Answer:
The company should not develop the new product as The operation cash flow is too low as compared to the OCF that results in zero NPV
.
Explanation:
In order to know if the company should develop the new product we would have to make the following calculations:
The No, of units the company expects to sell = Market share*Market size = 4.5%*120,000 = 5,400
Total contribution = No. of units sold*contribution margin per unit = 5400*87.20 = $470,880
Fixed costs = $418,000
Profit before tax = Total contribution - Fixed costs = $470,880 - $418,000 = $52,000
Net profit = (1-Tax rate)*Profit before tax = (1-34%)*$52,000 = $34,320
Since there are no depreciation costs(assumed), net profit is the operating cash flow.
Therefore, the company should not develop the new product as The operation cash flow is too low as compared to the OCF that results in zero NPV
.
The future value of a current investment is calculated through the equation,
F = P x (1 + i)^n
where F is the present value, F is the future value, i is the nominal interest rate, and n is the number of years.
Substituting the known values,
F = ($375)(1 + 0.03)^1 = $386.25
Hence, the answer to this item is letter C.
Answer:
a. real interest rate is 0.217 or 21.7%.
b. saving = 134
, investment is 332
, consumption is 3666.
Explanation:
a) Y = Cd + Id + Gd
Where Y= output
Cd= consumption
Id= Investment purchases
Gd=Government purchases
Y= (3600 - 2000r + 0.10Y) + (1200 - 4000r) + 1000
Y=5800-6000r+0.10Y
0.9Y=5800-6000r
At full employment Y=5000
Putting the value of Y in the above equation
0.9*5000=5800-6000r
5800-4500=6000r
r=0.217
Therefore real interest rate is 0.217 or 21.7%.
(b) Sd = Y - Cd - G
where Sd is national saving
Sd = Y - (3600 - 2000r + 0.1Y) - 1200
Sd = 5000-(3600 - 2000*0.217 + 0.1*5000) - 1200 =5000-3600+434-500-1200 = 134
Therefore, saving = 134
Id= 1200-4000*0.217 =332
Therefore, investment is 332
Cd= 3600-2000r+0.10Y=3600-434+500=3666
Therefore, consumption is 3666.
Answer:
the equivalent units of production is 250 units
Explanation:
The computation of the equivalent units of production is units under FIFO method is shown below:
= Opening inventory balance in units + additional units - ending inventory balance units
= 25 units + 275 units - 50 units
= 250 units
hence, the equivalent units of production is 250 units
We simply applied the above formula so that the correct value could come
And, the same is to be considered
Answer:
20% is the ROI of division A
8% is the ROI of division B
16% is the ROI of division C
Explanation:
Find the attachments for the explanation
