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marin [14]
2 years ago
13

You have determined that an OCF of $142,098 will result in a zero net present value for a project, which is the minimum requirem

ent for project acceptance. The fixed costs are $418,000 and the contribution margin per unit is $87.20. The company feels that it can realistically capture 4.5 percent of the 120,000 unit market for this product. The required rate of return is 11 percent. Should the company develop the new product
Business
1 answer:
Arturiano [62]2 years ago
0 0

Answer:

The company should not develop the new product as The operation cash flow is too low as compared to the OCF that results in zero NPV .

Explanation:

In order to know if the company should develop the new product we would have to make the following calculations:

The No, of units the company expects to sell = Market share*Market size = 4.5%*120,000 = 5,400

Total contribution = No. of units sold*contribution margin per unit = 5400*87.20 = $470,880

Fixed costs = $418,000

Profit before tax = Total contribution - Fixed costs = $470,880 - $418,000 = $52,000

Net profit = (1-Tax rate)*Profit before tax = (1-34%)*$52,000 = $34,320

Since there are no depreciation costs(assumed), net profit is the operating cash flow.

Therefore, the company should not develop the new product as The operation cash flow is too low as compared to the OCF that results in zero NPV .

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McMurphy Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the produ
Ganezh [65]

Answer:

C) buy the part, as this would save the company $192,000

Explanation:

Assuming there is no other use for the facilities, McMurphy should _buy the part, as this would save the company $192,000_______.

8 0
2 years ago
Relative to life insurance companies, property and casualty insurance companies hold Question 2 options: A) fewer municipal bond
stepan [7]

Answer:

The correct answer is letter "C": more liquid assets.

Explanation:

Property and casualty insurance covers insureds in front of damages to a property structure or the belongings inside it in accidental situations, vandalism or burglaries. Life insurances are purchased so a benefit can be provided to the policy holder's beneficiary in case of his or her decease.

Property and casualty insurances are said to hold <em>liquid assets</em> since they deal with the coverage of tangible objects that can be easily converted in cash. Though, life insurance does not deal with materials. It only provides monetary or valuable benefits after the pass away of the insured.

8 0
2 years ago
Assume that Matt, Joe, and Teresa are the only citizens in a community. A proposed public good has a total cost of $1,000. All t
iragen [17]

Answer: Defeated; two against and one in favor

Explanation:

The options to the question are:

a. Accepted; two in favor and one against

b. Defeated; two against and one in favor

c. Accepted; three in favor and none against

d. Defeated; none in favor and three against

A majority vote is a voting system whereby the person who wins is the person that has more than fifty percent of the vote.

In this question, we are told that Matt, Joe, and Teresa will share an equal portion of this cost in taxes and that the benefit of the public good is $500 for Matt, $280 for Joe, and $260 for Teresa.

In a majority vote, this proposal will most likely be defeated as there will be two against and one in favor. Joe and Teresa will be against it ane only Matt will be in support as he will receive more in benefit than the others.

5 0
2 years ago
To keep your business plan up-to-date, it should be revised every
Rufina [12.5K]

Answer:

A-month

Explanation:

by revising it monthly, it is the most up to date and can be consistently helpful to you as well as organized.

4 0
1 year ago
Which of the following is an example of party retailing?
Gnoma [55]
I think it would be target hope this helps
5 0
2 years ago
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