Estimated that the annual sales of energy saving device

Assignment Help Financial Management
Reference no: EM13847657

It is estimated that the annual sales of an energy saving device will be 25,000 the first year and increase by 10,000 per year until 55,000 units are sold during the fourth year. In the fifth year and each year thereafter the sales will decrease by 5000 units per year until reaching 25000 in year ten.

Proposal A is to purchase manufacturing equipment costing $125,000 with an estimated salvage value of $20,000 at the end of 10 years. Proposal B is to purchase equipment costing $285,000 with an estimated salvage value of $50,000 at the end of 10 years. The variable manufacturing cost per unit under proposal A is estimated to be $0.80, but is estimated to be only $0.26 under proposal B. If the interest rate is 9%, which proposal should be accepted for a 10-year production horizon?

please show all work

Reference no: EM13847657

Questions Cloud

Calculate the total ionic concentration of a weak acid : Calculate the total ionic concentration of a weak acid and a weak base (knowing their conductivities) by setting up a proportion with the total ionic concentration and conductivity of a strong acid and a strong base. Basically, we ran out of time and..
What is its cash conversion cycle : Everdeen, Inc has a 100-day operating cycle. If its average age of inventory is 35 days, how long is its average collection period? If its average payment period is 30 days, what is its cash conversion cycle?
Calculate required return on manufacturing common stock : King Farm Manufacturing Company’s common stock has a beta of 1.04. If the risk-free rate is 2.65 percent, and the market return is 8.71 percent, calculate the required return on King Farm Manufacturing’s common stock.
What is your annualized holding period return : You purchased 250 shares of General Motors stock at a price of $72.74 two years ago. You sold all stocks today for $88.44. During this period the stock paid dividends of $4.20 per share. What is your annualized holding period return (annual percentag..
Estimated that the annual sales of energy saving device : It is estimated that the annual sales of an energy saving device will be 25,000 the first year and increase by 10,000 per year until 55,000 units are sold during the fourth year.  If the interest rate is 9%, which proposal should be accepted for a 10..
Construct statement of cash flow : Construct a Statement of cash flow for Timora B. Rown Nursing home based on the following information; Inpatient charges $200,000. ER Charges $75,000. Bad Debt $8%.
What are relevant costs and what are irrelevant costs : What are relevant costs? What are irrelevant costs? Depreciation of plant is an example of imputed cost? In differential cost analysis, managerial decisions are based on P/V ratio and contribution?
Offered job-different salary arrangements : You have just been offered a job. You have the choice of two different salary arrangements. You can have 45,000 per year for the next two years, payable at the end of each year; or you can have 32,500 per year for the next two years, payable at the e..
Retirement strategy is to invest : Your retirement strategy is to invest 500 per month in an equity mutual fund and 200 per month in a bond fund. Your retirement date is 40 years from now. The expected return on the stock fund is expected to be 6% and the expected return on the bond f..

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate the expected net present value of the project

Kanga Resorts is interested in developing a new facility in Asia. The company estimates that the hotel would require an initial investment of $14 million. The company expects that the facility will produce positive cash flows of $2.6 million a year a..

  Calculate investors required rate of return today

(Bonds) A company has an outstanding issue of $1,000 face value bonds with a 9.5% annual coupon and 20 years remaining until maturity. The bonds are currently selling at a price of 90 (90% of face value). An investment bank has advised that a new 20-..

  The beginning of the current fiscal year

The capital accounts of Hogan and Moss have balances of $90,000 and $65,000, respectively on January 1, 2011, the beginning of the current fiscal year.  Prepare a statement of partners' equity for 2011 for the partnership of Hogan and Moss. If an amo..

  Semi annual coupon bond and a zero coupon bond

Suppose your company needs to raise $15 million and you want to issue 21-year bonds for this purpose. Assume the required return on your bond issue will be 4 percent, and you're evaluating two issue alternatives: a 4 percent semi annual coupon bond a..

  Computing tax liabilityhardwaresoftware setup required

computing tax liabilityhardwaresoftware setup required financial calculatorproblem description jonathan a single male

  Use the arithmetic average-real risk-free rate

Suppose the real risk-free rate is 3.50%, the average future inflation rate is 2.50%, a maturity premium of 0.20% per year to maturity applies, i.e., MRP = 0.20% (t), where t is the years to maturity. Suppose also that a liquidity premium of 0.50% an..

  Should abilia refinance her loan

Two years ago Abilia purchased a $13,000 car; she paid $2,500 down and borrowed the rest. She took a fixed rate 60-month instalment loan at a stated rate of 7.0% per year. Interest rates have fallen during the last two years and she can refinance her..

  Compute the materials price variance

Prepare a schedule of cash collections for May through July and compute the materials price variance and the materials quantity variance.

  Dividend reinvestment plan increase amount of equity capital

If a firm repurchases its stock in the open market, the shareholders who tender the stock are subject to capital gains taxes. If you own 100 shares in a company’s stock and the company’s stock splits 2 – for – 1, then you will own 200 shares in the c..

  Explain what would be the market value of the stock

(a) If investors who purchase similar investments require a 10 percent return, what is the market value of OST's preferred stock? (b) What would be the market value of the stock if investors require an 8 percent return?

  What is the holding period return of a bond with a par value

What is the holding period return of a bond with a par value of $1,000 and a coupon rate of 8% if its price at the beginning of the year was $1,012 and its price at the end of the year is $1,047?

  No dividends will be paid on the stock

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next eleven years, because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $15.00 per share 12 yea..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd