Two alternative locations are under consideration for a new plant: Jackson, Mississippi, and Dayton, Ohio. The Jackson location is superior in terms of costs. However, management believes that sales volume would decline if this location were chosen because it is farther from the market, and the firm's customers prefer local suppliers. The selling price of the product is $350 per unit in either case. Use the following information to determine which location yields the higher total profit per year: Location Jackson Dayton The annual profit from Jackson is $ Annual Fixed Cost $2,100,000 $3,000,000 Variable Cost per Unit $45 $95 Forecasted Demand per Year 35,000 units 39,000 units (Enter your response as an integer.)
Q: Gluon Incorporated is considering the purchase of a new high pressure glueball. It can purchase the…
A: Equivalent annual cost represents the cost of an asset incurred relating to operating &…
Q: Mary will receive $12,000 per year for the next 10 years as royalty for her work on a finance book.…
A: In the given case, we have provided the annual cash inflows , number of years and the opportunity…
Q: Calculating the Cost of Credit Card Purchases Directions Use the interest rate of 18% and an annual…
A: The cost of credit represents the amount charged to the borrower by the lender in a credit…
Q: What are the similarities and differences in preferred stock and debt? When would you use either or…
A: A company's capital structure is the combination of several funding sources, including debt, stock,…
Q: Greg owes two debt payments - a payment of $5420 that was due in 11 months ago and a payment of…
A: With number of compounding in a year (m) and stated annual rate (r), the effective annual rate can…
Q: Ivy bought 10 packs of cups for her holiday party. A pack of MEDIUM cups costs $1.80 and a pack of…
A: Cost accounting is one of the accounting system being used in business. Under this, different type…
Q: According to MM propositions, levered firms have a higher value because of interest tax shield. Who…
A: So whenever we are dealing with the concept of interest taxi it is said to be the benefit which is…
Q: For the following equation: S=P(1+r)n where P=3,000 S=11,000 and n=5, the value of r is…
A: Hi studentSince there are multiple questions, we will answer only first question.Time value of money…
Q: ed Hawk, Incorporated, is considering a change in its cash-only sales policy. The new terms of sale…
A: Company gives credits to the customers to increase the sales but that increase in sales is…
Q: calculate indexed dividend % if total dividend paid is rs 445,000 and base market capitalization of…
A: Dividend percentage refers to the dividend yield, it is the ratio of dividend per share to the…
Q: Choc Full of Good Inc., a producer of powdered hot chocolate, has just received a large order that…
A: The hedge ratio represents the ratio of the value of the futures contracts to the value of the…
Q: suppose you purchae a 20 year treasury bond with a 5% annual coupon, initially trading at par. 8…
A: A bond refers to an instrument that the company issues for raising debt capital from investors. It…
Q: Sean's investment of $81,400.00 in a fund matured to $155,777.80 in 8 years. If the interest in the…
A: The periodic interest rate refers to the return that the investment provides for each period. The…
Q: Wellington Jumbo Crab's stock currently sells for $100 per share. Last week the firm issued rights…
A: Given:Stock price = $100 per shareSubscription price = $20 per shareNumber of rights = 3
Q: o & Grace deposit $750 at the end of every three months for 7 years into an account earning 6.1%…
A: More is the compounding of interest than more is the effective rate of interest and more is the…
Q: An amount of $15,000 is borrowed from a bank to finance a purchase of a new car for a period of 4…
A: A loan refers to a contract between two parties where money is forwarded by one party to the other…
Q: A stock is about to go public and listed on the S &P 500. Using the following information calculate…
A: The value of a stock can be estimated by taking the sum of discounted future expected dividend…
Q: You are considering a European put option and a European call option on ABC Ltd and have available…
A: To determine if an arbitrage profit can be earned, we need to compare the cost of creating a…
Q: You are considering a new product launch. The project will cost $2,050,000, have a 4-year life, and…
A: Break even level of output or sales is calculated as shown below.
