Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Mayfair Limited currently subsidizes cafeteria services for its 200 employees. Mayfair is in the process of reviewing the cafeteria services, as cost-cutting measures are needed throughout the organization to keep the prices of its products competitive. Two alternatives are being evaluated: downsize the cafeteria staff and offer a reduced menu or contract with an outside supplier. The current cafeteria operation has four employees with a combined base annual salary of €110.000 plus additional employee benefits at 25% of salary. The cafeteria operates 250 days each year, and the costs for utilities and equipment maintenance average €30.000 annually. The daily sales include 100 starters at €4,00 each, 80 sandwiches or salads at an average price of €3,00 each, plus an additional €200 for beverages and desserts. The cost of all cafeteria supplies is 60% of revenues. The plan for downsizing the current operation envisions retaining two of the current employees whose combined base annual salaries total €65.000. A starter menu would no longer be offered, and prices of the remaining items would be increased slightly. Under this arrangement, Mayfair expects daily sales of 150 sandwiches or salads at a higher average price of €3,60. The additional revenue for beverages and desserts is expected to increase to €230 each day. Because of the elimination of the starter, the cost of all cafeteria supplies is expected to decline to 50% of revenues. All other conditions of operation would remain the same. Mayfair is willing to continue to subsidies this reduced operation but will not spend more than 20% of the current subsidy. A proposal has been received from Wilco Foods, an outside supplier who is willing to supply cafeteria services. Wilco has proposed to pay Mayfair €1.000 per month for use of the cafeteria and utilities. Mayfair would be expected to cover equipment repair costs. In addition, Wilco would pay Mayfair 4% of all revenues received above the breakeven point. This payment would be made at the end of the year. All other costs incurred by Wilco to supply the cafeteria services are variable and equal 75% of revenues. Wilco plans to charge €5,00 for a starter course, and the average price for the sandwich or salad would be €4,00. All other daily sales are expected to average €300. Wilco expects daily sales of 66 starters and 94 sandwiches or salads.
Required
1) Determine whether the plan for downsizing the current cafeteria operation would be acceptable to Mayfair Limited. Show your calculations.
2) Is the Wilco Foods proposal more advantageous to Mayfair Limited than the downsizing plan? Show your calculations.
Miyagi Data, Inc., sells earnings forecasts for Japanese securities. What is average collection period?
You are planning to save for retirement over the next 30 years. To do this, you will invest $700 a month in a stock account and $300 a month in a bond account. When you retire, you will combine your money into an account that pays an EAR of 8%. How ..
You have just arranged for a $1,820,000 mortgage to finance the purchase of a large tract of land. The mortgage has an APR of 8.4 percent, and it calls for monthly payments over the next 20 years. However, the loan has an eight-year balloon payment, ..
Of the following options, which would you expect to have the highest option price? A European 1-month put option on a stock whose market price is $90 where the strike price is $100. The standard deviation of the stock price over the past 5 years has ..
What would you ultimately choose to do? What is your financial reasoning behind this choice?
Assume a tax rate of 30% and a discount rate of 12%. What is the depreciation tax shield for this project in year 5?
What does Janice believe the inflation rate will be over the next year?
Stock Y has a beta of 1.3 and an expected return of 8.1 percent. Stock Z has a beta of 0.7 and an expected return of 11 percent. What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other?
Calculate the annual, end of year loan payment. Explain why the interest portion of each payment declines with the passage of time.
Find the present value of each of the four investment opportunities.- Which, if any, opportunities are acceptable?
What will be the effect of any gain or loss on the $500,000 notional difference?
What is the present value? Narrative analysis of this investment alternative?
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd