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zaharov [31]
3 years ago
9

PortaCom manufactures notebook computers and related equipment. PortaCom's product design group developed a prototype for a new

high-quality portable printer. The new printer features an innovative design and has the potential to capture a significant share of the portable printer market. Preliminary marketing and financial analyses provided the following selling price, first-year administrative cost, and first-year advertising cost:
Selling Price $284 per unit
Administrative Cost $500,000
Advertising Cost $700,000
In the simulation model for the PortaCom problem, the preceding values are constants and are referred to as parameters of the model.
(a) An engineer on the product development team believes that first-year sales for the new printer will be 18,500 units. Using estimates of $50 per unit for the direct labor cost and $88 per unit for the parts cost, what is the first-year profit using the engineer's sales estimate?
(b) The financial analyst on the product development team is more conservative, indicating that parts cost may well be $101 per unit. In addition, the analyst suggests that a sales volume of 9,500 units is more realistic. Using the most likely value of $50 per unit for the direct labor cost, what is the first-year profit using the financial analyst's estimates?
Business
1 answer:
Alchen [17]3 years ago
7 0

Answer:

Instructions are below.

Explanation:

Giving the following information:

Selling Price $284 per unit

Administrative Cost $500,000

Advertising Cost $700,000

(a) Units= 18,500

Direct labor= $50

Direct material= $88

Sales= 18,500*284= 5,254,000

Variable costs= (50 + 88)*18,500= (2,553,000)

Contribution margin= 2,701,000

Administrative Cost= (500,000)

Advertising Cost= (700,000)

Net operating income= 1,501,000

B)Units= 9,500

Direct labor= $51

Direct material= $101

Sales= 9,500*284= 2,698,000

Variable costs= (51 + 101)*9,500= (1,444,000)

Contribution margin= 1,254,000

Administrative Cost= (500,000)

Advertising Cost= (700,000)

Net operating income= 54,000

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What is the weighted average cost of capital (WACC) for ABC Limited which has the following capital structure? $5m of equity wit
katrin2010 [14]

The weighted average cost of capital (WACC) for ABC Limited is 12.63%

The weighted average cost of capital(WACC) of a firm is the average cost of finance incurred by the firm on all its sources of finance.

It is determined as the sum of the cost of each source of finance multiplied by their respective weights in the firm's capital structure.

By weights, I mean the percentage of funding each source contributes to the total finance available at the firm's disposal.

WACC=(weight of equity*cost of equity)+(weight of mezzanine finance*cost of mezzanine finance)+(weight of debt*cost of debt)

weight of equity=equity finance/total finance

cost of equity=15%

weight of mezzanine finance=mezzanine finance/total finance

cost of mezzanine finance=9.5%

weight of debt of finance=debt finance/total finance

total finance=$5m+$2m+$1m

total finance=$8m

WACC=($5/$8*15%)+($2/$8*9.5%)+($1/$8*7%)

WACC=12.63%

Find further guidance on weighted average cost of capital's computation in the link below:

brainly.com/question/25566972

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7 0
2 years ago
Select all the choices that decision makers could use marginal analysis for to make effective decisions.
mylen [45]
<span>Adding a machine to the factory and producing another car would be the choices that decision makers could use marginal analysis to make effective decisions.</span>
7 0
2 years ago
Read 2 more answers
Benjamin, Inc., operates an export/import business. The company has considerable dealings with companies in the country of Camer
timurjin [86]

Answer:

the picture attached is the main question while the solution is given in the explanation box below

Explanation:

a)

2017 = Loss = 25000 * 8 * [0.42-0.50] = 16000

2018 = Gain = 25000 * 8 * [0.50-0.43] = 14000

b)

2017 = gain = 25000 * 8 * [0.48-0.42] = 12000

c)

2017 = Loss = 25000 * 8 * [0.48 - 0.50] = 4000

2018 = Gain = 25000 * 8 * [0.50-0.43] = 14000

4 0
3 years ago
In its recent income statement, a firm reported $25 million of net income, and in its year-end balance sheet, the firm reported
frez [133]

Answer:

The answer is B. $10,000,000

Explanation:

The formula for dividend paid to shareholders is

Beginning Retained Earnings plus net income minus ending retained earnings.

Please refer to the attached for the calculation

5 0
3 years ago
The relationship between financial leverage and profitability   Pelican​ Paper, Inc., and Timberland​ Forest, Inc., are rivals i
Fantom [35]

Answer:

Pelican​ Paper, Inc., and Timberland​ Forest, Inc.

Financial leverage and profitability ratios:

a) Debt Ratio = Total liabilities divided by Total assets x 100

Pelican = $1,000,000/$10,900,000 x 100

= 9.2%

Timberland = $5,500,000/$10,900,000 x 100

= 50%

Times Interest Earned Ratio = EBIT/Interest Expense

Pelican = $5,750,000/$100,000

= 57.5 times

Timberland = $5,750,000/$550,000

= 10.4 times

A discussion of their financial risk and ability to cover the costs in relation to each other:

C. ​Timberland's earnings will be more volatile. This additional risk is supported by the significantly lower times interest earned ratio of Timberland. Pelican can face a very large reduction in net income and still be able to cover its interest expense.

D. Timberland has a much higher degree of financial leverage than does Pelican. As a​ result, Timberland's earnings will be more​volatile, causing the common stock owners to face greater risk.

Explanation:

a) Data

Financial Statement Values:

Item                                Pelican Paper, Inc.     Timberland Forest, Inc.

Total assets                     $10,900,000                $10,900,000

Total equity (all common)  9,900.000                    5,400,000

Total debt                            1,000,000                    5,500,000

Annual interest                      100,000                       550,000

Total sales                       23,000,000                  23,000,000

EBIT                                    5,750,000                    5,750,000

Earnings available for

common stockholders      3,394,800                      3,174,000

b)  Creditors provide half of the finances and effectively own 50% of Timberland.  This contrasts with the debt ratio of Pelican, where creditors can lay claim to only 9.2% of the assets of the firm.  Furthermore, Pelican can settle its debts with current earnings 57.5 times, compared to Timberland's interest coverage of 10.4 times.

3 0
3 years ago
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