A retail company is considering the two mutually exclusive projects glven in the following table.Selling toys$350.000YoarSelling kitchenware-$300,0001240,000230,000265,000210,00030%Find the range of MARR for which the company would invest in selling kitchenware over selling toys with do-nothing altemative. (choose the closest range)IRR28%MAAR s 15%O 15% SMAARS30%MAARS28%O 5% SMAARS28%O None of the above

Correct Answer is 15%≤MARR≤30% The MARR is also referred as the hurdle rate, that is, a financially…

A retail company is considering the two mutually eexclusive projects given in the following table. Selling toys -8350,000 240,000 265,000 Selling kitchenware 24300.000 230,000 Year 1 210.000 IRR 28% 30% Find the range of MARR for which the company would invest in selling kitchenware over selling toys with do-nothing altemative. (choose the closest range) MAAR S 15% O 15% SMAARS30% MAARS28% O 5% SMAARS28% O None of the above O O O O C

A retail company is considering the two mutually eexclusive projects given in the following table. Selling toys -8350,000 240,000 265,000 Selling kitchenware 24300.000 230,000 Year 1 210.000 IRR 28% 30% Find the range of MARR for which the company would invest in selling kitchenware over selling toys with do-nothing altemative. (choose the closest range) MAAR S 15% O 15% SMAARS30% MAARS28% O 5% SMAARS28% O None of the above O O O O C

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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“It is Well with my Soul" (IWMS) Co. is evaluating an investment proposal to manufacture GB pen drives, which has performed well in test marketing trials conducted recently by the company’s research and development division. The following information relating to this investment proposal has now been prepared. Initial investment GH¢ 3 million Selling price (current price terms) GH¢ 20 per unit Expected selling price inflation is provided as follows: Years 1 2 3 4 Selling price Inflation rate 3% 4% 5% 6% Variable operating costs (current price terms) GH¢ 8 per unit Fixed operating costs (current price terms) GH¢ 150,000 per year Expected operating cost inflation 5 % per year The research and development division has prepared the following demand forecast as a result of its test marketing trials. The forecast reflects expected technological change and its effect on the anticipated life-cycle of GB pen drives. Years 1…
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REQUIRED Answer each of the following questions independently. As far as possible use the expanded contribution margin model to present your answers. Suppose an additional R300 000 is spent on advertising in order to increase the sales by 3 000 Calculate the number of pallets that need to be produced and sold to break even. Suppose the management team of Lomax Ltd is considering a R30 per pallet decrease in the selling price with the expectation that this would increase the sales volume by 10%. Is this a good idea? Motivate your answer with the relevant calculations. Determine the selling price per pallet that will enable Lomax Ltd to achieve an operating profit of R3 192 000. INFORMATION Lomax Ltd…
Suppose that you want to buy an equipment for their plant. The following two options are available (see below). If the price of electricity is 0.6 OR/kW-hr and the Ac's are expected to work 4320 hr/yr, which A/C do you recommend to buy if MARR is 16%. Use PW method Offer A Offer B Investment Power consumption (kW) 50,000 55,000 1.6 1.2 Annual revenues 19,000 19,400 (RO/year) Life time (yr) Salvage value (RO) 8 2,000 1,300
Red Company is considering launching a new product which it believes has a 60% probability of success. The company is, however, considering undertaking an advertising campaign costing R60,000, which would increase the probability of success to 95%. If successful the product would generate income of R220,000 otherwise R85,000 would be received. What is the maximum amount that the company should be prepared to pay for advertising? A. R21,000 B. R81, 000 C. R39,000 D. R47 250
possible annual sales may not exceed $50 lakhs and if there is competition it may fall considerably. of a new 48. A company has a project to install a new machine exclusively for the manufacture product which is expected to have good demand and reasonably high margin. Maximum e company has obtained quotations and short listed two offers for the new machine. Details in respect of the two models are given below : Machine Models M, $ 50 lakhs 5 lakhs 15 lakhs $ 50 lakhs Maximum possible sales per year Fixed Costs per year Estimated profit for maximum sales 8 lakhs 17 lakhs You are required to calculate : (i) Break even sales of each machine; (ii) Sales at which both models will give the same profit;
E3 Doni is a self-manufactured, he wants to calculate how much the price for their new product if the targeted initial margin is 65%; given all-in production cost is $15, transport & logistic cost is 5.8% from the production cost, and revenue sharing cost would be 12% from landing cost (production + transport + logistic).
1. Production has indicated that they can produce widgets at a cost of P4.00 each if they lease new equipment at a cost of P10,000. Marketing has estimated the number of units they can sell at a number of prices (Php4000) Which price/volume option will allow the firm to avoid losing money on this project? (Please show and explain solution)
REQUIRED Answer each of the following questions independently. As far as possible use the expanded contribution margin model to present your answers. Calculate the total Contribution Margin and Operating Profit (Loss) if all 30 000 pallets are Sold. .calculate the margin of safety (as a percentage) for 2022 Use the contribution margin ratio to calculate the sales value required to achieve an operating profit of R6 000 000. Suppose an additional R300 000 is spent on advertising in order to increase the sales by 3 000 Calculate the number of pallets that need to be produced and sold to break even. Suppose the management team of…
T.
Q.1 ChemCo has developed a new product, and has consulted with its marketing department, who have determined that the market share will be 20,000 units, and have recommended that a selling price of $60.00 per unit would be app- ropriate. ChemCo has been able to keep the cost per unit at $50.00. The company has spent a total of $900,000 to design and develop this product. Required: Use the above information to compute as follows: 1. Compute the expected margin for ChemCo 2. Compute the expected turnover 3. Compute the ROI Explain why it is necessary to do the above computations, and show how management can use this information for managing operations
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