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The Rodriguez Company is considering an average-risk investment in a mineral water spring project that has a cost of $150,000. The project will produce 1,000 cases of mineral water per year indefinitely. The current sales price is $138 per case, and the current cost per case (all variable) is $105. The firm is taxed at a rate of 34 percent. Both prices and costs are expected to rise at a rate of 6 percent per year. The firm uses only equity, and it has a cost of capital of 15 percent. Assume that cash flows consist only of after-tax profits, since the spring has an indefinite life and will not be depreciated.a. Should the firm accept the project? (Hint: The project is perpetuity so you must use the formula for perpetuity to find its NPV.)b. If total costs consisted of a fixed cost of $10,000 per year and variable costs of $95 per unit, and if only the variable costs were expected to increase with inflation, would this make the project better or worse? Continue with the assumption that the sales price will rise with inflation.
What are examples of unusual or dysfunctional costing information that has been seen and/or decisions made using that costing information?
truefalse question1.an income statement reports the firms revenues and expenses for a specific period of time such as
Inflex Corp. uses credit terms of 3/15 net 40. 30% of their customers take advantage of the discount and pay on day 15, 70% of their customers pay on day 40. What is Inflex Corp.'s days sales outstanding? Please show work.
Write a 400-word paper on your organization in which you complete the following: Identify and evaluate contemporary issues in international financial management.
Critically evaluate the importance of capital structure and the cost of capital in the efficient financial management of large companies.
what is the operating leverage effect and what causes it? what are the potential benefits and negative consequences of
Discuss the accounting for leases.
Calculate the value of each investment based on your required rate of return and which investment would you select? Why?
calculate the incremental depreciation on the new versus the old machine. D) determine the net present value of the new machine. should they purchase the new manchine.
hillman inc. has net income of 160000 weighted-average shares of common stock outstanding of 50000 and preferred
D. Butler Inc. needs to raise $14 million. Assuming that the market price of the firm's stock is $95, and flotation costs are 10 percent of the market price, how many shares would have to be issued? What is the dollar size of the issue?
Supply and Demand. The economic times in which we live are fascinating for a number of reasons. We have recently seen a recession, heard talk of a "recovery", and lately seen gasoline prices change.
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