Division, an investment center. The division has a P50,000 controllable margin and P300,000 of sales. How much will NUBD’s average operating assets be
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NUBD is evaluating its X Division, an investment center. The division has a P50,000 controllable margin and P300,000 of sales. How much will NUBD’s average operating assets be when its

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- A firm produces $85 million of net income on $1,250 million of assets. Investors expect a 5 percent return. Required: Calculate the economic value added (EVA)Suppose your company needs $10 million to build a new assembly line. Your target debt- equity ratio is .4. The flotation cost for new equity is 10 percent, but the flotation cost for debt is only 7 percent. Your boss has decided to fund the project by borrowing money because the flotation costs are lower and the needed funds are relatively small. a. What is your company's weighted average flotation cost, assuming all equity is raised externally? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the true cost of building the new assembly line after taking flotation costs into account? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e.g., 1,234,567.) Answer is complete but not entirely correct. 9.73 % a. Flotation cost b. Amount raised 11,010,000 4Consider 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
- A proposed project has fixed costs of $35,000 per year. The operating cash flow at 14,000 units is $60,000. a. Ignoring the effect of taxes, what is the degree of operating leverage? b. If units sold rise from 14,000 to 14,400, what will be the increase in operating cash flow? c. What is the new degree of operating leverage?Sunland Division's operating results include: controllable margin of $280000, sales totaling $1400000, and average operating assets of $800000. Sunland is considering a project with sales of $100000, expenses of $84000, and an investment of average operating assets of $200000. Sunland's required rate of return is 10%. Should Sunland accept this project? O Yes, ROI will drop by 6.6% which is still above the minimum required rate of return. O Yes, ROI still exceeds the cost of capital. O No, the return is less than the required rate of 10%. O No, ROI will decrease to 8%. Save for Later O i 20 2 Attempts: 0 of 1 used Submit AnswerThe Suboptimal Glass Company uses a process of capital rationing in its decision making. The firm's cost of capital is 14 percent. It will invest only $50, 500 this year. It has determined the IRR for each of the following projects: Project Project Size Internal Rate of Return A $ 10, 100 17.0% B 30, 300 16.0 C 25,250 15.0 D 10, 100 17.5 E 10, 100 18.0 F 20, 200 24.0 G 15,150 12.0 a. Pick out the projects that the firm should accept. (You may select more than one answer. Click the box with a check mark for the correct answer and click to empty the box for the wrong answer.) check all that apply 1 Project Bunanswered Project Cunanswered Project Dunanswered Project Eunanswered Project Funanswered Project Gunanswered Project Aunanswered b. If projects E and F are mutually exclusive, how would that affect your overall answer? That is, which projects would you accept in spending the $ 50, 500? (You may select more than one answer. Click the box with a check mark for the correct answer and…
- Midwest Water Works estimates that its WACC is 10.45%. The company is considering the following capital budgeting projects. Assume that each of these projects is just as risky as the firm's existing assets and that the firm may accept all the projects or only some of them. Which set of projects should be асcсepted? Project Size Rate of Return А $1 million 12.0% -Select- В 2 million 11.5 -Select- 2 million 11.2 -Select- 2 million 11.0 -Select- E 1 million 10.7 -Select- F 1 million 10.3 -Select- 1 million 10.2 -Select-Golden Goodness (GG) has an investment center that had the following data: Operating Income $28,000 Sales $350,000 Invested assets $175,000 PMB has set a minimum acceptable rate of return at 14%. Using the information, answer the following questions. You must include what type of number it is (%, $, etc.) What is the profit margin? What is the investment turnover? What is the return on investment?Revenues generated by a new fad product are forecast as follows: Year Revenues 1 $50,000 2 35,000 3 30,000 4 20,000 Thereafter 0 Expenses are expected to be 40% of revenues, and working capital required in each year is expected to be 20% of revenues in the following year. The product requires an immediate investment of $60,000 in plant and equipment. a. What is the initial investment in the product? Remember working capital. b. If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight-line depreciation, and the firm’s tax rate is 20%, what are the project cash flows in each year? Assume the plant and equipment are worthless at the end of 4 years. c. If the opportunity cost of capital is 10%, what is the project's NPV? d. What is the project IRR?
- Buzzy Manufacturing Company has P2 billion in sales and P0.6 billion in fixed assets. Currently, the company’s fixed assets are operating at 80% of capacity. What level of sales could Buzzy have obtained if it have been operating at full capacity? What is Buzzy’s target fixed assets to sales ratio? If Buzzy’s sales increased by 30%, how large is the increase in fixed assets will the company need to meet its target fixed assets to sales?The Caffeine Coffee Company uses the modified internal rate of return. The firm has a cost of capital of 11 percent. The project being analyzed is as follows ($26.000 investment): Use Appendix A and Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year Cash Flow $ 12,000 11,000 9,000 What is the modified internal rate of return? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Internal rate of return 11.45%A project will cost $30 in year 1 and generate earnings before interest, taxes and depreciation of $20 in year 1, $15 in year 2 and $10 in year 3. The inital cost is to be linearly depreciated over three years. The company has a marginal corporate income tax rate of 21% and the appropriate unlevered cost of capital for the project is 12%. a: What is the NPV of the project if the firm is all equity-financed? b: What is the APV of the project if the firm uses $30 debt finance in the first year at an expected rate of return of 5%? The company will pay interest in years 2 and 3 and pay off the loan in year 3











