Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
You are evaluating a project which costs $720,000, has a four-year life, and no salvage value. Depreciation is straight-line and the half year rule does not apply. Sales are projected at 190 units per year; price per unit will be $21,000, variable cost per unit will be $15,000 and fixed costs will be $225,000 per year. Based on your experience, you believe the unit sales, variable cost and the fixed cost projections given here are probably accurate to within ± 10 percent. The required return on the project is 15 percent and the tax rate is 35 percent.
(a) Calculate the operating cash flow (OCF) and net present value (NPV) for the base-case, best-case and worst-case scenarios.
(b) Suppose that the probability of the base-case scenario is twice the probability of either the worst-case scenario or the best-case scenario. Should the project be accepted? Why?
(c) How sensitive is the base-case NPV to changes in fixed costs? Illustrate your answer assuming that fixed costs increase from $225,000 to $230,000.
(d) What is the base-case accounting break-even sales level for this project.
(e) Calculate the degree of operating leverage (DOL) for the base-case scenario. How do you interpret this number?
Concept of accounting for Wealth creation It is significant to recognise that generating wealth for the owners isn't the same as seeking to maximise the current year's profit.
Q. What is Capitalized Interest? Capitalized Interest - INTEREST cost incurred during time required to bring an ASSET tothe condition and location for its intended use and incl
Q. Explain bonus or capitalisation issues? A rights issue is a approach of raising finance via the issue of shares to existing equity shareholders. Consecutively to make such a
d. Prepare the summary journal entry required to transfer finished component kits from the Cutting Department to the Finishing Department in January. e. Compute the total cost assi
A company produces 2 modules of mobile phones. 1.Basic modle is sold 5000/=, direct material cost 1250/=, requires 0.25h labour time. Produce unites 8000 per month. 2.smart model
Interstate Manufacturing produces brass fasteners and incurred the following costs for the year just ended: Materials and supplies used Brass
Vincent Ltd operates solely in Western Australia and the chief operating decision maker has identified five operating segments: Mining, Insurance, Retailing, Manufacturing and Tran
Resolution For Voluntary Winding Up A company may be put into voluntary liquidation: 1) By ordinary resolution: where any period fixed for the duration of the company has ex
Omission to do something which a reasonable man, guided by those ordinary considerations that ordinarily regulate human affairs, would do or doing of something that a reasonable an
The economy of Cotai contains 2000 $1 bills. (a) If people hold all money as currency, what is the quantity of money? (b) If people hold all money as demand deposits and bank
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd