Which system should be chosen

Reference no: EM13292465

Cupcakeshop is looking at two different inventory control systems. LIFO costs $750,000, lasts 5 years and results in annual OCF of ($85,000). FIFO costs $980,000, lasts 7 years and results in annual OCF of ($75,000). Whichever one is chosen will be renewed indefinitely at the same cost and same OCF. Using a required return of 15%, which system should be chosen? (Show the numbers used to derive the answer.)

Reference no: EM13292465

Questions Cloud

Compute the solubility-product constant : It is found that 4.68e-06 g of Nd2(CO3)3 dissolves per 100 mL of aqueous solution at 25 oC. Calculate the solubility-product constant for Nd2(CO3)3.

What is this project npv : What is the effect on NPV of an addition of $750,000 in Net Working Capital?

How much heat is required to change this ice cube into steam : A 5.0 ice cube at -20 is in a rigid, sealed container from which all the air has been evacuated. How much heat is required to change this ice cube into steam

Explain what concentration of aso43 is necessary to begin : A solution of Na3AsO4 is added dropwise to a solution that is 0.0643 M in Bi3+ and 0.000180 M in Cd2+. What concentration of AsO43- is necessary to begin precipitation

Which system should be chosen : Whichever one is chosen will be renewed indefinitely at the same cost and same OCF. Using a required return of 15%, which system should be chosen? (Show the numbers used to derive the answer.)

What is the breaking strength of the string : string under a tension of 50.5 N is used to whirl a rock in a horizontal circle of radius 2.55 m at a speed of 20.3 m/s on a frictionless surface, What is the breaking strength, in newtons, of the string

What would be the effect on the operating cash flow : A first analysis used straight line depreciation, but if $200,000 was recognized in year 1 as the depreciation expense, what would be the effect on the Operating Cash Flow for Year 1 if the tax rate is 40%?

Find the phase velocity of electrons : Find the group velocity of 0.57 MeV protons. Find the phase velocity of 0.57 MeV protons. Find the phase velocity of 0.57 MeV electrons

Calculate eps under each economic condition : The company is considering raising $90,000 in debt costing 7% to repurchase stock. Currently there are 5,000 shares outstanding.

User Account

All Pages