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svetlana [45]
3 years ago
9

A company planning to market a new model of motor scooter analyzes the effect of changes in the selling price of the motor​ scoo

ter, the number of units that will be​ sold, the cost of making the motor​ scooter, the effect on Net Working​ Capital, and the cost of capital for the project. They predict that the breakminuseven point for sales price for the motor scooter is​ $2,480. What does this​ mean?
Business
1 answer:
Andrew [12]3 years ago
3 0

Answer:

A. If the motor scooter is sold for $2.480, then the net present value (NPV) for the product will be zero.

Explanation:

As we believe that The break even point is the point where the organization has no income gained and no loss incurred While the present net value is the value that determines whether or not the projects will be approved after considering the discounted cost.  

It means that if the original investment is less than the present value then the proposal is otherwise refused, the break even point is where the net present value is zero

Hence, the first option is correct

You might be interested in
Scribd in the marketplace of today, ________ are the primary means of socializing companies and brands.
MrMuchimi

The answer is: Social networks and related tools

Social media and other related tools allow the companies to provide information regarding their products to a wide variety of consumers segmentation with relatively cheaper price. Due to the low barrier of entry, small businesses often find easier success in marketing through these mediums rather than using traditional media.

4 0
2 years ago
XYZ Co. has forecasted June sales of 400 units and July sales of 700 units. The company maintains ending inventory equal to 125%
Gnesinka [82]

Answer:

775 units

Explanation:

By forecast,

June sales = 400 units

July sales = 700 units

if ending inventory equal to 125% of next month's sales

Then June's ending inventory = 125% × 700

                                                  = 875 units

May's ending inventory = 125% × 400

                                       = 500 units

Opening inventory + production - sales = closing inventory

Using the formula above, where p = production

500 + p - 400 = 875

p = 875 - 100

p = 775

Production required for June is 775 units.

7 0
2 years ago
. A building owner charges net rent of $20 in the first year, $21 in the second year, and $22 in the third year, but is providin
Anit [1.1K]

Answer: $17.28

Explanation:

6 month free concession in first year drops rent to:

= 20 / 2

= $10

Effective rent = [Present value of Year 1 rent + Present value of Year 2 rent + Present value of Year 3 rent ] / [ 1 - (1 / (1 + rate)^ number of years) / rate]

= [(10 / (1 + 10%) ) + (21 / (1 + 10%)²) + (22 / (1 + 10%)³)] * [1 - (1 / (1 + 10%)³/ 10%)]

= (9.09 + 17.355 + 16.5289) / 2.48685

= $17.28

8 0
2 years ago
The monopoly demand curve is _____________, while the perfectly competitive firm’s demand curve is _______________. This is beca
Amiraneli [1.4K]

Answer:

Downward sloping; horizontal line; demand; large number of competitors

Explanation:

A monopoly is a market structure where there is only a single firm in the market. This firm is a price maker. It can charge whatever price it wants, but the consumers will demand more at a lower price.  

That is why the demand curve of a monopoly is downward sloping and the same as the market demand curve.  

A perfectly competitive market refers to the market structure where there is a large number of buyers and sellers. These firms are price takers. They face a horizontal line demand curve. This is because of a large number of competitors producing homogenous products. So if a firm raises its prices the consumers will move to the firm at a lower price.  

The market demand curve though is downward sloping.

8 0
3 years ago
Given the following information: Percent of capital structure: Preferred stock 10 % Common equity (retained earnings) 40 Debt 50
sasho [114]

Answer: 8.23%

Explanation:

Firstly, we will calculate the cost of debt which will be:

= Yield (1-Tax rate)

= 9% × (1-0.34)

= 9% × 0.66

= 5.94%

Then, the Cmcost of preferred stock will be:

= 7/(104-9.40)

= 7/(94.6)

= 7.39%

We will also get the value of the cost of equity which will be:

= (Dividend expected common/Price common) + growth rate

= (2.50/76) + 8%

= 3.29% + 8%

= 11.29%

For Debt:

Cost after tax: 5.94

Weight = 50%

Weighted cost = 5.94 × 50% = 2.97

For Preferred stock:

Cost after tax: 7.39

Weight = 1%

Weighted cost = 7.39 × 10% = 0.74

For Common equity

Cost after tax: 11.29

Weight = 40%

Weighted cost = 11.29 × 40% = 4.52

Weighted average cost of capital = 2.97 + 0.74 + 4.52 = 8.23%

8 0
2 years ago
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