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Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $160. The materials cost for a standard diamond is $60. The fixed costs incurred each year for factory upkeep and administrative expenses are $218,000. The machinery costs $2.1 million and is depreciated straight-line over 10 years to a salvage value of zero.
a. What is the accounting break-even level of sales in terms of number of diamonds sold? (Do not round intermediate calculations.) Break-even sales diamonds per year
b. What is the NPV break-even level of diamonds sold per year assuming a tax rate of 40%,
a 10-year project life, and a discount rate of 12%? (Do not round intermediate calculations. Round your answer to the nearest whole number.) Break-even sales diamonds per year
The correlation coefficient between stock B and the market portfolio is 0.8. The standard deviation of stock B is 35% and that of the market is 20%. Calculate the beta of the stock.
Bill O'Blarney tells you that he plans to give you $1 million as a birthday present on your 75th birthday. You are now 25—and a bit skeptical. You suggest that he deposit the present value of this nice gift today in an investment account for you. If ..
Porter bonds were issued five years ago with a 20 year maturity. The bond has a call provision that allows them to pay off the debt anytime after ten years by compensating bond holders with an extra year’s interest at the coupon rate. The bond’s coup..
An investor has a 10 security portfolio with a beta of 1.5, each with a market value of $5,000. If the investor wants to reduce the overall beta to 1.4 by eliminating a risk security with a beta of 1.7, what would be the beta of the replacement secur..
Describe the income tax advantages of making charitable gifts during a person's lifetime, including items that would qualify for income tax deduction. Give some examples.
The Value Line Investment Survey provides information for investors. Below, you will find information for Boeing found in the 2009 edition of Value Line
Bright star bank pays a nominal annual interest rate of 11.36 percent compounded quarterly on your savings account. Calculate the effective annual rate or EAR (answer plus units) round 2 decimal places
In 350-400 words explain why investors expect a higher rate of return from stocks with a variable return rate. Include once source reference.
You are considering investing in a project that is a cost cutting proposal. additional net revenues from the project are expected to equal $83.33 for each of the three years of the project life. The process has an initial cost of $125 and will be dep..
Money Market Versus Call Option Hedging. You expect that inflation in the United States will be 3%, versus 5% in the United Kingdom. The expected spot rate in one year is $1.8756. The spot rate of the pound as of today is $1.8000.
BOE Manufacturing is trying to decide between two different conveyor belt systems. System A costs $272,000, has a four-year life, and requires $83,000 in pretax annual operating costs. System B costs $384,000, has a six-year life, and requires $77,00..
Barrett Industries invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Barrett does not pay any dividends, and it has no plans to pay dividends in the near future. What is the firm's horizon..
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