Block Island TV currently sells large televisions for $3,600. It has costs of $3,000. It has investment capital of $120,000,000. Block Island TV sales are currently 10,000 televisions per year. 1. What is the markup percentage on cost if Block Island TV has a target return on investment of 10%? А. 10% В. 20% С. 30% D. 40% 2. What is the target cost if Block Island TV wants to keep the current price $3,600 while achieving the 10% return on investment? A. $3,000 B. $2,800 C. $2,600 D. $2,400

Block Island TV currently sells large televisions for $3,600. It has costs of $3,000. It has investment capital of $120,000,000. Block Island TV sales are currently 10,000 televisions per year. 1. What is the markup percentage on cost if Block Island TV has a target return on investment of 10%? А. 10% В. 20% С. 30% D. 40% 2. What is the target cost if Block Island TV wants to keep the current price $3,600 while achieving the 10% return on investment? A. $3,000 B. $2,800 C. $2,600 D. $2,400

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter16: Financial Planning And Control

Section: Chapter Questions

Problem 5PROB

See similar textbooks

Similar questions

Average rate of returnnew product Hana Inc. is considering an investment in new equipment that will be used to manufacture a smart-phone. The phone is expected to generate additional annual sales of 10,000 units at 300 per unit. The equipment has a cost of 4,500,000, residual value of 500,000, and a 10-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Determine the average rate of return on the equipment.
Assume that a company plans to introduce a new product to the market at a target selling price of $20 per unit. It is investing $4,000,000 to purchase the equipment needed to produce and sell 250,000 units per year. Assuming the company’s required rate of return on all investments is 16.50%, what is the new product’s target cost per unit? Multiple Choice $21.84 $22.84 $18.36 $17.36
Question 3 You are starting a new project.This project would last 4years. The following is the input information that you have collected: Buildinf cost(1.3% in the first year and 2.6% every year)....................................$12,000,000 Equipment cost (MACRS 5 years)........................................................................$8,000,000 Net operating working capital requirement(% of sales)...........................................10% First year sales(in units)............................................................................................20,000 Growth rate in units sold.............................................................................................0% Sales price per unit......................................................................................................$3,000 Variable cost per unit.....................................................................................................$2,100 Fixed…
Thornton Painting Company is considering whether to purchase a new spray paint machine that costs $5,400. The machine is expected to save labor, increasing net income by $810 per year. The effective life of the machine is 15 years according to the manufacturer’s estimate. Required Determine the unadjusted rate of return based on the average cost of the investment. (Enter your answer as a whole percentage (e.g. 0.55 should be entered as 55).)
Question 1 Aguilera Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implant as follows: Year Unit Sales 1 8300 2 9200 3 10400 4 9800 5 8400 Production of the implants will require GH¢ 150,000 in net working capital to start and additional net working capital investments each year equal to 15 percent of the projected sales for that year. In the final year of the project, net working capital will decline to zero as the project is wound down. In other words, the investment in working capital is to be completely recovered by the end of the project’s life. Total fixed costs are GH¢ 240,000 per year, variable production costs are GH¢ 190 per unit, and the units are priced at GH¢ 345 each. The equipment needed to begin production has an installed cost of GH¢ 2,300,000. Because the implants are intended for professional singers, this equipment depreciated using the straight-line basis. In five years, this equipment…
1.ABC Company is considering a new product. Total assets to support expansion cost is $500,000. It is estimated that ABC Company can generate $1,200,000 for annual sales with a 6% profit margin. What is the net income?a. $30,000b. $72,000c. $1,200,000d. $102,0002.Suppose you inherited $200,000 and invested it at 6% per year. How much could you withdraw at the end of each of the next 15 years?a. $23,431.83b. $24,764.40c. $17,843.15d. $20,592.553.What would the future value of $100 be after 5 years at 10% compound interest?Select one:a. $161.05b. $127.84c. $134.54d.$151.294. ABC Company will pay a dividend of $3.00 per share in the next 12 months (D1). The required rate of return (ke) is 10% and the constant growth rate is 5%. Compute Price of common stock.a. $60.00b. $100.00c. $42.86d. $70.005. XYZ Company’s preferred stock is selling for $25 a share. If the required return is 12%, determine the dividend value be two years from now.a. $3.76b. $2.39c. $2.50d. $3.00
ANSWER IN EXCEL AS REQUESTED You purchased a stamping machine for $100,000 to produce a new line of products. The stamping machine will be used for five years, and the expected salvage value of the machine is 20% of the initial cost. The annual operating and maintenance costs amount to $30,000. If each part stamped generates $12 revenue, how many parts should be stamped each year just to break even? Assume that you require a 15% return on your investment. Answer in Excel
Question 1 The sales and finance team of a car company is evaluating a new proposed luxury model of its brand that will require an investment of $1Billion in a new machine for car interior decoration. Demand for the company’s car is expected to begin at 100,000 units in year 1, with 10% annual growth thereafter. Production cost will be $40,000 per unit in the first year, and increase by a rate of either 3% or 5% per year as a result of wage increase. Selling price will start at $35,000 and increase by 5% of the production cost. The model will be phased out at the end of year 10. In addition, 0.3%, 2% and 1% of before tax profit per year will be spent on social corporate responsibility, commercial (including promotions) and recalls respectively. Assume taxes will be 30% of yearly profit and that inflation will remain at 0% per year throughout the 10 year of production. Also assume interest rate is expected to be 3% per year in the first 5 years and 5% in the last 5 years.a. Based on…
A company is thinking about marketing a new product. Up-front costs to market and develop the product are $14.3 Million. The product is expected to generate profits of $2.3 million per year for 27 years. The company will have to provide product support expected to cost $254,298 per year in perpetuity. Furthermore, the company expects to invest $43,883 per year for 10 years for renovations on the product. This investing would start at the end of year 7. Assume all profits and expenses occur at the end of the year. Calculate the NPV of this project if the interest rate is 7.4%.