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Hi Sir , kindly help me with the following question :
A job requires 2400 actual labour hours for completion but it is anticipated that idle time will be 20 % of the total time required. if the wage rate is $10 per hour , what is the budgeted labour cost for the job , including cost of idle time?
A. $19200
B. $24000
C.$28800
D.$30000For every 100 hours that we pay for, 20 hours will be idle, and therefore 80 hours will be worked.
(Or to put it the other way round – if we want 80 hours work, then we need to pay for 100 hours).
So…..for 2400 hours work, we need to pay for 2400 x 100/80 hours. We will pay then at $10 per hour.
Thank you so much Sir.
Sir i’m also having problems with test no 2 in investment appraisal:
A company is considering investing in a new machine that will cost $270,000 and will last for 4 years with a
scrap value at the end of 4 years of $20,000.
It is expected to generate operating cash inflows each year as follows:
Year 1: $50,000
Year 2: $180,000
Year 3: $100,000
Year 4 $50,000
The cost of capital is 12% per annum.What is the Internal Rate of Return of the machine (to the nearest %)?
Actually i cannot understand from where you got discounting as 20%
Please start a new thread when it is a different question.
To calculate the IRR you need to make two guesses and then approximate between them.
Here, one of the guesses was at 20%, but any guess will do.(It would be a good idea to watch my free lecture on calculating the IRR)
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