Question

You are preparing to produce some goods for sale. You will sell them in one year and you will incur costs of $81,000 immediately. If your cost of capital is 6.5%, what is the minimum dollar amount you need to sell the goods for in order for this to be a non-negative NPV? Question content area bottom Part 1 The minimum dollar amount is $ enter your response here

Name: you are preparing to produce some goods for sale you will sell them in one year and you will incur costs of 81000 immediately if your cost of capital is 65 what is the minimum dollar amount 52066
Uploaded: 2022-11-05T09:06:07-08:00
Duration: 2 min 40 s
Channel: Sri K
Description: you are preparing to produce some goods for sale you will sell them in one year and you will incur costs of 81000 immediately if your cost of capital is 65 what is the minimum dollar amount 52066

          You are preparing to produce some goods for sale. You will sell them in one year and you will incur costs of $81,000 immediately. If your cost of capital is 6.5%, what is the minimum dollar amount you need to sell the goods for in order for this to be a non-negative NPV? Question content area bottom Part 1 The minimum dollar amount is $    enter your response here

Added by Michelle C.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Sri K

11/05/2022

Step 1

The present value (PV) of the costs can be calculated using the formula: PV = Cost / (1 + r)^n Where: Cost = $81,000 (cost incurred immediately) r = 6.5% (cost of capital) n = 1 (number of years) PV = 81,000 / (1 + 0.065)^1 PV = 81,000 / 1.065 PV ≈ $76,056.34 Show more…

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You are preparing to produce some goods for sale. You will sell them in one year and you will incur costs of $81,000 immediately. If your cost of capital is 6.5%, what is the minimum dollar amount you need to sell the goods for in order for this to be a non-negative NPV? Question content area bottom Part 1 The minimum dollar amount is $ enter your response here