B increase development cost for new chemical products
<span>Globalization brings in a lot of inclusiveness between the various countries and their activities get distributed. This distribution can be with respect to jobs and other opportunities. So the Americans concerns about the globalization are that they dislike the number of domestic jobs that have been off shored to other countries.</span>
Answer:
$17,877
Explanation:
initial outlay = ?
net cash flows years 1 to 5 = $3,000 - $400 = $2,600
net cash flows years 6 to 10 = $3,000 - $800 = $2,200
assuming that the discount rate is 6%, we need to determine the maximum amount of initial investment that would result in the NPV = 0
in order to do this we have to calculate the present value of the future cash flows:
PV = $2,600/1.06 + $2,600/1.06² + $2,600/1.06³ + $2,600/1.06⁴ + $2,600/1.06⁵ + $2,200/1.06⁶ + $2,200/1.06⁷ + $2,200/1.06⁸ + $2,200/1.06⁹ + $2,200/1.06¹⁰ = $17,877
that means that the maximum amount that can be invested = $17,877, and that way the NPV = 0
Answer:
Break-even point in units= 1,064,250
Explanation:
Giving the following information:
Fixed costs= $412,800
Unitary variable cost= $2.4
Selling price= $4
Desired income= $1,290,000
<u>To calculate the sales in units required, we need to use the following formula:</u>
Break-even point in units= (fixed costs + desired profit) / contribution margin per unit
Break-even point in units= (412,800 + 1,290,000) / (4 - 2.4)
Break-even point in units= 1,064,250
Answer:
13.26%
Explanation:
For computing the best estimate, first we have to determine the expected rate of return by using the CAPM model which is shown below:
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
= 5.5% + 1.10 × 8%
= 5.5% + 8.8%
= 14.3%
The Market rate of return - Risk-free rate of return) is also known as the market risk premium and the same is applied.
Now under the dividend growth model, the cost of equity would be
Price = Next year dividend ÷ (Required rate of return - growth rate)
where,
the next year dividend would be
= $2.20 + $2.20 × 5%
= $2.20 + 0.11
= $2.31
The other items rate would remain same
Now put these values to the above formula
So, the value would equal to
$32 = $2.31 ÷ (Cost of equity - 5%)
After solving this, the cost of equity would be 12.22%
Now the best estimated would be
= (14.3% + 12.2%) ÷ 2
= 13.26%