Answer the Following Questions Using the Information Below:
the Allianz

question 150

Multiple Choice

Answer the following questions using the information below:
The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items:
$\begin{array} { l } \text {Relevant ordering costs per purchase order }&\$450 \\ \text {Relevant carrying costs per year for each package: }& \\ \text { Required annual return on investment}& 15\%\\ \text {Required other costs per wear }& \$4\\\end{array}$
Annual demand is 30,000 packages per year. The purchase price per package is $48.
-What is the annual relevant carrying costs?

• A) $5,196
• B) $6,971
• C) $8,695
• D) $3105.30

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Definitions:

Net Present Value

The difference between the present value of cash inflows and outflows over a period of time, used in capital budgeting to assess the profitability of investments.

Investment

The allocation of resources, such as capital or time, with the expectation of achieving a future return or profit.

Net Present Value

The variance in the present value of cash entering and leaving over a specified period.

Present System

The current set of methods, processes, or mechanisms in place within an organization or system.