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docker41 [41]
3 years ago
14

Old Town Industries has three divisions. Division X has been in existence the longest and has the most stable sales. Division Y

has been in existence for five years and is slightly less risky than the overall firm. Division Z is the research and development side of the business. When allocating funds, the firm should probably:
Business
2 answers:
Cloud [144]3 years ago
5 0

Answer:

D) assign the highest cost of capital to Division Z because it is most likely the riskiest of the three divisions.

Explanation:

When a corporation's business units clearly have differentiated risks associated to their activities, the corporation can assign different capital structures to each division and if possible calculate their own weighted average cost of capital (WACC).

One of the basic premises in business, is that investors are risk adverse. This means that investors will require higher returns from riskier investments. WACC has two main components: shareholder equity and debt (either loans, bonds, preferred stock). Debt should cost the same for every division, but shareholder equity shouldn't.

It is the same reason why a subsidiary that operates in Australia has a lower WACC than a subsidiary operating in South America, and that one has a lower WACC than a subsidiary operating in Africa. Higher risk always demands higher returns.

blagie [28]3 years ago
4 0

Answer:

D.

Explanation:

Based on the scenario being described within the question it can be said that when allocating funds, the firm should probably assign the highest cost of capital to division Z because it is most likely the riskiest of the three divisions. This is because Division Z focuses on research and development which means that they might not actually discover or create something that can bring value to the company and is therefore highly risky.

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Using the estimated sales and production of 140,000 boxes of Chap-Off, the Accounting Department has developed the following man
Alchen [17]

Answer:

Silven Industries

If Silven buys its tubes from the outside supplier, it will be able to avoid $1.10 of its own Chap-Off manufacturing costs per box

Explanation:

a) Data and Calculations:

Estimated Production and Sales Units of Chap-Off = 140,000 boxes

Manufacturing cost per box:      Avoidable costs

Direct material              $ 3.70           $0.74 ($3.70 * 20%)

Direct labor                      2.00             0.20 ($2.00 * 10%)

Manufacturing overhead 1.60              0.16 ($1.60 * 10%)

Total cost                      $ 7.30            $1.10

Outside supplier's price for tubes = $1.20 per box

b) Unless there an alternative use for the machine used in making the tubes internally exists, it may not be cost-effective for Silven to buy from the outside supplier.  Alternatively, it should renegotiate a price per box that is less than $1.10 in order to stop making the tubes internally.

8 0
3 years ago
(LaVilla) LaVilla is a village in the Italian Alps. Given its enormous popularity among
garri49 [273]

Answer:

  a) 120 skiers per day

  b) 6.25% increase in revenue

Explanation:

a) If the average skier stays 10 days, the average turnover is 1/10 of the skiers per day, or 1200/10 = 120 skiers per day.

__

b) For a stay of n days, the average skier spends ...

  50 +(n-1)30 = 20 +30n

and the average spending per day is ...

  (20 +30n)/n = (20/n) +30

So, for a 10-day stay, the average skier spends in restaurants ...

  20/10 +30 = 32 . . . . per day

And for a 5-day stay, the average skier will spend ...

  20/5 +30 = 34 . . . . per day

The change in restaurant revenue is expected to be ...

  (34 -32)/32 × 100% = 2/32 × 100% = 6.25%

Restaurant revenues will be 6.25% higher compared to last year.

8 0
3 years ago
Suppose you owned a portfolio consisting of $250,000 of long-term U.S. government bonds. Would your portfolio be riskless? Expla
hammer [34]

Answer and Explanation:

An investment when it would be risk free in that case both the principal and the interest amount are to be paid within the prescribed time. Also when the U.S government bonds i.e. long term would be issued by the government have a lesser interest rate as compared with the other riskier securities available at the market place this is because as the government would default next to zero in case of the short term it would make the default when there are extreme situations arise.

Therefore in the short term it would be risk free

But in the long run, the person is based on the treasury bills returns so that he or she could equate the similar standard of living also it would not suffice when the inflation rises

Therefore the less risky investment would be of Government bonds

6 0
3 years ago
When using punishment, a manager should question 1 options: ignore undesirable behaviors. Save reprimands until the end of the w
Fofino [41]
Answer is to save reprimands until the end of the work day or preferably before a weekend this is to ensure privacy and to not embarrass or violate the employee's rights
7 0
3 years ago
A client’s condition has resulted in a decrease in work demands of most cells in the body. Which change within the cell will lik
SVEN [57.7K]

Answer:

The correct answer to the following question will be "Decreased size of organelles".

Explanation:

  • Cell atrophy occurs in a decline in the size and number of cell cell types. Through cell atrophy, the cell reduced the absorption of oxygen and the development of mitochondria.
  • The size of the cell reduces. When faced with reduced work demands or unfavorable environmental factors, many cells are able to go back to a small size and to a lower and much more effective level of ability that is consistent with sustainability.
  • A reduction in the size of the cells is termed atrophy. The cell death cycle is not impaired.

Hence, it is the right answer.

6 0
3 years ago
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