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marin [14]
1 year ago
13

You have determined that an OCF of $142,098 will result in a zero net present value for a project, which is the minimum requirem

ent for project acceptance. The fixed costs are $418,000 and the contribution margin per unit is $87.20. The company feels that it can realistically capture 4.5 percent of the 120,000 unit market for this product. The required rate of return is 11 percent. Should the company develop the new product
Business
1 answer:
Arturiano [62]1 year ago
0 0

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 .

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Stormer Company reports the following amounts on its statement of cash flow: Net cash provided by operating activities was $31,5
tekilochka [14]

Answer:

The ending cash balance is $ 11,700.

Explanation:

<u>Calculating the ending cash balance : </u>

Ending cash balance = Net cash provided by operating activities - Net cash used in investing activities - Net cash used in financing activities + beginning cash balance  

Ending cash balance = 31,500 - 11,400 - 14,100 + 5,700  

Ending cash balance = $11,700

4 0
1 year ago
You are given the following information for Ted’s Dread Co.: sales = $82,000; costs = $57,700; addition to retained earnings = $
vazorg [7]

Answer:$6,843.33=Depreciation

Explanation:

To Calculate the depreciation expense for the company

Net income = Dividends + Addition to retained earnings

Net income = $3,320 + 7,500

Net income = $10,820

Also,

Net income = Taxable income - (Taxable income)(Tax rate)

Net income = Taxable income(1 - Tax rate)

Therefore,

Taxable income = Net income / (1 - Tax rate)

Taxable income = $10,820 / (1 - 0.25

Taxable income = $10,820/0.75 =14,426.67

But

EBIT -interest = taxable income,So

EBIT = Taxable income + Interest

EBIT = $14,426.67+3,030

EBIT = 17,456.67

EBIT = Sales - Costs - Depreciation

$17,456.67 = $82000 - 57,700 - Depreciation

$17,456.67= 24,300-Deprecistion

Depreciation =24,300-17456.67 =

$6,843.33

4 0
1 year ago
Jamal was recently hired as a sales representative for a pharmaceutical company. He notices that all the other sales reps "pad"
il63 [147K]

Answer: Conformity

Explanation: Ethics trap refers to the situation in which an individual finds difficult to assess what is morally correct for him or her and what is not.

  Conformity refers to the ability of an individual to match the customs and beliefs of a group to mingle with that particular group.

In the given case, Jamal has been working in the company where all the members have been cheating on their accounts except for him. This urges Jamal to do the same for being a part of group.

Hence we can conclude that the correct option is C.

7 0
1 year ago
A firm promotes men to higher positions than women despite women performing better at the workplace. This is because the company
djyliett [7]

Answer:

The correct answer is letter "D": sex discrimination.

Explanation:

Sex discrimination arises in front of any differentiated treatment an individual may give to men and women believing either one of the two is inferior to the other. There are several features conceived by stereotypes that could lead a person to provide benefits to a male such as women being weaker or to females such as men are not sensitive enough to work for customer service departments.

Sex discrimination is forbidden in any form. In the U.S., the Equal Employment Opportunity Commission (EEOC) is in charge of reviewing and enforcing laws produced for any type of discrimination at work because of judging people based on their <em>race, color, religion, age, disability, nationality, sexual preference or sex.</em>

4 0
1 year ago
On November 1, Orpheum Company accepted a $12,400, 90-day, 8% note from a customer to settle his account. What entry should be m
maksim [4K]

Answer:

Dr Note Receivable $12,400

Cr Accounts Receivable $12,400

Explanation:

Based on the information given we were told that on November 1 the company accepted a note from a customer in order to help settle the customer account of the amount of $12,400 which means that the Journal entry that should be made on the November 1 to record the acceptance of the note will be :

Dr Note Receivable $12,400

Cr Accounts Receivable $12,400

3 0
11 months ago
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