6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $1.50 per unit. Hethinks that this move, combined with some increase in advertising, would increase this year's unit sales by 25%. How much could thepresident increase this year's advertising expense and still earn the same $920,000 net operating income as last year? Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expenses are $40.00per unit, and fixed expenses total $160,000 per year. Its operating results for last year were as follows:$ 2,160,0001,080,0001,080,000160,000$ 920,000SalesVariable expensesContribution marginFixed expensesNet operating income

Computation of New variable cost $40 + $1.5 $41.5 Increase in sale units $2160000 / $80 + 25% 33750…

Answered: 6. The president does not want to…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Digby's turnover rate for this year is 6.36%. This rate is projected to remain the same next year and no further downsizing will occur from automating. Digby plans to spend an additional $500 beyond the extra amount above the $1000 recruiting base it spent this year. The goal of this additional investment is to improve the quality of applicants. What would the total recruiting cost be for Digby next year? Select : 1 $186,185 $171,863 $157,541 $143,219
(Ignore income taxes in this problem.) Your Company has some equipment that can either be repaired right now for $40,000 or sold for $13,000 scrap value. As an alternative, Your Company could buy new equipment for $145,000. Both pieces of equipment would last 8 years. The annual operating expenses of the new equipment would be $6,500 less than the operating costs of the old machine. In addition, the new machine would be able to produce 100 more units that can be sold for a contribution margin of $80 per unit. The new equipment is expected to have a $14,000 salvage value in 8 years. Your Company discount rate is 7%. What is the net present value of the decision to buy the new equipment instead of repairing the old equipment? O $400 O $3,146 O $2.728 O ($5,421)
Allegience Insurance Company's management is considering an advertising program that would require an initial expenditure of $182,050 and bring in additional sales over the next five years. The projected additional sales revenue in year 1 is $85,000, with associated expenses of $30,000. The additional sales revenue and expenses from the advertising program are projected to increase by 10 percent each year. Allegience's tax rate is 30 percent. (Hint: The $182,050 advertising cost is an expense.) Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: 1. Compute the payback period for the advertising program. 2. Calculate the advertising program's net present value, assuming an after-tax hurdle rate of 10 percent. (Round your intermediate calculations and final answer to the nearest whole dollar.) 1. 2. > Answer is complete but not entirely correct. Payback period Net present value 3✔ years $ 49,209 X
Use the below tables to solve the problem.
Solve it correctly please. I will rate it and review it.
Your firm is contemplating the purchase of a new $530, 000 computer - based order entry system. The system will be depreciated straight line to zero over its five-year life. It will be worth $50, 000 at the end of that time. You will save $310, 000 before taxes per year in order processing costs, and you will be able to reduce working capital by $65,000 (this is a one- time reduction). If the tax rate is 25 percent, what is the IRR for this project? -
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Kinky Copies may buy a high-volume copier. The machine costs $130,000 and this cost can be fully depreciated immediately. Kinky anticipates that the machine actually can be sold in 5 years for $30,000. The machine will save $22,000 a year in labor costs as an after-tax reduction, but will require an increase in working capital, mainly paper supplies, of $11,000. The firm's marginal tax rate is 21%, and the discount rate is 6%. (Assume the net working capital will be recovered at the end of Year 5.) What is the NPV of this project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places)
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