Your dad recently decidedto set up a coconut oilfactory given the globaldemand. In order toguarantee profitabilityand his ability to stay inbusiness. He has askedyou to help in thedecision-making. Given anestimated fixed cost ofsetting up of Gh¢2m andvariable cost of Gh¢55 perbottle of oil. Contributionmargin is 12.7%. Whatshould be the price (to thenearest whole) if he wantsto breakeven at 250,000bottles. #randomized O A. Gh¢63B. Gh¢62C. Gh¢65D. Insufficient information

in this we have to use break even cost volume analysis.

Your dad recently decided to set up a coconut oil factory given the global demand. In order to guarantee profitability and his ability to stay in business. He has asked you to help in the decision-making. Given an estimated fixed cost of setting up of Gh¢2m and

Your dad recently decided to set up a coconut oil factory given the global demand. In order to guarantee profitability and his ability to stay in business. He has asked you to help in the decision-making. Given an estimated fixed cost of setting up of Gh¢2m and

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

See similar textbooks

Similar questions

Solve it correctly please. I will rate accordingly with 4votes.
Ethan wants to cash in on the increased demand for ethanol. Accordingly, he purchased a corn farm in Mindanao. Ethan believes his corn crop can be sold to an ethanol plant for P4.80 per kilo, Variable cost associated with growing and selling a kilo of corn is P4.00. Ethan's annual fixed cost is P132,000. 1. What is the break-even point in sales pesos and kilos of corn? 2. If Ethan's farm is 1,375 hectares, how many kilos must he produce per hectare to break even?
Suppose that you are the manager of a studio cafe, and you are planning to invest on a new camera and a coffee maker designed to increase the productivity of your employees and output (services) produced. Your analyst provided you the following information: A. Complete the table below. Should the new camera and coffee maker be purchased? Explain your answer based on the incremental analysis.
Question: . What is the estimated Internal Rate of Return (IRR) of the project? Should the project be accepted based on the IRR criterion? Why? You have determined in your mind that you would like to have a business of your own, although your father runs a family restaurant in your local city. You have therefore, decided to have a medium size snack and cocktails bar which will accommodate the cruise ship passengers who visit your city. You plan to keep the business for five years after which you will sell it off to your brother John for $2,000,000 and go off to do your Master’s Degree in the UK. Though you will be occupying the establishment from your grandmother for free, you have decided that you need to make some improvements to the property which will cost you $1,500,000. Additionally, you will spend $275,000 in bar stools, tables and decorations. If this space had been leased out, it would have fetched a lease rental of $75,000 per year. You will depreciate the assets over 7…
compute each investment payback period.
J& YI Company is a real-estate developer considering a -tO-unit apartmentcomplex in a growing college town. As the area is also booming with foreign automaker loca ting their U.S. nssembly plants. the firm expects that 1he apartment complex, once built. will enjoy a 90% occupancy for an extended period. 111e firm already compiled some of the critical financial information related to the development project as follows:• Land price ( I acre) = $ 1.200.000• Building (40unitsof singlebedroom) = $4.800.000• Project life = 25 years• Building maintenance per unit per month = $JOO• Annual property taxes and insurance = $400. 000Assuming that the land will appreciate at an annual rate of 5%, but the building will have no value al th e end of 25 years (it will be torn down and a new structure would be built), determine the minimum monthly rent that should be charged if a 12% return (or 0.9-t89% per month) before tax is desired.
You are evaluating a proposal to buy a new executive jet for your corporation. The new jet will cost £7.5 million to buy. You will need to pay for this jet as soon as you purchase it. If you buy the new jet, you will sell the old executive jet for £3.0 million, which you will receive immediately. If you buy the new jet, there will be immediate extra training costs totalling £200000, for air crew and ground staff, which will occur once only and will be paid immediately. The new jet is more fuel-efficient and buying it will lead to an estimated saving of £500000 per year on fuel. However, maintenance will be more expensive and therefore maintenance costs will be £100000 more per year than at present. All fuel and maintenance costs must be paid for in the year in which they are incurred. Based on the above information, what is the estimated payback period for the new jet in years? Enter your answer to 1 decimal place, without commas. For example, for 6.33 years enter 6.3
