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Hit or Miss Sports is introducing a new product this year. If its see-at-night soccer balls are a hit, the firm expects to be able to sell 58,000 units a year at a price of $70 each. If the new product is a bust, only 38,000 units can be sold at a price of $65. The variable cost of each ball is $40, and fixed costs are zero. The cost of the manufacturing equipment is $6.9 million, and the project life is estimated at 10 years. The firm will use straight-line depreciation over the 10-year life of the project. The firm’s tax rate is 35%, and the discount rate is 12%.
Hit or Miss Sports can expand production if the project is successful. By paying its workers overtime, it can increase production by 33,000 units; the variable cost of each ball will be higher, however, equal to $45 per unit. By how much does this option to expand production increase the NPV of the project? (Assume the probability the see-at-night soccer balls will be a hit is 50%). (Do not round intermediate calculations. Round your answer to the nearest dollar amount.)
Increase in expected NPV $_____________.
Suppose a stock had an initial price of $90 per share, paid a dividend of $2.40 per share during the year, and had an ending share price of $76. Compute the percentage total return. What was the dividend yield and the capital gains yield?
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Assume that the clinic used the price that they need to exactly break even at 10,000 shots. Fewer people than expected showed up and purchased the flu shot. The clinic would: A. earn a profit. B. have a loss. C. break-even. D. have a reduced unit con..
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