User Account

All Pages

What is the net present value of expanding the production

Assignment Help Accounting Basics
Reference no: EM132753264

Question: X Company is thinking about expanding the production of Product A and eliminating Product B. Expanding sales of A should result in additional firm profits of $8,000 per year for the next 7 years, but will require the purchase of some additional equipment, costing $13,000. This equipment should be worth $3,500 at the end of 7 years.

By eliminating Product B, the firm will lose the product's $7,000 annual contribution margin but will save $12,000 of annual fixed costs.

Assuming a discount rate of 7%, what is the net present value of expanding the production of Product A and eliminating Product B?

Reference no: EM132753264

Questions Cloud

Find what will be the credit to d capital account : The ABC partnership is comprised of A, B, and C. What will be the credit to D's capital account assuming the goodwill method is used?
What is the consolidated sales revenue : On 1/1/2016, Choco acquired 70% of Cake. Choco paid $700,000 and acquisition date fair value of non-controlling interest (NCI) is $300,000. On 1/1/2016.
Calculate the net present value of the loan : Delta is also evaluating the use of a 4-year, 5% loan with proceeds of £375,000. The loan calls for equal annual principal payments.
What is the value of the bond : Suppose you buy a bond that will pay $1000 in 10 years along with an annual coupon payment of $50. The interest rate is 4%. What is the value of the bond
What is the net present value of expanding the production : X Company is thinking about expanding the production of Product A and eliminating Product B. Expanding sales of A should result in additional firm profits.
Compute the price of the stock : The new dividend after 12 months will represent D1. The required rate of return (Ke) is 14 percent. Compute the price of the stock (P0)
Explain the different categories of financial assets : Explain the different categories of financial assets (such as passive investments) and their measurement under IFRS and ASPE. Note: Use IFRS 9 as the IFRS.
Domain of financial management : Select a topic in the domain of Financial Management.
Find the equilibrium interest rate : How many units Yi of each of the securities a consumer would need to hold in order to ensure that she will receive the state-dependent payout (ZH, ZM, ZL)

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd