a buyer should pay for a piece of land should be equal to the price to construct an equivalent building. In the cost approach, the value of the cost approach property is determined by adding the cost of the land to ach to valuation over the income approach because it provides a more conservative the total cost of construction, less depreciation. When a property is new, it produces the most accurate market value when compared to other methods.
There are three different ways to value real estate, the other two being the similar approach and the income approach. The coast approach method evaluates real estate by estimating how much the structure conservative would cost today if it were completely destroyed and had to be rebuilt, as opposed to focusing on the prices other, comparable homes in the neighborhood are selling for or a property's capacity to generate cost approach revenue. It also takes into account the value of the land and takes into account any value loss (also known as depreciation) that may have occurred.
Learn more about cost approach here
https://brainly.com/question/28232902
#SPJ4
Which of the following would be more typically the responsibility of a controller rather than a treasurer?A) Overseeing accounting and tax functionsB) Capital budgetingC) Managing creditD) Making investment decisions
Answers
overseeing accounting and tax functions would be more typically the responsibility of a controller rather than a treasurer.
Who is considered as treasurer?An organization's treasurer is in charge of managing its finances. Cash and liquidity management, risk management, and corporate finance are among a corporate treasurer's important primary responsibilities. The major responsibilities of a treasurer include supervising the organization's financial management, reviewing policies and financial reporting, advising the board on financial strategy, and providing fundraising advice. A treasurer, often known as a financial controller, is responsible for supervising all financial activities and fundraising attempts made by an organizing committee. Their main responsibilities include managing incoming and outgoing funds, maintaining records, and establishing the budget.A controller, not a treasurer, would normally be in charge of supervising accounting and tax functions.To learn more about treasurer refer to:
https://brainly.com/question/24180593
#SPJ4
Engi Sola Corp. Manufactures solar engines for tractor trailers. Given the fuel savings available, new orders for 125 units have been made by customers requesting credit. The variable cost is $9,700 per unit, and the credit price is $11,100 each. Credit is extended for one period. The required return is 1.9% per period. If Engi Sola extends credit, it expects that 30% of the customers will be repeat customers and place the same order every period forever, and the remaining customers will be one-time orders.
Answers
Answer:
The net present value (NPV) of the decision to grant credit is $2,938,157.89.
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
Engi Sola Corp. Manufactures solar engines for tractor trailers. Given the fuel savings available, new orders for 125 units have been made by customers requesting credit. The variable cost is $9,700 per unit, and the credit price is $11,100 each. Credit is extended for one period. The required return is 1.9% per period. If Engi Sola extends credit, it expects that 30% of the customers will be repeat customers and place the same order every period forever, and the remaining customers will be one-time orders.
Calculate the NPV of the decision to grant credit.
The explanation of the answer is now given as follows:
Number of new orders = 125 units
Percentage of repeat order = 30%
Number of order that will be repeated forever = Number of new orders * Percentage of repeat order = 125 * 30% = 37.50 units
Credit price per unit = $11,100
Variable cost per unit = $9,700
Contribution margin per unit = Credit price per unit - Variable cost per unit = $11,100 - $9,700 = $1,400
Total contribution for all new order = Number of new orders * Contribution margin per unit = 125 * $1,400 = $175,000
Total contribution margin for order that will be repeated forever = Contribution margin per unit * Number of order that will be repeated forever = $1,400 * 37.50 = $52,500
Net present value (NPV) of total contribution margin for order that will be repeated forever = Total contribution margin for repeated order forever / Required return = $52,500 / 1.9% = 2,763,157.89
Net present value (NPV) of the decision to grant credit = Total contribution for all new order + NPV of total contribution margin for order that will be repeated forever = $175,000 + 2,763,157.89 = $2,938,157.89
Therefore, the net present value (NPV) of the decision to grant credit is $2,938,157.89.