Block Island TV currently sells large televisions for $3,600. It has costs of $3,000. It has investment capital of $120,000,000. Block Island TV sales are currently 10,000 televisions per year. 1. What is the markup percentage on cost if Block Island TV has a target return on investment of 10%? А. 10% В. 20% С. 30% D. 40% 2. What is the target cost if Block Island TV wants to keep the current price $3,600 while achieving the 10% return on investment? A. $3,000 B. $2,800 C. $2,600 D. $2,400

Block Island TV currently sells large televisions for $3,600. It has costs of $3,000. It has investment capital of $120,000,000. Block Island TV sales are currently 10,000 televisions per year. 1. What is the markup percentage on cost if Block Island TV has a target return on investment of 10%? А. 10% В. 20% С. 30% D. 40% 2. What is the target cost if Block Island TV wants to keep the current price $3,600 while achieving the 10% return on investment? A. $3,000 B. $2,800 C. $2,600 D. $2,400

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter9: Capital Budgeting Techniques

Section: Chapter Questions

Problem 12PROB

See similar textbooks

Similar questions

Walden Industries is considering investing in production-management software that costs $600,000, has $67,000 residual value, and leads to cost savings of $2,300,000 per year over its five-year life. Calculate the average amount invested in the asset that should be used for calculating the accounting rate of return. Question content area bottom Part 1 A. $333,500 В. $667,000 С. $67,000 D. $600,000
Gamma Electronics Gamma Electronics is considering the purchase of testing equipment that will cost $500,000 to replace old equipment. Assume the new machine will generate after-tax savings of $250,000 per year over the next four years. If Gamma Electronics has a 15% cost of capital, what's the IRR of the investment? a. 23.4% b. 15.0% c. 34.9% d. 100.0%
PI A manager at Shannon's Custom Cabinets is interested in purchasing a computer, software, and peripheral equipment costing $240,000 that would allow company salespeople to demonstrate to custor finished carpet installation would appear. Using this cost, the manager has determined that the investments net present value is $126.000, Compute the investment's profitability index Note: Round your answer to one decimal point de round 4.555 to 4.63 0
A company is thinking of investing in one of two potential new products for sale. The projections are as follows: Year Revenue/cost £ (Product A) Revenue/cost £ (Product B)0 (150,000) outlay (150,000) outlay 1 24,000 12,0002 24,000 25,3333 44,000 52,0004 84,000 63,333 Calculate the IRR for Product B only using 3% and 15% to 2 d.p.
A project has following estimated data: Price = $60 per unit; variable cost = $30 per unit; Fixed cost = $100,000; %3D %3D Company has borrowings of $100,000 at a rate of 10%. Calculate the combined leverage of the project when units sold are 10,000 units. a. 1.58 b. 0.63 с. 1.50 d. 1.05
An interior design studio is trying to choose between the following two mutually exclusive design projects: Year 0 1 2 3 Cash Flow Cash Flow (0) -$64,000 31,000 31,000 31,000 a-1 If the required return is 10 percent, what is the profitability index for both projects? (Round your answers to 3 decimal places. (e.g., 32.161)) Project I Project II -$18,000 9,700 9,700 9,700 Profitability Index a-2 If the company applies the profitability index decision rule, which project should the firm accept? O Project I O Project II Project I Project II b-1 What is the NPV for both projects? (Round your answers to 2 decimal places. (e.g., 32.16)) O Project I Project II NPV b-2lf the company applies the NPV decision rule, which project should it take?
Question 7 A company can invest in two alternatives: Machine Eco and Machine Top. The controlling department provides the following data. Eco total annual costs annual sales 3.600.000,00 € 4.000.000,00 € 3.000.000,00 € € 8 purchasing price machine residual value useful life (years) The cost of capital are 10%. How would you decide using the • profit comparison calculation and the profitability comparison? When will the machines be amortized? Question 8 Top 3.700.000,00 € 4.200.000,00 € 4.500.000,00 € € 8 Please refer to question no. 7. What would be the results Eco had a residual value of € 500.000,-- and Top of € 600.000,--?
QUESTION 1 Mobile LLC is evaluating a new project of constructing a building for rental purpose. The project requires an initial investment of OMR 1,000,000. The expected net cash flows are OMR 300,000 per year for five years at today's prices. However, these inflows are expected to rise by 10% per year because of inflation. The firm's cost of capital is 18%. Required: Calculate NPV o the project by: (a) Discounting money cash flows (b) Discounting real cash flows ochine for
EconomicS 2. Referring to the given data in 6.7/317 at the end of Chapter 6 (Engineering Economy by Sullivan et al), select the best alternative using: (a) PW (b) AW © FW (d) IRR 6-7. Three mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given next. The MARR is 20% per year. At the conclusion of the useful life, the investment will be sold. A в $28,000 $55,000 $40,000 Annual expenses $15,000 $13,000 $22,000 Annual revenues $23,000 $28,000 $32,000 $6,000 $8,000 $10,000 Investment cost Market value Useful life 10 years 10 years 10 years 26.4% 24.7% 22.4% IRR A decision-maker can select one of these alternatives or decide to select none of them. Make a recommendation using the PW method. (6.4)
Store Files 4- Consider the following projects, X and Y where the firm can only choose one. Project X costs $600 and has cash flows of $400 in each of the next 2 years. Project Y also costs $600, and generates cash flows of $500 and $275 for the next 2 years, respectively. Sketch a net present value profile for each of these projects. Which project should the firm choose if the cost of capital is 10 percent? What if the cost of capital is 25 percent? Show all work. Acrobat.com
How I resolve this problems please give me the detail A firm has the following investment alternatives: Year A B C 1 $400 $--- $---- 2 400 400 ---- 3 400 800 ---- 4 400 800 1,800 Each investment cost of capital is 10 percent a. What is each investment's internal rate of return? b. Should the firm make any of theses investment? C. What is each investemtn's net present value? d. Should the firm make any of these investment
Jackson amp; Sons uses packing machines to prepare its products for shipping. One machine costs $178,000 and lasts about 5 years before it needs replaced. The operating cost per machine is $16,000 a year. What is the equivalent annual cost of one machine if the required rate of return is 12 percent? Select one: O O O O O a. $81,006.15 b. $65,378.93 c. $54,224.08 d. $79,004.12 e. $38,556.67