Thunder Bay Entertainment Inc. has two separate divisions: DVD rental and sporting goods. The beta of the entire company is 1.25. The beta of the DVD rentals division is 0.8 and the beta of the sporting goods division is 1.5. The risk-free rate is 4% and the market risk premium is 7.5%. Which of the following independent projects should the company undertake? Project || ||| IV Industry Sporting goods Sporting goods DVD rental DVD rental CFO $150,000 $200,000 $50,000 $80,000 Perpetual annual CF $25,000 $30,000 $6,000 $7,500
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- Maximus Steel plans to introduce one of three new products code-named: Wren, Hawk, and Nightingale. The marketing department indicated that the success of any product depends on the market conditions (Favorable, Neutral, or Unfavorable). The profit the company will earn also depends on the market conditions. The table below shows the probability estimated for each market condition and the profits Maximus Steel will realize within those conditions: Product Code Market Conditions Favorable P = 0.2 Neutral P = 0.7 Unfavorable P = 0.1 Wren $120,000 $70,000 ($30,000) Hawk $60,000 $40,000 $20,000 Nightingale $35,000 $30,000 $30,000 Part 1 Instructions: Compute the expected value for each alternative. What is the best option for the company?Please find the Asset Beta (IndustryBeta) based on the following information below: Currently, Ljutic A/I Inc. has hired a consulting firm (Oakland Association-OA) to estimate the size of the market and hence expected unit sales for its main product (E-toral application sensor). OA’s work resulted in unit sales estimates of 318,331, 341,342, 368,769, 383,432, and 376,532 units respectively for the next five years conditioned on Ljutic adhering to an average sales price of $568 per unit for the first two years and $387 in years three, four, and five. From that point going forward, growth in unit sales is predicted to be 2.72% indefinitely. The results of an independent outside analysis by a leading market research firm has determined that the company can manufacture its product line at a variable cost per unit expected to be $63.47 growing at 2.23% per year for the first 5 years and 3.17% per year indefinitely thereafter while overall fixed costs are estimated to be $10,482,000…The production department is proposing the purchase of an automatic insertion machine. It has identified three machines and has asked the accountant to analyze them to determine which one has the best average rate of return. Machine A Machine B Machine C $83,087.40 $73,001.40 322,364.00 276,958.00 486,676.00 Estimated average income $45,130.96 Average investment Oa. Machine B Ob. Machine C Oc. Machine A Od. Machines B and C have the same preferred average rate of return.
- 1. COMPARING ALTERNATIVES- YOU WERE EMPLOYED IN A BPO COMPANY AND YOUR COMPANY TASKED YOU TO BUY A NEW ROUTER TO BOOST YOUR CONNECTIVITY WITH MANY NETWORKS SWITCH. THERE ARE FOUR AVAILABLE PRODUCTS TO CHOOSE FROM WITH THE FF COST DATA. COST DATA Brand A C D FIRST COST 24K 30K 49.6K 52K LABOR/YR MAINTENANCE/YR TAXES/INSURANCE 11.6K 9.32K 4.2K 2K 2.8K 1.9K 1.3K 0.7K 3% of ist cost 3% of ist cost 3% of ist cost 3% of ist cost POWER/YR 1.3K 1.36K 2.4K 2.020K LIFE,YRS 5 a. IF THE COST OF MONEY IS 17%, CHOOSE THE BEST ALTERNATIVE THAT YOU WILL RECOMMEND USING ANNUAL WORTH METHOD. b. PRESENT YOUR ANSWER IN MATRIX FORM. c. SHOW YOUR COMPUTATION ON DEPRECIATION USING SINKING FUND FORMULA. 2. IN CASE YOU PREFER A CERTAIN BRAND BUT IT DID NOT MEET THE ANNUAL COST CRITERIA, WHAT ARE THE OPTIONS YOU WILL DO IN ORDER THAT THE PREFERRED BRAND WILL BE ACCEPTED BY TOP MANAGEMENT? THE QUALITY OF BRAND A, B, C, & D ARE AT THE SAME LEVEL.The production department is proposing the purchase of an automatic insertion machine. It has identified three machines and has asked the accountant to analyze them to determine which one has the best average rate of return. Machine A $43,529.50 $80,697.00 Machine B Machine C $64,675.95 310,925.00 268,990.00 431,173.00 Estimated average income Average investment Oa. Machine B Ob. Machine A Oc. Machine C Od. Machines B and C have the same preferred average rate of return.Ajmal LLC a company based in ibri, and its Project management team has recently been completed the sensitivity analysis of their upcoming project at Fahud. The following are the results of the sensitivity analysis. i) Initial investment sensitivity margin is 15%, ii) Sales volume sensitivity margin is 12%, iii) Selling price sensitivity margin is 8%, iv) Variable cost sensitivity margin is 3%, You are required to identify which two of the above variables, the Ajmal LLC management should pay particular attention. a. ii & iii b. I & ii c. None of the options d. i & iv
- The senior buyer at How Does Your Garden Grow Inc. needs to select a supplier for plastic patio chairs for a one-year contract. The chairs will be shipped to the company's distribution center in Toledo, Ohio. Three potential suppliers have been identified and the data were gathered. Company Annual sales Plant location Purchase price per unit Quality (defective parts per million) Delivery (% on time) Transportation time Supplier Assessment Scores Category Quality performance and systems Management capabilities and attitudes ABC Molding $9 million Erie, PA $8.40 280 ppm Delivery performance Purchase price Total Weighted Score 98.5% 1 day *Shipping is not included. pictureClick here for the Excel Data File a. Complete the weighted-point model. (Round your answers to 1 decimal place.) Weight 50% 10% 20% 20% ABC Molding Rating 3 3 Perfection Plastics $73 million Oakland, CA $10.55 64 ppm 4 5 90% 5 days Score Perfection Plastics Rating Score 5 4 2 2 1-Products $34 million St. Louis, MO…I'm working through a practice assignment with an answer key and I'm getting Answer A for question 4 but the answer key for this one says the answer is C. Can someone work through this one and show me how its done please? For questions 3-4, consider the following table. Investment Investment cost at i = 0 Revenue at t = 1 Revenue at t= 3. 180 200 -200 50 -300 149 Table 1 Suppose that you need to choose between two investment options A and B. Given that the persistent anmual interest rate is 5 percent, which investment option would yiel a higher value? (a) Option A. (b) Option B. (c) Both options would yield the same value. (d) Not enough information.Analyze Star Stream's cost-vol ume-profit relationships Star Stream is a subscription-based video streaming service. Subscribers pay $120 per year for the service. Star Stream licenses and develops content for its subscribers. In addition, Star Stream leases servers to hold this content. These costs are not variable to the number of subscribers, but must be incurred regardless of the subscriber base. In addition, Star Stream compensates telecommunication companies for bandwidth so that Star Stream customers receive fast streaming services. These costs are variable to the number of subscribers. These and other costs are as follows: Enter your answers in whole dollars. Server lease costs per year $100,000,000 Content costs per year 2,000,000,000 Fixed operating costs per year 900.000,000 Bandwidth costs per subscriber per year 15 Variable operating costs per subscriber per year 25 a. Determine the break-even number of subscribers. subscribers b. Assume Star Stream planned to increase…
- (b) The research department of Kwasa Kwasa Ltd has recommended to the marketingdepartment to launch a shampoo of three different types. The marketing manager has todecide one of the types of shampoo to be launched under the following estimated pay offsfor various levels of sales:Estimated levels of sales15, 000 10,000 5, 0001. Egg shampoo2. Clinic shampoo3. Deluxe shampoo30001000-100030003000250100010001000What will be the marketing manager’s decision ifiv. Laplace criterion is used? v. Hurwicz criterion is used? Use α = 0.75m. Jana is interested in establishing a new division that will focus primarily on developing new Internet-based projects. In trying to determine the cost of capital for this new division, you discover that specialized firms involved in similar projects have, on average, the following characteristics: Their capital structure is 10% debt and 90% common equity; their cost of debt is typically 12%; and they have a beta of 1.7. Given this information, what would your estimate be for the new divisions cost of capital?7. Responsibility Accounting: a. What is a cost center? Give an example of a cost center b. What is a Profit center? Give an example of a profit center c. What is an investment center? Give an example of an investment center d. What is management by exception: e. The Hydride Division of Murdoch Corporation is an investment center. It has $1,000,000 of operating assets. During 2022, the Hydride Division earned operating income of $400,000 on $5,000,000 of sales. Murdoch's companywide return on investment or desired rate of return is approximately 20% SHOW WORK FOR CREDIT! 1. What is the ROI? 2. What is the margin? 3. What is the turnover? 4. What is the residual income?