Cash flow : Cash flow is the monetary consideration (return or income) received by the business for its long-term capital investment. Net present value method: Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is desired by the business based on the net income from the investment, and it is also called as the discounted cash flow method . To determine: The net cash flow of Company BE.

Question

A company produces a single product, with a selling price of $12 and a variable cost of $7. Fixed costs are $120,000 per period. What volume of sales in units is needed to earn a profit of $80,000 per period? Help

Answer 1

Question

Chapter 25, Problem 25.10EX

(a)

To determine

Cash flow:

Cash flow is the monetary consideration (return or income) received by the business for its long-term capital investment.

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is desired by the business based on the net income from the investment, and it is also called as the discounted cash flow method.

To determine: The net cash flow of Company BE.

(b)

To determine

To calculate: The net present value of the investment of Company BE.

(c)

To determine

To analysis: Whether the Company BE should invest in the bulldozer or not.

(d)

To determine

The number of operating hours that is equal to the amount of investment.

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A company produces a single product, with a selling price of $12 and a variable cost of $7. Fixed costs are $120,000 per period. What volume of sales in units is needed to earn a profit of $80,000 per period? Help

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Answer 2

Question

Chapter 25, Problem 25.10EX

(a)

To determine

Cash flow:

Cash flow is the monetary consideration (return or income) received by the business for its long-term capital investment.

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is desired by the business based on the net income from the investment, and it is also called as the discounted cash flow method.

To determine: The net cash flow of Company BE.

(b)

To determine

To calculate: The net present value of the investment of Company BE.

(c)

To determine

To analysis: Whether the Company BE should invest in the bulldozer or not.

(d)

To determine

The number of operating hours that is equal to the amount of investment.

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Answer 3

Question

Chapter 25, Problem 25.10EX

(a)

To determine

Cash flow:

Cash flow is the monetary consideration (return or income) received by the business for its long-term capital investment.

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is desired by the business based on the net income from the investment, and it is also called as the discounted cash flow method.

To determine: The net cash flow of Company BE.

(b)

To determine

To calculate: The net present value of the investment of Company BE.

(c)

To determine

To analysis: Whether the Company BE should invest in the bulldozer or not.

(d)

To determine

The number of operating hours that is equal to the amount of investment.

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Answer 4

Question

Chapter 25, Problem 25.10EX

(a)

To determine

Cash flow:

Cash flow is the monetary consideration (return or income) received by the business for its long-term capital investment.

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is desired by the business based on the net income from the investment, and it is also called as the discounted cash flow method.

To determine: The net cash flow of Company BE.

(b)

To determine

To calculate: The net present value of the investment of Company BE.

(c)

To determine

To analysis: Whether the Company BE should invest in the bulldozer or not.

(d)

To determine

The number of operating hours that is equal to the amount of investment.

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Answer 5

Chapter 25, Problem 25.10EX

(a)

To determine

Cash flow:

Cash flow is the monetary consideration (return or income) received by the business for its long-term capital investment.

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is desired by the business based on the net income from the investment, and it is also called as the discounted cash flow method.

To determine: The net cash flow of Company BE.

(b)

To determine

To calculate: The net present value of the investment of Company BE.

(c)

To determine

To analysis: Whether the Company BE should invest in the bulldozer or not.

(d)

To determine

The number of operating hours that is equal to the amount of investment.

Answer 6

Chapter 25, Problem 25.10EX

(a)

To determine

Cash flow:

Cash flow is the monetary consideration (return or income) received by the business for its long-term capital investment.

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is desired by the business based on the net income from the investment, and it is also called as the discounted cash flow method.

To determine: The net cash flow of Company BE.

Answer 7

Chapter 25, Problem 25.10EX

(a)

To determine

Cash flow:

Cash flow is the monetary consideration (return or income) received by the business for its long-term capital investment.

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is desired by the business based on the net income from the investment, and it is also called as the discounted cash flow method.

To determine: The net cash flow of Company BE.

Answer 8

(b)

To determine

To calculate: The net present value of the investment of Company BE.

Answer 9

(b)

To determine

To calculate: The net present value of the investment of Company BE.

Answer 10

(c)

To determine

To analysis: Whether the Company BE should invest in the bulldozer or not.

Answer 11

(c)

To determine

To analysis: Whether the Company BE should invest in the bulldozer or not.

Answer 12

(d)

To determine

The number of operating hours that is equal to the amount of investment.

Answer 13

(d)

To determine

The number of operating hours that is equal to the amount of investment.

Answer 14

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Answer 25

Ch. 25 - Prob. 1DQ Ch. 25 - Discuss the principal limitations of the cash...Ch. 25 - Prob. 3DQ Ch. 25 - Prob. 4DQ Ch. 25 - Prob. 5DQ Ch. 25 - Prob. 6DQ Ch. 25 - Prob. 7DQ Ch. 25 - Two projects have an identical net present value...Ch. 25 - Prob. 9DQ Ch. 25 - Prob. 10DQ

Solution Summary: The author explains the Net Present Value method, which compares the initial cash outflow of investment with the present value of its cash inflows.

Concept explainers

To calculate: The net present value of the investment of Company BE.

To analysis: Whether the Company BE should invest in the bulldozer or not.

The number of operating hours that is equal to the amount of investment.

Chapter 25 Solutions