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Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $120. The materials cost for a standard diamond is $60. The fixed costs incurred each year for factory upkeep and administrative expenses are $211,000. The machinery costs $2.0 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 35%, a 10-year project life, and a discount rate of 10%? (Do not round intermediate calculations. Round your answer to the nearest whole number.)
Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded 250 pounds of gold and 62,800 pounds of copper. The joint cost related to the operation was $500,000. Gold sells for $325 per ounce and copper sells for $..
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Beale Manufacturing Company has a beta of 2.2, and Foley Industries has a beta of 0.45. The required return on an index fund that holds the entire stock market is 12%. The risk-free rate of interest is 4.5%. By how much does Beale's required return e..
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Reversing Rapids Co. purchases an asset for $159,660. This asset qualifies as a five-year recovery asset under MACRS. The five-year expense percentages for years 1, 2, 3, and 4 are 20.00%, 32.00%, 19.20%, and 11.52% respectively. Reversing Rapids has..
Another approach to estimating the beta of an investment is by using the market model. What is this? Can you find any good websites that provide an analysis? Be sure to give your own insights as well.
Today is January 1, 2009 and you are considering purchasing an outstanding bond that was issued on January 1, 2007. It has a 9.5% annual coupon and originally had a 30-year maturity. (They mature on December 31, 2036.) The bonds can be called for 5 y..
An investor has the opportunity to buy a $10,000 government bond which is guaranteed to yield 6.5% interest in one year's time. The investor decides to make the investment as there is a net difference between the cost and benefit. Which of the follow..
Sims Computing has $1,625,000 in current assets and $636,000 in current liabilities. They wish to increase their inventory levels from the current level of $400,000. They will borrow on a short term note payable to acquire the additional inventory. w..
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