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olganol [36]
2 years ago
5

Sommer, Inc., is considering a project that will result in initial aftertax cash savings of $2.3 million at the end of the first

year, and these savings will grow at a rate of 2 percent per year indefinitely. The firm has a target debt-equity ratio of .60, a cost of equity of 10 percent, and an aftertax cost of debt of 4.6 percent. The cost-saving proposal is somewhat riskier than the usual project the firm undertakes; management uses the subjective approach and applies an adjustment factor of 3 percent to the cost of capital for such risky projects.
Required:
What is the maximum inital cost the company would be willing to pay for the project?
Business
1 answer:
Anuta_ua [19.1K]2 years ago
6 0

Answer:

the maximum initial cost is 25.62674095 million

Explanation:

The computation of the maximum initial cost of the company is shown below:

But before that the discount rate is

= 0.6 ÷ 1.6 × 4.6% + 1 ÷ 1.6 × 10% + 3%

= 10.9750%

Now Maximum initial cost is

=2.3 ÷ (10.975% - 2%)

= 25.62674095 million

Hence, the maximum initial cost is 25.62674095 million

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Adriana Corporation manufactures football equipment. In planning for next year, the managers want to understand the relation bet
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Answer:

$50.57 ; $175,573.6

Explanation:

The computation of the fixed and variable portions of overhead costs based on machine-hours using high low method is shown below:

Variable cost per hour = (High Overhead cost - low overhead cost) ÷ (High machine hours - low service hours)

= ($581,145 - $503,775) ÷ (8,020 hours - 6,490 hours)

= $77,370 ÷ 1,530 hours

= $50.57

Now the fixed cost equal to

= High overhead cost - (High machine hours × Variable cost per hour)

= $581,145 - (8,020 hours × $50.57)

= $581,145 - $405,571.4

= $175,573.60

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3 years ago
What type of brake lining is typically used on heavy-duty vehicles?
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3 0
3 years ago
1.List the three steps of the planning phase of the strategic marketing process. Briefly describe the core elements and the purp
anygoal [31]

Answer:

1.List the three steps of the planning phase of the strategic marketing process.

The three sepecifc steps are:

  • Defining target audience - in this step, a segment of the market is chosen as the target for the good or service. (for example, young people, old people, wealthy people, poor people, etc).
  • Setting measurable goals - in this step, a specific sales volume goal is determined.
  • Developing budget - in this step, a detailed budget is developed in order to carry out the strategy that should help the company reach its marketing goal (previous step).

2.Which demographic cohorts are also known as the Millennial and Z Generations?

Millenials: those born between 1981 and 1996. They tend to be progressive, and be interested in social media, internet culture, and technology.

Generation Z: those born between 1996 and and the early 2010s. They are much like millenials but even more so: more progressive, more interested in technology, and in social justice causes.

This information is crucial for marketers because they help complete the first step in the marketing planning process: targeting an audience. The demographic cohorts are in fact, market segments, albeit very broad ones.

3.Explain the actions and considerations that relate to the five stages of the consumer purchase decision process.

Problem or need recognition: in this stage, the customer becomes aware of a need that has not been met.

Information search: the customer looks for a product or service that can meet his needs.

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Purchase: the customer completes the market transaction: the purchase of the good or service.

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3 0
3 years ago
A partial listing of costs incurred at Gilhooly Corporation during September appears below: Direct materials $ 162,000 Utilities
sergejj [24]

Answer:

Manufacturing overhead=  $96,000

Explanation:

Giving the following information:

Utilities, factory $ 11,000

Indirect labor $ 30,000

Depreciation of production equipment $ 51,000

<u>The manufacturing overhead includes all indirect costs regarding production. </u>

<u></u>

Manufacturing overhead= 11,000 + 30,000 + 51,000

Manufacturing overhead=  $96,000

8 0
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