Explain the limitations of a cvp analysis in given situation

Assignment Help Finance Basics
Reference no: EM131442476

Discussion

Your company, Diamond Dynamics, is researching whether or not it would be a good decision to invest in new manufacturing equipment that will significantly speed up production time on the assembly line. However, the total cost of the equipment and installation, not including any maintenance plan, is a hefty investment of roughly $850,000. In a 500-word description, Explain how a CVP analysis would be useful for determining whether or not the investment is worth it. Also, explain the limitations of a CVP analysis in this situation and for making managerial decisions in general.

Reference no: EM131442476

Questions Cloud

Two-asset portfolio-what is the expected return of portfolio : Stock A has an expected return of 12% and a standard deviation of 40%. Stock B has an expected return of 17% and a standard deviation of 60%. The correlation coefficient between Stocks A and B is 0.2. What is the expected return of a portfolio invest..
What is meant by a products contribution margin ratio : Discussion Problem- What is meant by a product's contribution margin ratio? How is this ratio useful in planning business operations?
Evaluate the effects of aging on cognitive development : Create a news release for your community to discuss the effects of aging on cognitive development. Your article should be 750 to 1,000 words. Address the following: Evaluate the effects of aging on cognitive development.
What is the portfolios beta : Your investment club has only two stocks in its portfolio. $35,000 is invested in a stock with a beta of 0.7, and $70,000 is invested in a stock with a beta of 1.8. What is the portfolio's beta?
Explain the limitations of a cvp analysis in given situation : Explain how a CVP analysis would be useful for determining whether or not the investment is worth it. Also, explain the limitations of a CVP analysis in this situation and for making managerial decisions in general.
What is the required return on the market : Suppose that the risk-free rate is 2.5% and that the market risk premium is 6%. What is the required rate of return on a stock with a beta of 1.1? What is the required return on the market?
Discuss the incidence of a city wage tax : Discuss the incidence of a city wage tax.
What should the bank have done to begin selling securities : a. What should the bank have done to lawfully begin selling insurance? b. What should the bank have done to begin selling securities?
Do you have a good relationship with your mother : This chapter reinforced some of the important elements of open ended questions, that we talked about in the previous weeks. So, what I want you to do today is to use open questions in the real world. When you have a conversation with your signifi..

Reviews

Write a Review

Finance Basics Questions & Answers

  Should you accept the offer or cash the canadian dollars

You met a tourist at the airport who is from Mexico and is on his way to Canada. He is willing to buy your C$200 for 1,300 pesos. Should you accept the offer or cash the Canadian dollars in at the airport? Explain.

  With the expectation that the dividend will grow at 5

expected return on stock investment. the common stock of the nicolas corporation is currently selling at 80 per

  What is a financial crisis

What is a financial crisis? - Why does an economic downturn often lead to a financial crisis? Explain why the reverse is also true.

  Given the information for schism inc in problems 11 and 12

given the information for schism inc. in problems 11 and 12 suppose you also know that the firms net capital spending

  Discussion-course reflection

Based on your learning and experiences going through this course as well as the research you conducted, do the following:

  What would your required rate of return be on common stocks

What would your required rate of return be on common stocks if you wanted a 5 percent risk premium to own common stocks given what you know from problem 2? If common stock investors became more risk averse, what would happen to the required rate of r..

  Why do you think this action by usx was so well received

Why do you think this action by USX was so well received by the stock market?

  Compare the cost of the truck to the cash flow records

Explain how Stephanie should convince her mother that it is inappropriate to call the bank manager and his wife for assistance in getting the loan approval?

  Rossdale inc had additions to retained earnings for the

rossdale inc. had additions to retained earnings for the year just ended 575000. the firm paid out 140000 in cash

  First attempt and pass on the second attempt

The probability that a student passes the written test for a private pilot's license is 0.75. What is the probability that John will fail on the first attempt and pass on the second attempt?

  A five-year plain-vanilla idrusd cross-currency swap

counterparty a is an american company with manufacturing operations in indonesia and its main customers in the united

  Lakeside grapes is considering expanding

Lakeside Grapes is considering expanding its wine-making operations

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