Q: Traded stocks in the capital markets are not Shariah-compliant when Select one: a.The company whose…
A: Traded stocks are shares of ownership in a company that are bought and sold on stock exchanges or…
Q: Two years ago, your firm bought a new machine for $5,000. The machine was depreciated on a MACRS 3…
A: Here,Purchase Price of Machine is $5,000Time Period when machine purchased is 2 years agoSale Price…
Q: (Related to Checkpoint 8.3) (CAPM and expected returns) a. Given the following holding period…
A: Risk-free rate6%Beta1.36MonthSugita CorpMarket12.2%1.2%20.002.0%31%3%4-1%-1%57%7%67%0%
Q: Chrome Company is considering the purchase of a machine for $24,000 that would reduce operating…
A: Companies can boost their total profitability, increase sales, and minimize expenses by choosing and…
Q: A-f-t-e-r- -g-r-a-d-u-a-t-i-n-g- -f-r-o-m- -c-o-l-l-e-g-e-,- -“-Y-O-U-”- -t-o-o-k- -a- -j-o-b- -a-s-…
A: Building a strong credit record is important for establishing a solid financial foundation. Here are…
Q: A firm is considering a potential investment project loss in free cash flow of $100 Million, but…
A: Net Present Value (NPV) is a discounting technique of capital budgeting decision. It is calculated…
Q: Cooperton Mining just announced it will cut its dividend from $3.78 to $2.37 per share and use the…
A: When the company receives profits and distributes them among the shareholders. That share of profit…
Q: Assume you recently have 6,000 in a bank. Asusume that you are going to receive 160 monthly until…
A: It is calculated by discounting all the cash flows to be received in the future and taking the sum…
Q: Your portfolio has a beta of 1.4. The portfolio consists of 30 percent U.S. Treasury bills and 50…
A: Beta of portfolio can be computed by following formula-Bp = ( Br × Wr ) + ( Bm × Wm) + ( Bs ×…
Q: Use the basic equation for the capital asset pricing model (CAPM) to work each of the following…
A: Hi Student,Thanks for the questions. As per Bartleby answering guidelines we can answer only the…
Q: We are evaluating a project that costs $864,000, has an eight-year life, and has no salvage value.…
A: Net Present Value is a financial metric used to evaluate the profitability of an investment project.…
Q: prepare statement of cash flow for indirect only
A: Statement of cash flows is one of the important financial statement being prepared in business. It…
Q: Collect the key benefits to small investors investing through mutual funds!Also list the most…
A: Investing through mutual funds offers several key benefits to small investors. These benefits…
Q: 1. Two mutually exclusive alternatives requiring different investments are being considered. The…
A: Incremental IRR refers to the Internal rate of return of the two alternatives for which the…
Q: Schlitz bought some new material which cost $1,000 and which had credit terms of 1/10 net 30.…
A: 1/10 net 30 means the trade credit offered to a customer for the sales of goods and implies if the…
Q: The following trial balance was extracted (taken) from the books of Brussels Ltd, a furniture store,…
A: Financial Statement comprises of Income Statement, Balance Sheet.Income Statement: It is a part of…
Q: Frank purchased 100 shares of Fox Company stock for $100.75 per share. To purchase this stock Frank…
A: The margin account refers to the trading account where the investor contributes a certain percentage…
Q: Investment Timing Option: Decision-Tree Analysis Kim Hotels is interested in developing new hotel in…
A: 1. Net Present value (NPV).Net present value is computed by deducting initial investment from…
Q: Which of the following shows the percentage of profit remaining after deducting cost of sales?( On…
A: The correct answer is "Gross Profit Margin."Gross Profit Margin is calculated by subtracting the…
Q: Safewell Co obtains a discount loan at a 12 percent interest rate. Safewell borrows $100,000 for…
A: Effective interest rate if the amount of interest rate which is charged on the principal amount…
Q: In the highest-risk Standard & Poor’s rating category that is a CCC/C rating, more than half of the…
A: In the highest-risk Standard & Poor's rating category, which is typically denoted as CCC/C, more…
Q: Finance The time value of money refers to: a) Factors that show future value b) Factors that…
A: Time Value of Money refers to the concept that the sum of money that is in hand today will not worth…
Q: Investment X offers to pay you $6,000 per year for nine years, whereas Investment Y offers to pay…
A: Long-term planning and smart decision-making are encouraged by NPV. NPV analysis assists businesses…
Q: Diamond Boot Factory normally sells its specialty boots for $35 a pair. An offer to buy 70 boots for…
A: Differential income refers to teh change in the income of one project compared with another…
Q: At the beginning of last year, Thomas purchased 100 shares of the Web.com Fund at an NAV of $34.64…
A: We make investments in financial assets like equities and mutual funds with the hope of seeing…
Q: Budweiser has gotten a 90-day bank loan equaling $10,000 with an annual interest rate of 15%,…
A: Number of day = n = 90 daysLoan Amount = a = $10,000Interest rate = r = 15%
Q: Travis Corporation's ROE last year was 30 percent, but its management has developed a new operating…
A: Return on equity (ROE) is one of the profitability ratio being used in business. This shows how much…
Q: From the following cash flow diagram of nine years and 6% interest rate, find the present value, P.
