HomeworkLib
Question

Arestaurant buys a pizza oven for $5,000 and can resell it in 5 years for $2,000. The sunk cost is O $5,000. $7,000. O $2,000
business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Sunk cost is the value which a producer is not able to recover.  

Sunk cost= Cost to buy asset - Salvage value

Sunk cost = $5000 - $2000

Sunk cost = $3000

Option d is the correct answer

0 0
Add a comment
Know the answer?
Add Answer to:
Arestaurant buys a pizza oven for $5,000 and can resell it in 5 years for $2,000....
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • A local pizzeria buys a used car to make pizza deliveries. It pays $2,000 down and...

    A local pizzeria buys a used car to make pizza deliveries. It pays $2,000 down and $2,000 a year for two more years. What is the present value of these payments at a 5% interest rate? 3.3 A local pizzeria buys a used car to make pizza deliveries. It pays $2,000 down and $2,000 a year for two more years. What is the present value of these payments at a 5% interest rate?

  • Jet’s Pizza is considering investing in a new type of pizza oven. If the discount rate...

    Jet’s Pizza is considering investing in a new type of pizza oven. If the discount rate is 7% for these mutually exclusive projects which project should the company invest in? Modern Brick Oven Brick Oven Time 0 -10,000 -10,000 Time 1 5,000 4,000 Time 2 4,000 3,000 Time 3 3,000 10,000 Question 15 options: a) Modern Oven b) Neither project — both have negative NPV. c) Both projects — both have positive NPV. d) Brick Oven

  • Fairfax Pizza is considering buying a new oven. The new oven would be purchased today for...

    Fairfax Pizza is considering buying a new oven. The new oven would be purchased today for 19,000 dollars. It would be depreciated straight-line to 2,000 dollars over 2 years. In 2 years, the oven would be sold for an after-tax cash flow of 3,300 dollars. Without the new oven, costs are expected to be 11,500 dollars in 1 year and 17,900 in 2 years. With the new oven, costs are expected to be -500 dollars in 1 year and 11,600...

  • Units 1,000 2,000 3,000 4,000 5,000 6.000 7.000 8,000 9.000 10.000 11,000 Rent Expense $5,000 5,000...

    Units 1,000 2,000 3,000 4,000 5,000 6.000 7.000 8,000 9.000 10.000 11,000 Rent Expense $5,000 5,000 5,000 7,000 7,000 7.000 7,000 7,000 7.000 10.000 10.000 10.000 Direct Materials $4,000 6,000 7,800 8,000 10,000 12,000 14.000 16.000 18.000 23,000 28.000 36.000 Determine the relevant range of activity for this product. Relevant range e Textbook and Media o t em e Textbook and Media Calculate the variable cost per unit within the relevant range. Variable cost $ per unit e Textbook and...

  • Fairfax Pizza is considering buying a new oven. The new oven would be purchased today for...

    Fairfax Pizza is considering buying a new oven. The new oven would be purchased today for 17,000 dollars. It would be depreciated straight-line to 1,600 dollars over 2 years. In 2 years, the oven would be sold for an after-tax cash flow of 2,100 dollars. Without the new oven, costs are expected to be 11,500 dollars in 1 year and 17,500 in 2 years. With the new oven, costs are expected to be 300 dollars in 1 year and 14,600...

  • Columbia Pizza has one oven that can make a whole pie in about 10 minutes. Their...

    Columbia Pizza has one oven that can make a whole pie in about 10 minutes. Their late-night business among hungry college students is booming, and from 9 pm – 11 pm, they average 5 pie orders per hour. However, from 5 pm – 9 pm, they average only 3 pie orders per hour. Both order rates can be assumed arrive according to a Poisson distribution. The owner of Columbia Pizza has discovered that if people have to wait for more...

  • If the contribution margin is $5,000, variable cost is $4,000, and net operating income is $2,000,...

    If the contribution margin is $5,000, variable cost is $4,000, and net operating income is $2,000, what is the fixed cost? $9,000 $1,000 $3,000 $7,000

  • Recorded $5,000 of depreciation expense Purchased a patent for $2,000 cash; patent is valid for 20...

    Recorded $5,000 of depreciation expense Purchased a patent for $2,000 cash; patent is valid for 20 years Purchased equipment with cash. The cost of the equipment was $20,000; freight was $1,000, sales tax was $1,000; installation was $1,000 Sold $3,000 of inventory for $7,000. Received cash for the sale

  • Investment End of Year ܢ 2 3 4 5 A $ 2,000 3,000 4,000 (5,000) 5,000...

    Investment End of Year ܢ 2 3 4 5 A $ 2,000 3,000 4,000 (5,000) 5,000 B $3,000 3,000 3,000 3,000 5,000 C $ 5,000 5,000 (5,000) (5,000) 15,000 What is the present value of each of these three investments if the appropriate discount rate is 12 percent?

  • 12.22 Four years ago, a firm purchased an industrial batch oven for $23,000. The oven had...

    12.22 Four years ago, a firm purchased an industrial batch oven for $23,000. The oven had an estimated life of 10 years with $1,000 salvage value. These original esti- mates are still good. If sold now, the machine will bring in $2,000. If sold at the end of the year, it will bring in $1,500. The market value after the first year has decreased at annual rate of 25%. Annual operating costs for subsequent years are $3,800. A new machine...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT