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Another utilization of cash flow analysis is setting the bid price on a project. To calculate the bid price, we set the project NPV equal to zero and find the required price. Thus the bid price represents a financial break-even level for the project. Guthrie Enterprises needs someone to supply it with 157,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've decided to bid on the contract. It will cost you $1,970,000 to install the equipment necessary to start production; you'll depreciate this cost straight-line to zero over the project's life. You estimate that in five years this equipment can be salvaged for $167,000. Your fixed production costs will be $282,000 per year, and your variable production costs should be $10.20 per carton. You also need an initial investment in net working capital of $147,000. If your tax rate is 40 percent and you require a 11 percent return on your investment, what bid price per carton should you submit?
Calculate the profitability index for Project A and Project B. Which project is better?
Healthy Foods, Coirporation, sells 50 pound bags of grapes to the military for $10 a bag. The fixed expenses of this operation are $80,000, while the variable costs of grapes are $.10 per pound.
Computation of contribution margin and break-even point and target operating income and What will be the operating income
Computation of Amount of Insurance to be carried using Human Value approach and Your estimates if you increased or lowered the
You must determine the intrinsic value of Tsetseko Technologies' stock. Tsetseko's end-of-year free cash flow (FCF) is expected to be $17.50 million, and it is expected to increase at a constant rate of 7 percent a year thereafter.
If the selling price per deck of cards will be the same under each method, at what level of output will the two methods produce the same net operating income (EBIT)?
Assume Toyota has nonmaturing preferred stock outstanding that pays a $1.00 quarterly dividend and has a required return of 12% APR. Determine the stock worth?
Ben remembers from finance class that the shorter the amortization period, the less total interest you will pay. Calculate how much interest they would save if they made monthly payments over a 20 year amortization rather than a 25 year amortiza..
What is the present value of a cash flow stream of $1,000 per year annually for 15 years that then grows at 4 percent per year forever when the discount rate is 13 percent? Show formula used.
Utilization of Relevant cost for Decision Making and Identify at least one relevant costing decision used by the management at UniCo
Determine which method of financing has traditionally made up the majority of external financing by corporations?
Inventory conversion period of 50 days
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