Question

Process or Sell Product T is produced for $3.38 per pound. Product T can be sold wilthout additional processing for $4.16 per pound or processed further into Product U at an additional cost of $0.47 per pound. Product U can be sold for $4.5 per pound. Prepare a differential analysis dated November 15 on whether to sell T (Alternative 1) or process further into U (Alternative 2). If required, round your answers to the nearest whole dollar. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Sell Product T (Alt. 1) or Process Further into Product U (Alt.2) November 15 Process Further Differential Effect (Alternative 2) (Alternative 2) Sell Product T (Alternative ) u on Income Revenues, per unit Costs, per unit income(Loss), per unt s| s-□ s Should Product T be sold (Alternative 1) or processed further into Product U (Alternative 2)? Sell Product T Process further into Product U eBook Show Me How Calculator Cash Payback Period A project has estimated annual net cash flows of $24,500. It is estimated to cost $98,000. Determine the cash payback period. If required, round your answer to one decimal pla ce. years 2 Net Present Value A project has estimated annual net cash flows of $15,000 for two years and is estimated to cost $37,500. Assume a minimum acceptable rate of return of 20%. Use the Present Value of an Annuity of $1 at Compound Interest table below. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 1.833 1.736 1.690 1.626 1.528 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 4.212 3.791 3.605 3.352 2.991 K 6 4.917 4.355 1 3.784 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Determine (1) the net present value of the project (if required, round to the nearest dollar) and (2) the present value index (rounded to two decimal places). If required, use the minus sign to indicate a negative net present value. (1) Net present value of the project (2) Present value index Check My Work 3 more Check My Work uses remaning Lease or sell Amount DescriptionsDiffer Differential Analysis Final Question Duncan Company owns a machine with a cost of S30 1,000 and accumulated deprec aton of S64430 th t can be sold for S206900 ies a 4% sales comm ss on Altematively, Duncan Company can lease the machine to another company for three years for a total of $277,610, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Duncan Company on the machine would total $19.286 over the three years Required: 1. Prepare a differentiel analysis on February 21 as to whether Duncan Company should lease (Altermative ) or sel (A/ternative 2) the machine Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries For those boxes in which you must enter subtracted or negative numbers use a minus sign. if there is no amount or an amount is zero, enter "o A colon(wil automaticaly appear # required 2. Should Duncan Company lease (Alternative 1) or sell (Alternative 2) the machine? Differential Analysis Prepare a differential analysis on February 21 as to whether Duncan Company should lease (Alternative 1) or sell (Alternative 2) the machine. Refer to the Amount Descriptons list provided for the exact wording of the answer choices for text entries For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0. A colon (C) will aufomatically appear if required Score: 41/51 Differential Analysis Lease Machine (Alternative 1) or Sell Machine (Alternative 2) February 21 Differential Effect Lease Machine Sell Machine on Income Altenative 1) Altermative 2) Aternative 2 27761000 $266,900.00 $(10.710.00) 9286.00) 10,676.00 8.610.00 25832400$256.224.00$(2,100.00 3 Revenues 4 Costs ncome (loss) Thank yeu Points965/ 12

Answer 1

Problem 1 – Differential Analysis

Solution:

Differential Analysis
Sell Product T (Alt. I) or Process Further into Product U (Alt.2)
November.15
	Sell Product T (Alternative 1)	Process Further into Product U (Alternative 2)	Differential Effect on Income (Alt.2)
Revenues per unit	$4.16	$4.50	$0.34
Cost per unit	$3.38	$3.85	-$0.47
Income (loss) per unit	$0.78	$0.65	-$0.13

Sell Product T

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