lolonsamadali

Jensen Inc., a graphic arts studio, is considering the purchase of computer equipment and software for a total cost of $18,000. Jensen can pay for the equipment and software over three years at the rate of $6,000 per year. The equipment is expected to last 10 to 20 years, but because of changing technology, Jensen believes it may need to replace the system in as soon as three to five years. A three-year lease of similar equipment and software is available for $6,000 per year. Jensen’s accountant has asked you to recommend whether the company should purchase or lease the equipment and software and to suggest the length of time over which to depreciate the software and equipment if the company makes the purchase.

Required:

Ignoring the effect of taxes, would you recommend the purchase or the lease? Why or why not? Referring to the definition of depreciation, what appropriate useful life should be used for the equipment and software?

The revenue from selling q items is R(q)=200q?q^2, and the total cost is C(q)=75+13q. Write a function that gives the total profit earned, and find the quantity which maximizes the profit. a)Profit pi(q)= b)Quantity maximizing profit q=

How come first egg or hen?

Herald Golf, Inc., was formed in September of last year. The company designs, contracts for the manufacture of, and markets a line of men’s golf apparel. A portion of the statement of cash flows for Herald follows:

Management expects a solid increase in sales in the near future. To support the increase in sales, it plans to add $2.2 million to inventory. The company did not disclose a sales forecast. At the end of the current year, Herald had less than $1,000 in cash. It is not unusual for a new company to experience a loss and negative cash flows during its start-up phase.

Required:

As a financial analyst recently hired by a major investment bank, you have been asked to write a short memo to your supervisor evaluating the problems facing Herald. Emphasize typical sources of financing that may or may not be available to support the expansion.

Assume δt = t/(1 + t²), t > 0, where t is in years.

An investment was worth $100 at t = 2.

• (a) What will the investment be worth at t = 5? (Answer: $228.04)

• (b) What is the equivalent effective annual discount rate over the interval 2 < t < 5? (Answer: 24.03%)