Topex Sdn Bhd's management is always looking for ways to improve productivity and efficiency. This is the more important in view of rising wage costs and difficulty in hiring workers. The company is looking to buy a new CNC grinding machine to replace the old machine that had been bought for RM100,000 5 years ago. The old machine has a life of 4 years. If sold now this old machine can fetch RM 5,000. Topex's management is considering a new and more efficient machine. This new machine will cost RM170,000 and can last for 4 years. The resale value then is RM20,000. Topex will also incur freight and installation charges of RM1,000 and RM9,000 respectively. The new machine is more productive and can generate RM62,000 more contributions a year. Spoilage cost of the new machine would be RM2,000 a year, while the current spoilage is RM5,000 a year. The business is also going to increase its working capital by RM10,000 to provide this machine with more inventories. Tax rate is 30%. a) Complete…
You were hired as the CFO of a new company that was founded by three professors at your university. The company plans to manufacture and sell a new product, a cell phone that can be worn like a wrist watch. The issue now is how to finance the company, with equity only or with a mix of debt and equity. The price per phone will be $250.00 regardless of how the firm is financed. The expected fixed and variable operating costs, along with other data, are shown below. How much higher or lower will the firm's expected ROE be if it uses 60% debt rather than only equity, i.e., what is ROEL - ROEU? 0% Debt, U 60% Debt, L Expected unit sales (Q) 33,500 33,500 Price per phone (P) $250.00 $250.00 Fixed costs (F) $1,000,000 $1,000,000 Variable cost/unit (V) $200.00 $200.00 Required investment $2,500,000 $2,500,000 % Debt 0.00% 60.00% Debt, $ $0 ?? Equity, $ $2,500,000 ?? Interest rate NA 10.00% Tax rate 25.00% 25.00% Group of answer choices…
Rachael Wilson is CFO for a large telecom company in Australia. She has recently discovered an interesting computer available for purchase in Australia from Computer Analytics. It is being used by several companies to automatically perform analysis on data. Rachael has been researching it for the last month and is convinced that the $3.1million machine would suit her company. It will save $900,000 a year in analyst salaries. Computer Analytics will install it and test it for $100,000 and it is expected to last for 8 years. Computer Analytics also requires a refundable deposit of $300,000 to be paid up front. This will be held by Computer Analytics for the life of the machine so it can provide annual updates. Required rate of return is 14%. Calculate Net Present Value (NPV). Show your calculations. Calculate Internal Rate of Return (IRR). Show your calculations. Should Rachael go ahead with purchasing the computer if the required rate of return is 15%? Show your calculations.
An investor is planning to establish a new business to grow and produce tiger prawns in Northern Australia. The development proposal is for 20 hectares (ha) of ponds for prawn production at a total capital cost of $10,000,000 (including land purchase, new infrastructure and new ponds). You judge the ponds to be capable of producing a gross margin per pond hectare of $50,000 starting in year 2 (no income or variable costs in year 1). You expect the annual overheads of running this prawn farm would be $100,000 which will start from year 1. The initial capital investment of land, infrastructure and ponds will maintain their purchase value in real terms over the life of the project. New investment in machinery of $1,000,000 is also required to be spent straight away upon development starting and will have a salvage value in year 5 of 50 per cent of original purchase price. The required real rate of return of the investor is 6 per cent per annum. All figures shown are real terms, and are…
Leeds Limited is looking to expand its operations and increase its market share in the cell phone industry. To achieve this, they are looking to increase its current productive capacity of 100 000 cell phones a year by at least 6% for each of the next 5 years. It is considering two cell phone making machines and is unsure which to purchase: Cell Phone Machine ABC:Cell Phone Machine ABC can be imported at a landed purchase cost of R160 000 and a further R20 000 transport and installation costs will have to be incurred to get it ready for production. This machine is expected to last 5 years after which it will be sold at its scrap value of R20 000. Net cash flow from the sale of the additional production is expected to be R58 000, R63 000, R68 000, R72 000 and R51 000 respectively over the 5-year lifespan of the machine. This machine will enable Leeds Limited to achieve a 4% increase in productive capacity.Cell Phone Machine XYZ:Cell Phone Machine XYZ can be purchased locally for R190…

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS