ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Chapter 7A, Problem 12P
To determine
The calculation of Interest rate.
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Cebu Tire and Rubber Company has a capacity to produce 650,000 tires of variable sizes per year. At present, it is operating at 62% capacity. The firm’s annual income is P 416,000. Annual fixed costs are P 192,000 and the variable costs are equal to P 0.356 per unit of product. (a) What is the firm annual profit or loss? (b) At what volume of sales does the firm break-even?
PART 2 - C
PROBLEM SOLVING
PROBLEM NO.1
Compute the PW:
$3500 market value
productivity attributable to equipment per year
(Operating costs have already been deducted fron the revenue)
$8500
$8500
$8500
$8500
$8500
1
2
3
End of Year
i= 18%/yr
$23500 investment cost
5.
A company has a bond outstanding with a face value of $1000 that reaches maturity in 5 years. The bond certificate indicates that the stated coupon rate for this bond is 8.9% and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the bond is 10.6%, then at what price should the bond trade?
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