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Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $160. The materials cost for a standard diamond is $60. The fixed costs incurred each year for factory upkeep and administrative expenses are $218,000. The machinery costs $2.1 million and is depreciated straight-line over 10 years to a salvage value of zero.
a. What is the accounting break-even level of sales in terms of number of diamonds sold? (Do not round intermediate calculations.)
Break-even sales diamonds per year
b. What is the NPV break-even level of diamonds sold per year assuming a tax rate of 40%, a 10-year project life, and a discount rate of 12%? (Do not round intermediate calculations. Round your answer to the nearest whole number.)
Assume market interest rates have risen substantially in the 5 years since an investor purchased Treasury bonds that were offering a 6% return over their 15-year life. If the investor sells now he or she is likely to realize a total return that is:
Explain how forward contracts and currency futures could be used by Mega Company and construct appropriate hedges with forward contracts and currency
A bond has a $1,000 par value, 14 years to maturity, and a 6% semi annual coupon and sells for $975. Assume that the yield to maturity remains at 6.27% for the next 2 years. What will the price be 2 years from today?
Sharma Co. is a U.K. firm with a Chinese subsidiary that produces cell phones in China and sells them in Japan. This subsidiary pays its wages and its rent in Chinese yuan, which is stable against the pound. Assume that the Japanese yen strengthens a..
Ashes Divide Corporation has bonds on the market with 12 years to maturity, a YTM of 8.4 percent, and a current price of $1,296.50. The bonds make semiannual payments. What must the coupon rate be on these bonds?
In a transaction for the sale of an auto painting facility, Bright Auto Colors Company tells Custom Cars Corporation that the paints and other supplies on-site are included. The contract says nothing about the supplies on-site, but does state, “This ..
ABC Corporation is evaluating a new promotional campaign that could increase home sales.Possible outcomes and probabilities of the outcomes are shown next. What is the expected value of additional sales in units? What is the standard deviation of add..
Assume an after-tax saving interest rate of 6 percent and a tax rate of 28 percent.
The clinic incurred $4,500,000 in general expenses and paid cash for them. The hospital received $1,000,000 in cash from a donor who temporarily restricted its use.
Suppose that Intel currently is selling at $64 per share. You buy 500 shares using $20,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 7%. What is the percentage increase in the ne..
BSBFIM601 - Manage finances Assignment. Why should you identify your business' or industries critical dates? Why might you need to analyse cash flow trends? Why do you need to be aware of your tax liabilities? Why is it important to ensure that your..
The real risk-free rate is 2.5%. Inflation is expected to be 2.5% this year and 4.75% during the next 2 years. Assume that the maturity risk premium is zero. What is the yield on 2-year Treasury securities?
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