Question

Due to a pre-existing contract, Recycle America Inc. has the opportunity to acquire 10,000 pounds of scrap aluminum and 2,500 pounds of scrap lead for $10,750. If the current market price for scrap aluminum is $0.83 per pound and the current market price for lead is $1.06 per pound, then the added benefit (cost) to you if you acquire this metal is:

Answer 1

The added benefit is $200.

Step-by-step explanation:

Amount on the pre-existing contract = $10,750

Total current market price for scrap aluminum = Pounds of scrap aluminum to purchase * Current market price of scrap aluminum per pound = 10,000 * $0.83 = $8,300

Total current market price for scrap lead = Pounds of lead aluminum to purchase * Current market price of scrap lead per pound = 2,500 * $1.06 = $2,650

Added benefit (cost) = Total current market price for scrap aluminum + Total current market price for scrap lead - Amount on the pre-existing contract = $8,300 + $2,650 - $10,750 = $200

Since the amount is positive which indicates that the addition of total current market price for scrap aluminum and total current market price for scrap lead is greater the amount on the pre-existing contract, the added benefit is therefore $200.