1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
marin [14]
3 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]3 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 .

You might be interested in
Within organizations, leaders are needed to ________ and managers are needed to ________.
velikii [3]
Pay , work hope this helped you have a good day
4 0
3 years ago
Home depot, a large home improvement retailer, used research to learn that 25 percent of the time when customers bought a drill,
bagirrra123 [75]
This technique is called data mining.
5 0
3 years ago
Methods analysis is particularly valuable when it is used on jobs that: (I) are high in labor content. (II) are done frequently.
ycow [4]

Answer:

B. I, II, and IV only

Explanation:

Job specialization can be defined as a strategic process which typically involves the ability of employees working in an organization to develop specific skills, knowledge, great expertise or professionalism and experience to perform their duties, tasks or job functions effectively and efficiently.

In order to gain the requisite skills, expertise and knowledge for job specialization, it is very important for the employees to have undergone an extensive training and a good number of years in work experience.

The primary purpose of job specialization is to increase efficiency and productivity because the employees are able to specialize in the use of specific tools (equipments) to accomplish their tasks, as well as limit the level of error or mistakes in the production process.

In Business management, method analysis can be defined as the study of the detailed process for the performance of a job i.e how a job is done. Thus, method analysis gives a detailed report on the tasks involved in the performance of a job and how they are to be done.

Basically, methods analysis is particularly valuable when it is used on jobs that:

1. Are high in labor content.

2. Are done frequently.

3. Are unsafe, tiring, unpleasant, and/or noisy.

3 0
2 years ago
Which of these purchases is more likely to be paid for with a credit card?
patriot [66]
I got A too hope this helps
7 0
3 years ago
Read 2 more answers
Describe the differences between power and authority.
Arisa [49]

Answer:

Power is an entity's or individual's ability to control or direct others, while authority is influence that is predicated on perceived legitimacy.

3 0
2 years ago
Read 2 more answers
Other questions:
  • _____ is information about data—its content, quality, condition, origin, and other characteristics.
    10·1 answer
  • In its first month of operations, Novak Company made three purchases of merchandise in the following sequence: (1) 190 units at
    13·1 answer
  • American president obama enacted a five-year freeze on federal salaries to help the government achieve its objectives of reducin
    15·1 answer
  • Rational choices: A. are based on a comparison of total benefits and total costs. B. can only be made by those who are economist
    13·1 answer
  • A firm in a purely competitive labor market is a wage taker because
    7·1 answer
  • Allied made its first and only purchase of inventory for the period on
    11·1 answer
  • Sometimes there is a backlash from employees regarding mandatory diversity training. One possible solution that has some researc
    7·1 answer
  • Richard Voith estimated the price elasticity of demand for round-trip rail fare to be 0.62. If fares rose by 30 percent, one wou
    15·1 answer
  • How does opportunity cost affect decision making
    6·1 answer
  • Using the ob concepts and tools that best suit the situation is called a(n) ___________ to management.
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!