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Allstar Shoe Company produces a wide variety of athletic-type shoes for tennis, bas- ketball, and running. Although sales are somewhat seasonal, production is uniform throughout the year. Allstar's production and sales average 1.92 million pairs of shoes per year. The company purchases shoelaces for its entire product line. Shoe- laces are bought in lots of 10,000 pairs at a price of $800 per lot. Ordering costs are $20, including the cost of preparing the purchase order and inspecting the shipment when it arrives at the company's warehouse. Annual inventory carrying costs average 15 percent of the inventory value. Assuming that the shoelace manufacturer is located nearby and that orders are filled on the same day they are placed (that is, virtually instantaneously), determine the following:
a. The EOQ for shoelaces
b. The total annual inventory costs of this policy
c. The frequency with which Allstar should place its orders for shoelaces.
The Portland Stallion professional football team is looking at its future revenue stream from ticket sales. Currently a season package costs $275 per seat. The season ticket holders have been promised this same rate for the next five years.
Your best friend works in the finance office of the Delta Corporation. You are aware that this friend trades Delta stock based on information he overhears in the office. You know that this information is not known to the general public. Your friend c..
For two mutually exclusive projects, the net present value and internal rate of return methods select different projects if the required rate of return is greater than the discount rate at which the two net present value profiles intersect. If projec..
Aria Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implant as follows: Year Unit Sales 1 75,000 2 88,000 3 102,000 4 97,000 5 78,000 Production of the implants will require $1,540,000 in net working capital to star..
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An investment bank pays $32 per share for 3.0 thousand shares of CZS Company in a firm commitment stock offering. It then can sell those shares to the public for $35 per share. A. How much money does CZS receive? B. What is the profit to the investme..
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You own 400 shares of Stock A at a price of $70 per share, 450 shares of Stock B at $85 per share, and 850 shares of Stock C at $31 per share. The betas for the stocks are 0.8, 1.6, and 0.6, respectively. What is the beta of your portfolio?
Explain the meaning of risk, return, and risk preferences? Why is risk not the chance of taking a loss?
You’ve observed the following returns on Doyscher Corporation’s stock over the past five years: –25.8 percent, 14.2 percent, 31.4 percent, 2.6 percent, and 21.6 percent. The average inflation rate over this period was 3.26 percent and the average T-b..
Calculating the Rate of Return of Investment Using Financial Leverage. Suppose Shaan invested just $10,000 of his own money and had a $90,000 mortgage with an interest rate of 8.5 percent. If after three years he sold the property for $120,000. What ..
Stock Y has a beta of 1.8 and an expected return of 18.3 percent. Stock Z has a beta of 1.0 and an expected return of 11.3 percent. If the risk-free rate is 5.6 percent and the market risk premium is 6.6 percent, the reward-to-risk ratios for stocks ..
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