Reference no: EM133012354
Questions -
Q1. Emperor's Clothes Fashions can invest $5 million in a new plant for producing invisible makeup. The plant has an expected life of 5 years, and expected sales are 6 million jars of makeup a year. Fixed costs are $2.3 million a year, and variable costs are $1.30 per jar. The product will be priced at $2.20 per jar. The plant will be depreciated straight-line over 5 years to a salvage value of zero. The opportunity cost of capital is 10%, and the tax rate is 40%.
a. What is project NPV under these base-case assumptions?
b. What is NPV if variable costs turn out to be $1.50 per jar?
c. What is NPV if fixed costs turn out to be $2 million per year?
d. At what price per jar would project NPV equal zero?
Q2. A project has fixed costs of $1,800 per year, depreciation charges of $200 a year, annual revenue of $7,200, and variable costs equal to two-thirds of revenues.
a. If sales increase by 8%, what will be the percentage increase in pretax profits?
b. What is the degree of operating leverage of this project?
|
Explain the common characteristics of the accounting ethical
: Explain the common characteristics of the accounting ethical related with Integrity principles found across the above professional bodies
|
|
What was the company profit for the period
: By the end of the year Hellena had total assets of $505,000 and total liabilities of $120,000. What was the company profit for the period
|
|
Compute the annual depreciation and prepare its entry
: The salvage valune of the machine is said to Php 10,000 and has a life expectancy of 5 years. Prepare the initial entry, and compute for the annual depreciation
|
|
What was the net impact on darell income
: Forward rate (rupee) -P.77(4/4/2020), P.83(6/30/2020), P.82(8/2/2020). What was the net impact on Darell's income in 2020 as a result of this hedge
|
|
What is the degree of operating leverage of this project
: A project has fixed costs of $1,800 per year, depreciation charges of $200 a year, annual revenue of $7,200, What is the degree of operating leverage
|
|
How can a multinational firm diversify operations
: How can a multinational firm diversify operations? How can it diversify its financing? Do you believe these are effective ways of managing operating exposure
|
|
What is the cost of preferred financing
: Alarm Systems Corporation's preferred stock pays a dividend of $2.80 and sells for $32.00. What is the cost of preferred financing
|
|
What is your impression of an employees first culture
: What is your impression of an "employees first" culture? Would this work in other organizations? Why or why not? What would it take to make it work
|
|
Differences between cash basis and accrual basis accounting
: Using an example to explain the differences between cash basis and accrual basis accounting, and further discuss why adjusting entries are necessary
|