Company S considering adding a new line to its product mix and the production line would be set up in unused space in the main plant. It has installed machinery which generates the incremental sales of $1,250 units per year. Due to this the sale price and cost prices are increased by 3% and firm’s net working capital would have to increase by an amount equal to 12% of sales revenues. To determine: Depreciable basis of Company S and its annual depreciation expenses.

Question

In 1895, the first U.S. Putting Green Championship was held. The winner's prize money was $170. In 2022, the winner's check was $3,950,000. a. What was the percentage increase per year in the winner's check over this period? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. If the winner's prize increases at the same rate, what will it be in 2053? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Increase per year b. Winners prize in 2053 %

Answer 1

Question

Chapter 13, Problem 2MC

Summary Introduction

Case summary:

Company S considering adding a new line to its product mix and the production line would be set up in unused space in the main plant. It has installed machinery which generates the incremental sales of $1,250 units per year.

Due to this the sale price and cost prices are increased by 3% and firm’s net working capital would have to increase by an amount equal to 12% of sales revenues.

To determine: Depreciable basis of Company S and its annual depreciation expenses.

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In 1895, the first U.S. Putting Green Championship was held. The winner's prize money was $170. In 2022, the winner's check was $3,950,000. a. What was the percentage increase per year in the winner's check over this period? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. If the winner's prize increases at the same rate, what will it be in 2053? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Increase per year b. Winners prize in 2053 %

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