Selena would like to start a new venture after she finishes school. She projects that her fixed costs will be $50200. She expects that she can sell her product for $22 and that her variable costs per unit will be $4. She knows she has done her research but she is still worried about the risk involved with this new venture. How many units would she have to sell to break-even?

Selena would like to start a new venture after she finishes school. She projects that her fixed costs will be $50200. She expects that she can sell her product for $22 and that her variable costs per unit will be $4. She knows she has done her research but she is still worried about the risk involved with this new venture. How many units would she have to sell to break-even?

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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| 1. After defeating the Dark Lord, Ron's brother offers him a job at Weasleys' Wizard Wheezes. If Ron takes this job, his annual income will be 1 million galleons. Alternatively, Ron can return to Hogwarts to finish school, but then he must give up the job with his brother. Graduating will take him a year and it will cost 10,000 galleons in direct costs. He knows for sure he can become an Auror after finishing his education, at a yearly salary of 800,000 galleons. He thinks that the probability that he becomes Minister of Magic 25 years after graduating (at Year 27) is 25%, and the minister's salary is 10 million galleons per year. Regardless of his choice, he wants to retire in 30 years from now (at Year 30). Assume the interest rate is 5%. Assume all payments are at the beginning of the year and all wages are paid at the beginning of the year. a. If Ron is only concerned with the monetary rewards, will he go back to Hogwarts? If you are using equations, write down the appropriate…
Please provide complete solution.
Evee Cardenas is interested in investing in a women's specialty shop. The cost of the investment is $280,000. She estimates that the return from owning her own shop will be $35,000 per year. She estimates that the shop will have a useful life of 6 years. Assuming a required rate of return of 8%, calculate the NPV for Evee Cardenas' investment. What if the estimated return was $135,000 per year? Calculate the new NPV for Evee Cardenas' investment.
Olivier wants to buy a hot dog stand that will generate $118,000 per year forever. Because he needs some time to tweak the recipe, he plans to delay production and start generating cash flows 6 years from today. If the discount rate is 8%, what is TODAY's fair price for this hot dog stand?
Mme. Giselle's boutique in Cleveland, Ohio is planning to sell a Parisian frock. If the public view it as being the latest style, the frocks will be worth $12,000. However, if the frocks are viewed as passe, they will be worth only $3,000. If the probability that they are stylish is 10%, what is the expected value of the frocks? The expected value of the frocks (EV) is EV $ (Enter your response rounded to two decimal places.)
Suppose that, at age 30, you might wish to leave your job and pursue a master’s degree. If you choose to remain at your job, your employer would pay you $74k per year until retirement, at age 55. If you go back to the university, you would have to sacrifice 2 years of income, but once you graduate, you would receive $117k per year until you retire at age 55. The master’s program you are interested in costs $22k per year. Note: The term “k” is used to represent thousands (× $1,000). Required: At an opportunity cost of 8%, determine the percentage difference between your most and least profitable alternatives, with the least profitable option as the basis for your calculation.Answer% Intermediate calculations must be rounded to 3 decimal places (at least). Input your answer as a percent rounded to 2 decimal places (for example: 28.31%).
Misty needs to have $20,000 at the end of 6 years to fulfill her goal of purchasing a small sailboat. She is willing to invest a lump sum today and leave the money untouched for 6 years until it grows to $20,000, but she wonders what sort of investment return she will need to earn to reach her goal. Use your calculator or spreadsheet to figure out the annually compounded rate of return needed if she can invest $13,900 today.
Scarlett is considering the purchase of a new Wolf gas range by Sub-Zero Group, Inc. to increase the quality of the food served in her restaurant. It will also enhance the cooking experience for her and her chefs, as they won't have to fuss with the finicky electric burners they currently use. However, the new range is expensive. It will cost $9,920 to buy and properly install. On the upside, it should last for at least 7 years, at which time Scarlett may consider trading it in for another new range. While her operating costs will not decrease as a result of this purchase, Scarlett will be able to generate additional gross margin of at least $1,510 in the first year. After that, she expects the additional gross margin to grow by 10% each year for the next 4 years, at which point it will become stable for the remainder of the 7- year life. She believes the new range will be worth $1,010 at the end of this 7-year period. Her current range can be salvaged today for $250. Click here to…
Charlotte has just finished her MBA and started a career in banking investment, she wanted to have a new car as soon as possible. The price of the car is $ 28,320. She must also have clothes and coats for the job which costs $ 3,248. The salary for his job this year is $ 42,000 and next year it will be increasing to $ 46,000. The cost of living this year is $ 34,000. Charlotte plans to make the difference between income and expenditure for consumption by borrowing. Interest on the loan is 15% per year. Charlotte wants to pay the loan and interest within a year. How much money is left for next year that Charlotte can spend (consume)?
A farmer in Vancouver faces a dilemma. The weather forecast is for hot weather, and there is a 50% chance that the temperature this weekend will be too hot and destroy his entire flower garden, which is worth some $60,000. He can take two possible actions to try to alleviate his loss if the temperature rises (the objective is to maximize his expected flower value). First, he could use mulch which helps keep soil temperatures low. This would cost $3,000, but he could still expect to incur damage of approximately $27,000 to $32,000. Second, he can use shade cloth which offers partial and temporary protection from the sun. This method is more expensive ($6,000), and also more effective. With the shade cloth, he could expect to incur as much as $16,000 to $22,000 of the loss. Compare the farmers expected values for the three alternatives he has, considering the various possible loss scenarios for the mulch and the shade cloth. Which alternative would you suggest the farmer take? Why?…
Wilma is considering opening a widget factory. The unlevered cost of equity for making widgets is 0.1. This factory would cost $10 million to set up, and would produce EBIT of $3 million per year for the foreseeable future. She is thinking of applying for a $3 million subsidized perpetual loan to finance this project. Complying with the auditing requirements of this loan would have a present value of $2 million. This loan would have a rate of 0.04, while the rate she could get from the bank is 0.07. Her tax rate is 0.41. What is the NPV of this project, using the APV method?
2. A friend of yours is considering quitting his job as an engineer to become a wedding photographer. He thinks that he will make more money this way. His current job as an engineer pays him $87,500 annually. To switch to wedding photography, he will have to purchase photography equipment that will cost him $12,000. He also does not expect to make much money when he first starts out. He estimates that he would make $39,000 in his first year. But as he gets his name out there, he expects to make $7500 more each year. Assuming an interest rate of 5% and a 20-year analysis period, compute the net present worth of both options to recommend to your friend whetherhe should become a wedding photographer or not. Answer: ???= $1,090,425, ?W?= $1,212 ,678 Can someone show how this was solved?

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