A: Present value gives the present value of a future cashflow.…
Q: An engineer plans to deposit $3000 at the end of each year into a retirement account that pays 4%…
A: FV =P x [(1+r)n - 1] / rWhere: FV = Future value P = Amount deposited each year r = Interest rate…
Q: Your grandfather would like to share some of his fortune with you. He offers to give you money under…
A: Scenario 1Scenario 2Scenario 3Payment (A)$8,750$50,050$98,650Interest Rate (B) 6%6%6%Periods…
Q: You've collected the following information from your favorite financial website. 52-Week Price Lo…
A: Growth rate, g = 4% Current stock dividend, D0 = $0.38Current stock price, P0 = $14.10
Step by step
Solved in 3 steps with 2 images
- Southland Corporation’s decision to produce a new line of recreational products resulted in the need to construct either a small plant or a large plant. The best selection of plant size depends on how the marketplace reacts to the new product line. To conduct an analysis, marketing management has decided to view the possible long-run demand as low, medium, or high. The following payoff table shows the projected profit in millions of dollars: What is the decision to be made, and what is the chance event for Southland’s problem? Construct a decision tree. Recommend a decision based on the use of the optimistic, conservative, and minimax regret approaches.Two alternative locations are under consideration for a new plant: Jackson, Mississippi, and Dayton, Ohio. The Jackson location is superior in terms of costs. However, management believes that sales volume would decline if this location were chosen because it is farther from the market, and the firm's customers prefer local suppliers. The selling price of the product is $375 per unit in either case. Use the following information to determine which location yields the higher total profit per year: Location Jackson Dayton Annual Fixed Cost $2,100,000 $3,000,000 Variable Cost per Unit $45 $80 Forecasted Demand per Year 40,000 units 39,000 units The annual profit from Jackson is $8575000. (Enter your response as an integer.)Expo Lube is interested in producing and selling an industrial line of oil filters. Market research indicates that wholesale customers are currently willing to pay $8 for similar filters, and that Expo Lube could sell 80,000 units per year at that price. a. If Expo Lube requires a 21 percent return on sales, what is its target cost for the proposed industrial line of filters? b. Assume that market research reveals several of Expo Lube’s direct competitors are likely to lower the wholesale price of similar filters to $7 per unit. To remain competitive, what will Expo Lube’s target cost have to be to maintain a 21 percent return on sales? c. At a wholesale price of $7, Expo Lube estimates that it can sell 83,800 industrial filters per year instead of 80,000 units. Assuming its target costs are attainable, how much more or less profit per year will the company earn at the $7 wholesale price compared to the initial wholesale price estimate of $8?
