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Ace manufacturing has entered into a supply agreement with KB toys. KB is very concerned about meeting competitive price points in a profitable way. As a result, they are looking to keep costs as low as possible while delivering a quality product on time. In order to win the contract for the new Chainsaw Toy, Ace agreed to a Fixed Price + Incentive Fee contract with a 50/50 sharing of any cost reductions. They have opened their books to KB and revealed a cost of $9.50 per unit.
Target Price: $10.85
Price ceiling: $11.00
Target cost: $9.50
What is the maximum the KB will pay under this agreement?
If Ace succeeds at taking 1.50 out of the cost, what will the selling price be? What will Ace's margin (profitability) be?
If Ace's costs go up by $0.50, what will be the impact on their profitability?
What are the pro's and con's of such a contract from Ace's perspective?
The Garcia Company's bonds have a face value of $1,000, will mature in 10 years, and carry a coupon rate of 16 percent. Assume interest payments are made semiannually.
Which of the following is typically a characteristic of the mechanistic model of organization?
Kwik'n Hot Dogs is considering the installation of a new computerized pressure cooker that will cut annual operating costs by $23,000. The system will cost $39,900 to purchase and install. This system is expected to have a 4-year life and will..
healthy foods inc sell 50 pounds bags of grapes to military for 10 a bag. the fixd cost of this operation are 80000
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Matrix Enterprises is planning offering both a stock dividend and a cash dividend in the upcoming year. The most recent balance sheet for Matrix is given below.
The tax rate is 34 percent and the required return on the project is 12 percent. What is the operating cash flow for the project in year 2?
Explain the Modigliani-Miller dividend irrelevance proposition. Discuss the different ways in which a corporation can distribute cash to its shareholders.
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as an assistant vice president at a regional bank your boss has tasked you and the other avps to work in a group to
Find the rate of return on a preferred stock with a $50 par value, a stated dividend rate of 6% and a current market price of $34.
What is σ, the standard deviation of the net cash flows?
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