The firm is considering changing its production technology

Assignment Help Financial Management

Reference no: EM131025699

The Generic Publications Textbook Company sells all of its books for $100 per book, and it currently costs $50 in variable costs to produce each text. The fixed costs, which include depreciation and amortization for the firm, are currently $2 million per year. The firm is considering changing its production technology, which will increase the fixed costs for the firm by 51 percent but decrease the variable costs per unit by 51 percent. If the firm expects to sell 45000 books next year, should the firm switch technologies? (Round answers to nearest whole dollar,e.g. 5,275.)

The current EBIT for the firm is $

If the firm changes technology, the firm’s new EBIT will be $ .

The firm should the new technologies.

Reference no: EM131025699

Questions Cloud

Level of the supply chain and give : Discuss and define the types of inventory which are held at each level of the supply chain and give justifications for the necessity of holding the stock.

How much money will you have in the account : If you deposit $5,900 at the end of each of the next 20 years into an account paying 10.8 percent interest, how much money will you have in the account in 20 years? How much will you have if you make deposits for 40 years?

Share cash dividend to stockholders of record : Slade Inc. is a wholly owned subsidiary of Palt Inc. On June 1, 20x1, Palt declared and paid a $1 per share cash dividend to stockholders of record on May 15, 20x1. On May 1, 20x1, Slade bought 10,000 shares of Palt's common stock for $700,000 on the..

Price the bonds if your required rate of return : Bond-A: $ 1000 Face value, 5 year term, 5% coupon. Bond-B: $ 1000 Face value, 20 year term, 5% coupon. Price the bonds if your required rate of return is 5%. Price the bonds if your required rate of return is 7%. Compute the percentage change in the ..

The firm is considering changing its production technology : The Generic Publications Textbook Company sells all of its books for $100 per book, and it currently costs $50 in variable costs to produce each text. The fixed costs, which include depreciation and amortization for the firm, are currently $2 million..

What is the amount of injections in this economy : In equilibrium, what is the amount of injections in this economy? Suppose that the government decides to increase G by $120. Assuming that aggregate income does not change, which of the following is the most plausible effect of this policy?

What do we mean by the degree of a polynomial : What do we mean by the degree of a polynomial, and what role does the degree play in finding asymptotes for rational expressions? Explain the relationship between an equation in exponential form and the equivalent equation in logarithmic form.

Define process of evaluating and selecting best dbms product : Assume that you are responsible for selecting a new DBMS product for a group of users in your organization. To undertake this exercise, you must first establish a set of requirements for the group and then identify a set of features that a DBMS pr..

Internal rate of return modified internal rate of return : Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota. Dan Dority, the company's geologist, has just finished his analysis of the mine site. Construct a spreadsheet to calculate the payback period, internal rat..

User Account

All Pages