What happens to its profits if it accepts the offer

Assignment Help Finance Basics
Reference no: EM131146712

Computer Products Corp. sells peripheral equipment used by both private businesses and the government. Due to a recession, Computer Product's sales have declined by 100,000 units and it now has 200,000 units of excess capacity. All of its current sales are to private sector customers and each pays $12.00 per unit for the equipment. The sales price is equal to 150% of average variable costs. A government agency has offered to purchase 300,000 units at $10.00 each. If Computer Products accepts the offer, it will not be able to fill 100,000 units of its expected orders from private sector customers over the next few months, although the inability to meet customer demand is not expected to affect future sales.

a. Should Computer Products accept the offer to supply 300,000 units at $10 each to the government agency? What happens to its profits if it accepts the offer?

b. Would your answer change if the inability to meet private sector customer demand reduces sales of 50,000 during this (ignore any effects beyond this period)?

Reference no: EM131146712

Questions Cloud

What are the five characteristics of good job design : What are the differences among job enrichment, job enlargement, job rotation, job specialization, and employee empowerment?
Discuss in detail the evolution of advertising : Discuss in detail the evolution of advertising for Under Armour. How did Under Armour's advertising efforts begin and what is the company doing today? Include television, print, and social media for Under Armour in your answer.
Critically and effectively assess the value of theories : Critically and effectively assess the value of theories, concepts and models to the practices of the service sector and how they manage service quality
Utilize critical thinking in your personal-professional life : Describe the significant ways in which you would be able to utilize critical thinking in your personal and professional life. Discuss at least two (2) key concepts that you felt were most impactful to you this term and the manner in which you might u..
What happens to its profits if it accepts the offer : a. Should Computer Products accept the offer to supply 300,000 units at $10 each to the government agency? What happens to its profits if it accepts the offer? b. Would your answer change if the inability to meet private sector customer demand reduce..
Show how these two chainages were determined : Figure 13.18 shows proposed curb locations, together with offset stakes for the north-side curb. The straight section of curb begins at station 0 + 15 and ends at station 2 + 10. With the aid of a sketch, show how these two chainages were determin..
Why is there a social cost to monopoly power : Why is there a social cost to monopoly power? If the gains to producers from monopoly power could be redistributed to consumers, would the social cost of monopoly power be eliminated? Explain briefly.
The inspection department of a chemical packaging plant : Three segments (A, B, and C) of Trump Enterprises have net sales of USD 300,000, USD 150,000, and USD 50,000, respectively. A decision is made to allocate the pool of USD 25,000 of administrative overhead expenses of the home office to the segments, ..
Globalisation and multinational firm host country relations : At its half yearly meeting a number of issues were raised. You are required to write a 2500 word report responding to the following requests.

Reviews

Write a Review

Finance Basics Questions & Answers

  Why is a companys capital structure as measured by debt and

why is a companys capital structure as measured by debt and equity ratios important to financial statement

  Lasa-strategic analysis-organizational-competitive

The goal of conducting a competitor analysis is to gather information about the company's competitors and systematically formulate a strategy to become the market leader in the industry.

  Find company average collection period

Crasler Corporation net income last year was $100,000. The Corporation paid preferred dividends of $20,000 and its average common stockholders' equity was $580,000.

  Identify and explain importance of capital budgeting

Identify and explain importance of capital budgeting. What the purpose of capital budgeting.

  Big steves makers of swizzle sticks is considering the

big steves makers of swizzle sticks is considering the purchase of a new plastic stamping machine. this investment

  How much will the total income available to stockholders

Assume that Western Exploration Corp. is considering the acquisition of Ogden Drilling Company. The latter has a $510,000 tax loss carryforward. Projected earnings for the Western Exploration Corp. are as follows.

  What will be levine''s stock value if the previous dividend

Investors require a 15 percent rate of return on Levine Company's stock (rs =15%). a. What will be Levine's stock value if the previous dividend was D0 = $2 and if investors expect dividends to grow at a constant compound annual rate of (1) = percent..

  Determining best evaluation of company-s cost of equity

If stock sells for $39 per share, Determine your best evaluate of company’s cost of equity? Answer in a %.

  Correlation of the project cash flows

Corporation planning two potential projects, X and Y. In assessing the projects' risks, the corporation estimated the beta of each project versus both the company's other assets and the stock market,

  Hat are advantages of the alternative that you have selected

Analyze the alternatives presented and make a recommendation on purchasing the Jaguar. Be sure to provide support for your recommendation - why do you prefer the stated alternative? What are the advantages of the alternative that you have selected..

  Describe the workings of any home buyer assistance schemes

What is a potential solution for John, and name a provider that could assist - Identify and describe the key factors that must be taken into consideration when assessing whether a credit facility is ‘not unsuitable' for a borrower.

  What is the value of the stock to an investor

New age inc. paid a dividend yesterday of $2.00 per share, new age management expects the dividend to increase next year to $3.00 annually. if the dividend is expected to stay at $3.00 per yera for the foreseeable future.

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