The Tolar Company Has 400 Obsolete Desk Calculators That Are

question 65

Multiple Choice

The Tolar Company has 400 obsolete desk calculators that are carried in inventory at a total cost of $26,800. If these calculators are upgraded at a total cost of $10,000, they can be sold for a total of $30,000. As an alternative, the calculators can be sold in their present condition for $11,200.
-What is the net advantage or disadvantage to the company from upgrading the calculators?

• A) $8,000 disadvantage.
• B) $8,800 advantage.
• C) $18,000 disadvantage.
• D) $20,000 advantage.

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Definitions:

Stated Rate

The interest rate declared on a financial instrument, such as a bond or loan, not taking into account compounding or fees.

Par

The face value of a bond or security, often used in the context of bonds trading at, above, or below their issued price.

Market Rate

The prevailing interest rate available in the marketplace for similar financial instruments or loans.

Financial Instrument

A contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.