- Marketing manager suggests the company should sell CHANTEQ in both states as he is confident the market would be good. However, the direct material cost will increase by 10%. Advise the management on how many units to be sold for both states to maintain its annual profit.A manager is trying to decide whether to buy one machine or two. If only one is purchased and demand proves to be excessive, the second machine can be purchased later. Some sales will be lost, however, because the lead time for producing this type of machine is six months. In addition, the cost per machine will be lower if both are purchased at the same time. The probability of low demand is estimated to be 0.20. The after-tax net present value of the benefits from purchasing the two machines together is $80,000 if demand is low and $180,000 if demand is high. If one machine is purchased and demand is low, the net present value is $110,000. If demand is high, the manager has three options. Doing nothing has a net present value of $110,000; subcontracting, $160,000; and buying the second machine, $130,000. a. Choose the correct decision tree for this problem. Note that each payoff is given in thousands of dollars.A newly formed company must decide on a plant location. There are two alternatives under consideration: locate near the major raw materials or locate near the major customers. Locating near the raw materials will result in lower fixed and variable costs than locating near the market, but the owners believe that there would be a loss in sales volume because customers tend to favour local suppliers. Revenue per unit will be $160 in either case. Annual fixed costs ($ millions) Variable cost per unit Expected annual demand (units) Near raw materials Near customers 1. Using the above given information, determine the profits for each alternative. (Negative answers should be indicated by a minus sign.) 64 2. Which location would produce greater profit? O Near raw materials O Near customers Near Raw Materials $0.90 $ 40 8,600 Near Customers $1.00 $ 45 13,300
- Grove Audio is considering the introduction of a new model of wireless speakers with the following price and cost characteristics. Sales price $ 450.00 per unit Variable costs 210.00 per unit Fixed costs 764,000 per year Assume that the projected number of units sold for the year is 4,750. Consider requirements (b), (c), and (d) independently of each other. What will the operating profit be? What is the impact on operating profit if the sales price decreases by 20 percent? Increases by 10 percent? What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent? Suppose that fixed costs for the year are 20 percent lower than projected, and variable costs per unit are 10 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much?Littlefield Partners produce a part sold to agricultural equipment suppliers. For the last year (Year 1), the price, costs, and volume of the part were as follows: Unit price Unit variable cost Annual fixed cost Sales volume Managers at Littlefield believe that next year (Year 2), conditions in the industry will result in lower prices, both for the part they sell and the materials they purchase. Their best estimates at this time are that the selling price will decline by 10 percent while the unit variable cost will decline by 5 percent, taking into account the changes in both materials and labor. They believe that fixed costs will remain the same. $ 60 $ 40 Required: a. What was the break-even volume in number of units last year (Year 1)? b. Assume that the managers estimates are correct for Year 2. How many units would have to be sold in Year 2 to earn the same operating profits as earned in Year 1? Required A Required B $ 3,320,000 c. Assume that the managers' estimates on price and…Pet Hotel, Inc. operates three luxury pet boarding facilities and expects the following results for the coming year. {picture} Answer each of the following questions independently. 1. Fixed costs are all allocated and unavoidable. What will happen to profit if Pet Hotel discontinues operations at Pet Spa? 2. Suppose now that $25,000 of the fixed costs shown for Pet Spa is avoidable. What will happen to total profits if Pet Hotel discontinues operations at Pet Spa?
- International Paper is trying to find the best paper rolling machine to maximize sales volume. There are three machine options: Machine A, Machine B, and Machine C. Annual revenue is expected to be at one of three possible levels, High, $6 million; Medium, $3 million; or Low, $2 million; but is impacted by machine selection as the probabilities show in the table below: High Revenue Medium Revenue Low Revenue Machine A .1 .3 .6 Machine B .4 .4 .2 Machine C .5 .4 .1 Which machine should International Paper purchase to maximize the expected revenue, and wh sthe expected revenue? Group of answer choices Machine A, $2.7 million Machine B, $4.0 million Machine B, S4.6 million Machine C, $4.4 million none of the answers provided are correctGrove Audio is considering the introduction of a new model of wireless speakers with the following price and cost characteristics. Sales price $ 439.00 per unit Variable costs 199.00 per unit Fixed costs 687,000 per year Assume that the projected number of units sold for the year is 4,200. Consider requirements (b), (c), and (d) independently of each other. Required: What will the operating profit be? What is the impact on operating profit if the sales price decreases by 20 percent? Increases by 10 percent? What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent? Suppose that fixed costs for the year are 20 percent lower than projected, and variable costs per unit are 10 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much?A producer of chairs is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs of $10000 per month and a variable costs of $1.50 per unit produced. Each item is sold to the retailers at a price that averages $2.10 per unit. a. What volume per month is required to break even? b. What profit would be realized on a monthly volume of 65000 units? c. What volume is needed to obtain a profit of $15000 per month? d. What volume is needed to provide a revenue of $23000 per month