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We are evaluating a project that costs $1,180,000, has a ten-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 66,000 units per year. Price per unit is $45, variable cost per unit is $25, and fixed costs are $708,000 per year. The tax rate is 35 percent, and we require a return of 15 percent on this project. a. Calculate the accounting break-even point. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Break-even point ?? units b-1 Calculate the base-case cash flow and NPV. (Do not round intermediate calculations and round your NPV answer to 2 decimal places, e.g., 32.16.) Cash flow $ =? NPV $ =? b-2 What is the sensitivity of NPV to changes in the sales figure? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) ΔNPV/ΔQ =? $ b-3 Calculate the change in NPV if sales were to drop by 500 units. (Enter your answer as a positive number. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV would (Click to select) decrease/ increase by ?$ c. What is the sensitivity of OCF to changes in the variable cost figure? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
A new piece of equipment costs $18,000 with a residual value of $600 and an estimated useful life of five years. Assuming twice the straight-line rate, the book value at the end of year 2 using the declining balance method is? A 11,520 B 6,480 C 18,0..
Assume the reserve requirement is 5%. First Merit Bank as vault cash and deposits with the Fed of $50 million,
What is the yield of maturity of a 4-year bond that pays a coupon rate of 6.23 percent per year, has a $1,000 par value, and is currently priced at $990?
What are some Ethical issues that come to your mind when thinking about financial information as well as financial statements?
Suppose you sell a fixed asset for $126,000 when its book value is $146,000. If your company’s marginal tax rate is 40 percent, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?
Dinklage Corp. has 7 million shares of common stock outstanding. The company also has two bond issues outstanding.
Which of the following levels of government and/or organizations build and manage prisons?
A group of securities with similar characteristics is called a(n). In the accumulation phase of the investor life cycle.
An investment costs $3,500 today. This investment is expected to produce annual cash flows of $1,200, $1,400, $1,300 and $1,100, respectively, over the next four years. What is the internal rate of return on this investment?
Which of the following ratios gives information on the amount of profits reinvested in the firm over the years?
You have been asked by the president of your company to evaluate the proposed acquisition of a new machine.
What is insolvency risk? How can liquidity risk and credit risk cause insolvency? What actions can a financial institution take to best protect itself against insolvency?
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