Customer Service Chat
Get quote & make Payment
cost of capital , Financial Management
ABC Ltd. Produces electronic components with a selling price per of Rs.100. Fixed cost amount to
5000 units are produced and sold each year. Annual profits amount to Rs.50,000/-. The company’s all equity financed assets are Rs.5,00,000/-. The company proposes to change its production process, adding Rs.4,00,000/- to investment and Rs. 50,000/- to fixed operational costs.
The consequences of such a proposal are:
(i) Reduction in variable cost per unit by Rs.10/-
(ii) Increase in output by 2000 units.
(iii) Reduction in selling price per unit to Rs.95/-
(a) Assume an average cost of capital 10%. Examine the above proposal and advise whether or not the company should make the change.
(b) Also work out the degree of operating leverage
Posted Date: 10/14/2012 1:29:28 PM | Location : United States
Ask an Expert
cost of capital , Assignment Help, Ask Question on cost of capital , Get Answer, Expert's Help, cost of capital Discussions
Write discussion on cost of capital
Your posts are moderated
Write your message here..
Report on cash budget, The number of properties sold every month indicates ...
The number of properties sold every month indicates that Thorne Co experiences seasonal trends in its business. There is an sign that property sales are at a low level in winter an
How can funds be raised, How can funds be raised Funds are raised from ...
How can funds be raised Funds are raised from financial markets. Financial markets is a general term used todenote markets where financial securities are teat. These markets in
Tax-backed debt, An analyst should first examine the issuers ...
An analyst should first examine the issuers debt structure in order to analyze the tax-backed debts. The debt burden consists of respective direct a
Leverage, evaluate the importance of leverage in a small scale companyestio...
evaluate the importance of leverage in a small scale companyestion..
Explain what happen when government imposes a minimum price, Explain what w...
Explain what will happen while the government imposes a minimum price that is below the market equilibrium price. Why is this true? The minimum price will comprise no impact on t
Margin trading, Margin Trading: Suppose an investor wants to buy 100 Re...
Margin Trading: Suppose an investor wants to buy 100 Reliance Energy shares, whose market price is Rs.500. This transaction requires Rs.50,000 but the investor has only Rs.30,0
Cost of capital, Dividends are expected to grow at a constant rate of 5 per...
Dividends are expected to grow at a constant rate of 5 percent per year in the future. Firms last dividend was $1 and stock price 10 dollars the firms beta 1,2 the rate of return o
Show the analysis of credit information, Q. Show the Analysis of Credit Inf...
Q. Show the Analysis of Credit Information? Analysis of Credit Information: - Subsequent to obtaining the desired information from various sources the information is examined t
Benefit and drawback of maintaining many manufacturing sites, Discuss the b...
Discuss the benefits and drawbacks of maintaining multiple manufacturing sites like a hedge against exchange rate exposure. Answer: To set up multiple manufacturing sites can
Estimate the companys wacc, Assemble all other inputs/assumptions based on ...
Assemble all other inputs/assumptions based on the past data. Use your best judgment to have the most reasonable estimates. Tasks 1. Prepare an Excel spreadsheet containi
Accounting Assignment Help
Economics Assignment Help
Finance Assignment Help
Statistics Assignment Help
Physics Assignment Help
Chemistry Assignment Help
Math Assignment Help
Biology Assignment Help
English Assignment Help
Management Assignment Help
Engineering Assignment Help
Programming Assignment Help
Computer Science Assignment Help
Why Us ?
~24x7 hrs Support
~Quality of Work
~Time on Delivery
~Privacy of Work
Human Resource Management
Literature Review Writing Help
Follow Us |
T & C
Copyright by ExpertsMind IT Educational Pvt. Ltd.