Achieve economies of scope

Assignment Help Finance Basics
Reference no: EM133119436

Carl's Tires is planning to merge with Joe's Body Shop to offer a combined auto repair service shop. Carl's Tires has total costs of $1,500,000 and sales of $2,000,000, while Joe's Body Shop features costs of $2,200,000 and sales of $4,000,000. The combined firms will be able to achieve economies of scope sufficient to reduce costs by $400,000 while maintaining sales at current levels. Calculate the difference between the percentage values of the average costs of the merged firms and the combined average costs of two nearby competitors. These competitors continue to sell tires and do auto repair separately, having total costs of $2,000,000 and sales of $2,500,000, $2,400,000, and $3,200,000, respectively.

Reference no: EM133119436

Questions Cloud

What is the amount of web traffic that will require : Assume that 85% of the time, the Smiley's People web servers can handle the daily web traffic volume. What is the amount of web traffic that will require
Current exchange for the chf : Suppose the current exchange for the CHF is USD 0.9787 per CHF. You forecast the USD is going to appreciate by 15% relative to the CHF in one month.
Minimize costs associated with distribution of a good : Which is the quantitative technique created to minimize the costs associated with the distribution of a good?
Tax rate and the gain on sale of investment : Assuming a 6 percent discount rate, which investment has the greater NPV?
Achieve economies of scope : Carl's Tires is planning to merge with Joe's Body Shop to offer a combined auto repair service shop. Carl's Tires has total costs of $1,500,000 and sales of $2,
What happened with stock price : What happens with the stock price of a company whose debt rating is downgraded? Please refer to a specific example in the last three years.
What is the effective annual yield : Anna and Clara are considering buying treasury bills. Anna wants to buy a Treasury Bill that has a quoted Bond Equivalent Yield equal to 6% and 100 days to matu
How much is this investment worth today : You are offered an investment that will pay you $200 in one year, $400 the next year, $600 the year after, How much is this investment worth today
Employer-sponsored retirement plan : Barry has just become eligible for his? employer-sponsored retirement plan. Barry is 40 and plans to retire at 65. Barry calculates that he can contribute ?$3,8

Reviews

Write a Review

Finance Basics Questions & Answers

  Determine the future spot price

Mr. Stanford is a speculator who is considering the purchase of eight three-month Japanese yen call options. The option has a striking price of 96 cents per

  Confidence interval for the population average weight

Construct a 90% confidence interval for the population average weight of the candies.

  What is the pretax cost of debt

Suspect Corp. issued a bond with a maturity of 30 years and a semiannual coupon rate of 6 percent 3 years ago. The bond currently sells for 92 percent of its fa

  The kretovich company had a quick ratio of 14 a current

the kretovich company had a quick ratio of 1.4 a current ratio of 3.0 an inventory turnover of 6 times total current

  Calculate the price of the bonds

Assuming that the yield to maturity of each bond remains at 8.5% over the next 4 years, calculate the price of the bonds at each of the following years to matur

  What is the expected return on her portfolio

a) What is the expected return on her portfolio based on the amount invested above?

  What do you think whether omair should buy

1. What do you think whether Omair should BUY the trucks or LEASE them? Why?

  Comment on at&t’s performance across the three-year period

In a three-year period AT&T, the telecommunications provider, reported net income of $1.9 billion (Year Three), a net loss of $13 billion (Year Two), and net income of $7.7 billion (Year One).

  Assessing a client financial resources

One important aspect of the Know Your Client rule relates to financial resources. Without adequate resources, embarking on an investment program may be unwise o

  Calculate the effective interest rate on this loan

A $1 million loan requires five end-of-year equal payments of $284,333. a. Calculate the effective interest rate on this loan. b. How much interest (in dollars) is paid over the life of this loan?

  Best candidates for convertibles

Healthy firms are the best candidates for convertibles since you are providing options to investors and so that will allow you to issue the security at a cheap

  What would be the result at the end of five years

What would be the result at the end of five years If she pays her uncle $100 a month?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd