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Natasha2012 [34]
3 years ago
7

Preston Industries has two separate divisions. Each division is in a separate line of business. Division A is the largest divisi

on and represents 70 percent of the firm's overall sales. Division A is also the riskier of the two divisions. Division B is the smaller and least risky of the two. When management is deciding which of the various divisional projects should be accepted, the managers should:
A. allocate more funds to Division A since it is the largest of the two divisions.
B. fund all of Division B's projects first since they tend to be less risky and then allocate the remaining funds to the Division A projects that have the highest net present values.
C. allocate the company's funds to the projects with the highest net present values based on the firm's weighted average cost of capital.
D. assign appropriate, but differing, discount rates to each project and then select the projects with the highest net present values.
E. fund the highest net present value projects from each division based on an allocation of 70 percent of the funds to Division A and 30 percent of the funds to Division B.
Business
1 answer:
bogdanovich [222]3 years ago
8 0

Answer:

D. assign appropriate, but differing, discount rates to each project and then select the projects with the highest net present values.

Explanation:

Even though Division A is the largest and produce the highest amount of sales, it will not be selected based on this factor but its net present value(NPV). This will determine if the sales actually can fully recover the initial investment amount and yield a profit. Therefore, since Division A and B have different levels of risk, it will be appropriate to find their NPVs using different discount rates and accept the one with the highest NPV.

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A production function: shows the output that is most highly valued by consumers. shows the most desired production method for a
BigorU [14]

Answer:

Shows the output that is produced using different combinations of inputs combined with existing technology

Explanation:

The production function is an <u>expression that links the different amount of inptuts used in the production process and the final output obtained with each combination of inputs, with a given tehcnology.</u>

As an example, if a economy produces only popcorn, a production function would be an expression that shows hou much popcorn that economy can produce with different combinations of corn and sugar, with a given technology.

4 0
3 years ago
George’s t-shirt shop produces 5,000 custom printed t-shirts per month. george’s fixed costs are $15,000 per month. the marginal
k0ka [10]

Answer: Price is $7 when sale is 5000 and $6 when sale is 7,500 units.  

Explanation:

Total cost of George = Fixed cost + Variable Cost = $15,000 + $4 (Units produced)  = $15,000 + $4(5000) $15,000 + $20,000 = $35,000


George will breakeven when his price is just sufficient to cost the total cost.  

Break even = Profit = 0 Total revenue - Total cost = 0 P*Q - $35,000 = 0 P*5000 = $35000 P= $35,000/5000 P=$7

 

If George sells 50% more, then his sales is 7,500 units.  

Total cost of George = Fixed cost + Variable Cost = $15,000 + $4 (Units produced)  = $15,000 + $4(7,500) $15,000 + $30,000 = $45,000


George will breakeven when his price is just sufficient to cost the total cost.


Break even = Profit = 0 Total revenue - Total cost = 0 P*Q - $45,000 = 0 P*7500 = $45000 P= $45,000/7,500 P=$6

When sales is 5000 units price is $7. When sales is 7,500 units price is $6.

8 0
3 years ago
A $25,000 bank loan is to be repaid in equal yearly payment over 15 years at an effective annual interest rate of 7%. you did th
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8 0
3 years ago
Revenue on account amounted to 54,000. Cash collections of accounts receivable amounted to $2,300. Expenses for theperiod were 5
Georgia [21]

Answer:

Option (D) is correct.

Explanation:

Given that,

Revenue on account = $54,000

Cash collections of accounts receivable = $2,300

Expenses for the period = $52,100

company paid dividends = $450

Net income for the period:

= Revenue on account - Expenses for the period

= $54,000 -  $52,100

= $1,900

Therefore, the net income for the period is $1,900.

8 0
3 years ago
Company collected the following data regarding production of one of its products. Compute the total direct materials cost varian
Xelga [282]

Answer:

The total direct materials cost variance is $3,790 favorable

Explanation:

The computation of the total direct materials cost variance is shown below:

Total direct materials cost variance = Actual cost - standard cost

where,

Actual cost is $267,790

And, the standard cost = Actual finished units produced × Direct materials standard

= 22,000 × $12

= $264,000

Now put these values to the above formula  

So, the value would equal to

= $267,790 - $264,000

= $3,790 favorable

6 0
3 years ago
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