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McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $740 per set and have a variable cost of $410 per set. The company has spent $189,000 for a marketing study that determined the company will sell 38,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 8,000 sets of its high-priced clubs. The high-priced clubs sell at $1,290 and have variable costs of $720. The company will also increase sales of its cheap clubs by 8,000 sets. The cheap clubs sell for $480 and have variable costs of $120 per set. The fixed costs each year will be $7,560,000. The company has also spent $983,000 on research and development for the new clubs. The plant and equipment required will cost $21,000,000 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $914,000 that will be returned at the end of the project. The tax rate is 34 percent, and the cost of capital is 14 percent. Suppose you feel that the values are accurate to within only ±6 percent. The best-case NPV is $ and worst-case NPV is $. (Do not include the dollar signs ($). Negative amount should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16)) (Hint: The price and variable costs for the two existing sets of clubs are known with certainty; only the sales gained or lost are uncertain.)
A zero coupon bond with a face value of $1,000 is issued with an initial price of $463.34. The bond matures in 25 years. What is the implicit interest, in dollars, for the first year of the bond's life?
Reducing country risk. MNCs such as Alcoa, DuPont, Heinz and IBM donated products and technology to foreign countries where they had subsidiaries. How could these actions have reduced some forms of country risk?
Identify and discuss some of the primary risks the company faces in the near future and create a table showing the stock prices for the past five years
Under the WTO's dispute-settlement procedures, who can bring a complaint for nullification and impairment? a. A corporation b. A group of corporations within an industry c. A government d. All of the above
Familiarise yourself with the Anthonys Orchard company and its current situation; this can be done by exploring each of the tabs across the top of the screen in the Anthony's Orchard case study media.
Calculate and interpret the volume and management variances on the cost side.
What are the prices of a call option and a put option with the following characteristics? Stock price = $73 Exercise price = $70 Risk-free rate of return = 4%, compounded continuously Maturity = 8 months Standard deviation = 49% per year.
Lockboxes should be located?
Which of the following statements concerning junk bonds is most correct?
An orcharder spends $100,000 to planet pomegranate bushes. It will take four years for the bushes to provide a usable crop. He estimates that every year for 20 years after that he will receive a crop worth $9,500 per year. If the discount rate is 9%,..
On October 1m Mutch Company sold merchadise in the amount of $5,800 to Carr Company, with credit terms of 2/10,n/30. The cost of the items sold is $4,000. Mutch uses the perpetual inventory system. On October 4, Carr returns some of the merchandise. ..
Maze Co. recently reported operating income of $6.45 million, depreciation of $1.22 million, and had a tax rate of 40%. The firm's expenditures on fixed assets and net operating working capital totalled $0.8 million. How much was its free cash flow, ..
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