Accounting for decision making3Case overview:In this case, Crystal Hotel Pty ltd has been studied and it has been found that how this hotel manages every expense according to the budget and many cases of the company have been resolved on the basis of budgets, buy or rent decision, market analysis etc. in this case, many issues which has been faced by the company have been resolved and it has also been described that which option is useful for a company at which time. Task 1:Through analyzing over the Wellness Centre project of the company, it has been found that company has 2 options out of which either company could buy the machineries from the market or could take it on rent. According to the analysis, it has been found that the budget of the company is $45, 550. Further, the calculation has been done over both the options to analyze the best option for the company. Through evaluation it has been found that the buy option is good for a company as company becomes the owner of the machinery and can use the machinery in any manner at the same time, it has also been analyzed that buying option could be in disfavour of the company as well as company could not make the changes in the machinery with the changes in the technology (Sadler, 2003). Whereas through evaluation, it has been found that the rent option is good for a company as company could not make the changes in the machinery with the changes in the technology at the same time, it has also been analyzed that buying option could be in disfavour of the company as company could not use the machinery in any manner, company wants to (Macintosh and Quattrone, 2010). Through the calculation over the company, it has been analyzed that rent option is much better than the buy option as company have to bear total $46,806 in case of buy option whereas in rent option, company is just have to bear $12,159. And thus, it has been found thatthe rent option is quite better than the buy option for the company. BUY OPTIONRENT OPTIONCOSTDiscountedResidual ValueServicingTotalCostover3DiscountedValue Year 1DiscountedValueYear 2DiscountedValueYear 3TotalCostover3
Accounting for decision making4yearsyearsTreadmill (3pieces) $18,171$721$1,546.26$18,996$1,824$1,740$1,659$5,223Elliptical Trainer (2 pieces)$8,078$321$1,546.26$9,304$935$892$851$2,678Exercise Bike (4 pieces)$13,328$529$1,546.26$14,345$837$798$761$2,397Rowing Machine (1 piece)$2,723$108$1,546.26$4,161$776$740$706$2,222TOTALCOST$46,806$12,519Task 2:In this case, NPV of the company has been analyzed to identify that whether the company would be able to make the profits of not. It has been analyzed through this case that company have started a gym for the visitors and company has two plans for the membership one is basic and another one is full package. It has been analyzed through this study that the inflow from both the packages would be different. Further, it has been analyzed through the calculations that the total net present value of this investment would be $3,96,752 which is quite higher and depict that this investment option is a good option for the company. Company could invest into this project to higher the return (Turner & Thayer, 2001). Through the calculations, it is suggested to the company to invest the amount into thisnew project as well as it has also been found that company must also entertain the external visitors as it would help the company to enhance the cash inflow (Weygandt, Kimmel & Kieso, 2009).
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