Answer:
The answer is: E) Market development strategy
Explanation:
A market development strategy involves selling your current products in new markets.
In this case, Quitman Enterprises will sell their language dictionary (current product) to international students abroad (new market).
They will seek to expand their potential market through new users of the same product.
Answer:
Initial Invest= 630,000
Cash Flow 1=228,000/1.12= 203,571
Cash flow 2= 228,000/1.12^2=181,760
Cash Flow 3= (228,000+29000+73000)/1.12^3=234,887
=620,218
NPV= 620,218-630,000= -9,781
Explanation:
Limited amounts of food available because items are sold out.
A shortage exists when supply cannot keep up with demand.
Answer:
$2,593,000
Explanation:
The computation of consolidated net income is shown below:-
cancellation of excess of Interest expenses over Income = Interest expense - Interest income
= $80,000 - $37,000
= $43,000
Consolidated net income = Parent company Income + Subsidiary Income + cancellation of excess of Interest expenses over Income
= $1,850,000 + $700,000 + $43,000
= $2,593,000
So, for computing the consolidated net income we simply applied the above formula.
Answer:
Project's WACC = 12.95%
Explanation:
The WACC or weighted average cost of capital is the cost of a firm's capital structure. The capital structure of a firm may contain one or all of the following components - debt, preferred stock, common stock. For a firm with two components in capital structure in form of debt and equity, the WACC is calculated as follows,
WACC = wD * rD * (1+tax rate) + wE* rE
Where,
- wD and wE are the weights of debt and equity in the total capital structure
- rD and rE are the cost of each component
- We multiply the cost of debt by 1 - tax rate to calculate the after tax cost of debt
We must first determine the weight of debt and equity in total capital structure.
A debt to equity ratio of 0.64 means 0.64 debt for every 1 dollar of equity. The total assets are made up of debt + equity. So, total assets are 0.64 + 1 = 1.64
Weight of debt = 0.64 / 1.64 = 16/41
Weight of equity = 1 / 1.64 = 25/41
WACC = 16/41 * 0.053 + 25/41 * 0.149
WACC = 0.1115 or 11.15%
The projects cost of capital is 1.8% more than the company's WACC.
So, the project's cost of capital is,
Project's WACC = 11.15% + 1.8%
Project's WACC = 12.95%