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After spending $300,000 for research and development, chemists at Diversi- fied Citrus Industries have developed a new breakfast drink. The drink, called Zap, will provide the consumer with twice the amount of vitamin C currently available in breakfast drinks. Zap will be packaged in an 8-ounce can and will be introduced to the breakfast drink market, which is estimated to be equivalent to 21 million 8-ounce cans nationally. One major management concern is the lack of funds available for marketing. Accordingly, management has decided to use newspapers (rather than television) to promote Zap in the introductory year and distribute Zap in major metropolitan areas that account for 65 percent of U.S. breakfast drink volume. Newspaper advertising will carry a coupon that will entitle the consumer to receive $0.20 off the price of the first can purchased. The retailer will receive the regular margin and be reimbursed for redeemed coupons by Diversified Citrus Industries. Past experience indicates that for every five cans sold during the introductory year, one coupon will be returned. The cost of the newspaper advertising campaign (excluding coupon returns) will be $250,000. Other fixed overhead costs are expected to be $90,000 per year. Management has decided that the suggested retail price to the consumer for the 8-ounce can will be $0.50. The only unit variable costs for the product are $0.18 for materials and $0.06 for labor. The company intends to give retailers a margin of 20 percent off the suggested retail price and wholesalers a margin of 10 percent of the retailers’ cost of the item. d. What is the first-year break-even share of market?
Ensure best resources allocations regarding to the quantity and competences and ensure that all undertake projects are alignment to organization strategy and examine the degree of strategy linkage.
Epley Industries stock has a beta of 1.30. The company just paid a dividend of $.30, and the dividends are expected to grow at 4 percent. The expected return on the market is 13 percent, and Treasury bills are yielding 5.1 percent. The most recent st..
Consider the following binomial option pricing problem involving an American call. This call has two periods to go before expiring. Its stock price is 30, and its exercise price is 25. The risk free rate is .05, the value of u is 1.15, and the value ..
financial statement analysis the specific purposes of this project are1. apply to real company the basic knowledge and
We have explored different capital structures. It is noted that initially, leverage can be the least expensive form of capital. However, if potential lenders feel a firm is overly leveraged, they may charge a punitive rate, or refuse to lend all toge..
Rosco Taxi Service uses the units-of-activity method in computing depreciation on its taxicabs. Each cab is expected to be driven 143,000 miles. Taxi no. 10 cost $40,000 and is expected to have a salvage value of $470. Taxi no. 10 is driven 33,100 mi..
A stock has an expected return of 13.2 percent, the risk-free rate is 8.5 percent, and the market risk premium is 10 percent. What must the beta of this stock be?
For a company whose target capital structure calls for 50% debt and 50% common equity, which of the following statements is CORRECT
Victor has a $10,000 cash-value policy purchased 15 years ago when he was 25 years old. The policy will be paid at age 65. Find the cash value of insurance. Jack earned 6.5% last year on a $7500 investment in taxable bonds. If the applicable tax rate..
You purchase a Reit for $50. It distributes $3 consisting of $1 in income, $0.50 in long-term capital gains, $0.30 in short-term capital gains, and $1.20 in return of capital. After a yr., you sell the stock for $56.00 if you are in the 30 % income b..
Two years ago, Trans-Atlantic Airlines sold $250 million worth of bonds at $1,000 each. These semi-annual bonds had a maturity of 12 years and a coupon rate of 12.5%. Today these bonds are selling for $1,000. Determine the yield-to-maturity.
One year ago, you purchased a stock at a price of $32 a share. Today, you sold the stock and realized a total return of 25 percent. Your capital gain was $6 a share. What was your dividend yield on this stock?
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