A proposed project has estimated sale units of 2,500, giveor take 2 percent. The expected variable cost per unit is$6.79 and the expected fixed costs are $17,500. Costestimates are considered accurate within a plus or minus 3percent range. The depreciation expense is $2,850. The saleprice is estimated at $15.40 a unit, give or take 3 percent.The company bases its sensitivity analysis on the expectedcase scenario. If a sensitivity analysis is conducted using avariable cost estimate of $7, what will be the total annualvariable costs?a. $20,750Marsich Company has the following information forSeptember:SalesVariable cost of goods soldFixed manufacturing costs$500,000$235,000$80,000Variable selling and administrative expenses $45,000Fixed selling and administrative expenses $30,000Determine the following for Marsich Company for the monthof September.1. Manufacturing margin2. Contribution margin3. Income from operationsb. $16,625c. $17,500d. $17,850e. $18,125

1) Given:Estimated sale units: 2,500(±2%)Expected variable cost per unit: $6.79Expected fixed costs:…

Answered: A proposed project has estimated sale…

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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A manufacturing firm is considering two mutually exclusive projects. Both projects have an economic service life of one year with no salvage value. The first cost or Project 1 is $1,000, and the first cost or Project 2 is $800. The net year-end revenue for each project is given as follows: Assume that both projects are statistically independent or each other.(a) If you make decisions by maximizing the expected NPW, which projectwould you select?(b) If you also consider the variance of the projects, which project would youselect?
Elizabeth Corporation is starting two new projects. Project A requires an investment of $5,000, has expected return of 16% with standard deviation 14%. Project B has initial investment of $15,000, expected return of 15% with standard deviation 10%. The correlation coefficient between the projects is 0.75. Find the expected return, in dollars, of the portfolio of these two projects. What is the probability that this return is less than $4,000? COMPLETE AND SHOW WORK IN EXCEL
There are two projects, A and B. the following probability distribution for the projects are given below A B Initial Investment $9,000 $9,000 Annual rate of return Return Prob. Return Prob. Pessimistic 9% 0.25 11% 0.30 Most Likely 15 0.50 18 0.45 Optimistic 25 0.25 23 0.25 a. Compute expected rate of return for each project. b. Compute variance and standard deviation of rate of return for each project. c. compute the coefficient of variance. Which project should you take? C.
i need the answer quickly
Am. 332.
Office of Business Administration tells you that Villa Apartment has a project to expand the current operations and the estimated internal rate of return is 12.2%. The Villa Apartment's WACC is 11.8%. Based on all of these, you can safely conclude the: O appropriate discount rate for the project is between 11.8% and 12.2%. O expansion should be undertaken as it has a positive net present value. O project has slightly more risk than the firm's current operations. O project will have a lower debt-equity ratio than the firm's current operations.
In the case of investment opportunities, the initial investment is estimated at $150,000 the project life is 5 years and the annual costs are $72,600 and the prices and sales volume are as in the following table: Find the sensitivity analysis for the simple rate of return in the case of a 5% decrease in revenues.
Langston Labs has an overall (composite) WACC of 10%, which reflects the cost of capital for its average asset. Its assets vary widely in risk, and Langston evaluates low-risk projects with a WACC of 8%, average-risk projects at 10%, and high-risk projects at 12%. The company is considering the following projects: Expected Project Risk Return A High 15% B Average 12% C High 11% D Low 9% E Low 6% Which set of projects would maximize shareholder wealth? Group of answer choices 1. A, B, C, D, and E. 2. A, B, and C. 3. A, B, and D. 4. A and B. 5. A, B, C, and D.
Consider a four-year project with the following information: initial fixed asset investment = $590,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $34; variable costs = $26; fixed costs = $230,000; quantity sold = 89,000 units; tax rate = 35 percent. What is the degree of operating leverage at the given level of output? What is the degree of operating leverage at the accounting break-even level of output?
You are evaluating five investment projects. You already calculated the rate of return for each alternative investment and incremental rate of return between the two alternatives as well. In calculating the incremental rate of return, a lower cost investment project is subtracted from the higher cost investment project. All rate of return figures are rounded to the nearest integers. Investment Alternative Initial Investment ($) Rate of Return (%) Rate of Return on Incremental Investment (%) A CDE A B C D E b.Select E. c. Select B. 35,000 45,000 d. Do nothing. 50,000 65,000 80,000 12 15 13 20 18 B 28 20 36 27 12 40 22 If all investment alternatives are mutually exclusive and the MARR is 12%, which alternative should be chosen? a. Select D. 42 25 -5
Calculate the accounting rate of return for project A and B.
Consider the following project data. A marketing study that costs $200 will be conducted at t = 0. The best estimate now is that there is a 70 percent chance that the study will indicate potential and a 30 percent chance that it will not. If the study indicates potential, the firm will spend $500 at t = 1 to start production. If the firm starts production, the firm is confident that cash inflows will be $1,000 annually for two years (t=2 and 3). If the appropriate cost of capital is 10 percent, what is the project's expected NPV to the nearest dollar? A) $1,300 B) $923 C) $646 D) $586 E) $446

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