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2 years ago

Polk Products is considering an investment project with the following cash flows:

Business

1 answer:

Andrei [34K]2 years ago

6 0

Answer:

b. 1.86 years

Explanation:

The computation of the project's discounted payback is shown below:-

Year Cash Flows Discounted CFs (at 10%) Cumulative

Discounted CFs

0 -$100,000 -$100,000 -$100,000

1 $40,000 $36,363.64 -$63,636.36

2 $90,000 $74,380.17 $10,743.80

3 $30,000 $22,539.44 $33,283.25

4 $60,000 $40,980.81 $74,264.05

Discounted Payback Period = Years before full recovery +

(Uncovered Cost at start of the year ÷ Cash Flow during the year)

Now we will put the values into the formula

= 1 + ($63,636.36 ÷ $74,380.17)

= 1 + 0.86

= 1.86 years

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Suppose you were hired as a consultant for a company that wants to penetrate the Comp-XM market. This company wants to pursue a

Andreas93 [3]

Answer:

Option B. Chester Company

Explanation:

The company wants to pursue Niche Cost Leader Strategy. In a Niche cost leader strategy the product is highly differentiated and the cost the company charges to its customer is low as apposed to other competitors. The companies that has highly differentiated product and are new entrants usually use this strategy to win a good share of market size.

The strongest competitor would have lowest price, very stable market share price, high investment in plant and equipment, higher production capacity, lowest return on investment, lowest earnings per dollar sales. etc.

Now we will asses different reports and conclude which competitor will be the strongest competitor for the Niche Cost Leader Strategy company. The analysis is given as under:

Lowest Price: If we look at the Production information, Price Column and take the average price of the products of each company then we can conclude that Chester's price of average product is $20, Baldwin has $24.17 and the rest of the competitors are charging high. This means Chester is charging lowest price.
Stable Market Share Price: The vulnerability of share price of Chester is the lowest which stands at $0.45. This means that the stock exchange values the company's share as a stable stock with least vulnerability. (See Stock Market Summary)
Lower Return on Asset and Return on Sales: If we analyze the Selected Financial Statistics then we will acknowledge that Chester also has 2nd lowest Return on Assets and Return on sales which shows that the company is charging lower prices to its customers. Baldwin is not appropriate to consider here because the company is incurring losses hence its Return on Assets and Return on Sales can not be considered as good indication.
Higher Investment in Plant and equipment: The company has 2nd highest investment in plant and equipment with highest Net Book Value of $148k and Baldwin stands at $178k. Now again the higher investment of Baldwin is financed by debt which costs the company more than Chester. This means Chester would be strongest competitor because the company will have to only bear the depreciation cost which is non cash flow in nature and not the interest cost which Baldwin is bearing. (See Income statement for Interest Cost and Balance sheet for Carrying value of the asset).
Production Capacity: Chester has the highest production capacity which means that the company despite its 2nd largest investment in plant and equipment. This means that the plant and machinery of Chester is more innovative which is the reason that the production capacity is higher than other competitors.

From the above analysis it seems that Chester is pursuing Niche Cost Leader Market and is the strongest competitor that the company will face. Hence B is the correct option here.

6 0

2 years ago

How does Chloe Spencer's website make money? (Site 1)

NemiM [27]

Answer:

Google pays her every time someone clicks on a Google ad on her

site.

Explanation:

5 0

1 year ago

Read 2 more answers

Sister Pools sells outdoor swimming pools and currently has an aftertax cost of capital of 11.6 percent. Al's Construction build

pentagon [3]

Answer:

NPV -6,422.07908

The investment is not profitable at current cost of capital os 11.6%

Explanation:

Sister Pools 11.6% after tax cost of capital

Contructions 10.3% after tax cost of capital

- 85,000

cash flow 17,000 for next 7 years

We will calculate the present value of a 7-years annuity of 17,000 at 11.6% rate

We use Sister Pools rate because we are asked for this company and there is no indication about a change in the cost of capital condition.

$C \times \frac{1-(1+r)^{-time} }{rate} = PV\\\\\\\\17,000 \frac{1-(1+0.116)^{-7} }{0.116} = PV\\$

PV = 78,577.92092

Next we subtract the investment cost to get the Net Present Value

78,577.92092 - 85,000 = -6,422.07908

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2 years ago

Instead of trying to appeal to the entire marketplace, smart marketers and smart companies will try to find out ______.

tekilochka [14]

They will likely find out the customer’s liking and groups in which will serve best for their advantages of having to attract more consumers and to sell their products more. They will likely target this goal than to try appealing the market place because the customer will bring more advantages to the company or in field of business and market.

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2 years ago

Chris gilbert, 1966-68, was the first person in college football history, and the only ut player, to rush for more than 1000 yar

Westkost [7]

Distance ran by Chris Gilbert, D = 96 yards
Speed, S = 4.9 s / 40 yards
Time ran by Chris Gilbert, T = D x S
T = (96 yards) x (4.9 s / 40 yards)
T = 11.76 s, total time ran by Chris Gilbert

3 0

1 year ago