American pany estimates that 60,000 special zippers will used in the manufacture of men's jackets during the next year. Reese Zipper Company has quoted a price of P.60 per zipper. American would prefer to purchase 5,000 units per month, but Reese is unable to guarantee this delivery schedule. To ensure availability of these zippers, American is considering the purchase of all 60,000 units at the beginning of the year. Assuming American can invest cash at 8%, the company's opportunity cost of purchasing the 60,000 units at the beginning of the year is.

American pany estimates that 60,000 special zippers will used in the manufacture of men's jackets during the next year. Reese Zipper Company has quoted a price of P.60 per zipper. American would prefer to purchase 5,000 units per month, but Reese is unable to guarantee this delivery schedule. To ensure availability of these zippers, American is considering the purchase of all 60,000 units at the beginning of the year. Assuming American can invest cash at 8%, the company's opportunity cost of purchasing the 60,000 units at the beginning of the year is.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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