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Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter4: Preparing And Using Financial Statements

Section: Chapter Questions

Problem 1gM

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2. A manager is using the equation Y(t) = 6400 + 70t to forecast quarterly demand for a product. In the equation, t = 0 at Q2 of last year. Quarter relatives are Q1 = 0.89, Q2 = 0.88, Q3 = 0.73, and Q4 = 1.5. What forecasts are appropriate for the last quarter of this year? a. 10230 b. 10125 c. 9810 d. 10020 e. 4546.67
A company is thinking of investing in one of two potential new products for sale. The projections are as follows: Year Revenue/cost £ (Product A) Revenue/cost £ (Product B)0 (150,000) outlay (150,000) outlay 1 24,000 12,0002 24,000 25,3333 44,000 52,0004 84,000 63,333 Calculate NPV of both products (to 1 d.p.) assuming a discount rate of 7%. Which product should be chosen and why?
A company wants to price its product by using target ROR method. If the investment isestimated to be 300,000, target ROR = 15 %, expected demand is 43,125 units. What is the targeted price per unit?
Actual operating results for the shop are presented below: S 250,000.00 VC 100,000.00 CM 150,000.00 FX 120,000.00 NI 30,000.00 Required: Compute the Degree of Operating Leverage Factor Using the said concept, how many percent would income increase if the sales increase by 10%?
Choose the correct letter of answer Assuming that the company’s monthly demand is 10,000 units of Product x and y, which mathematical model is appropriate to express such a constraint? a. x + y ≤ 10,000b. x + y ≥ 10,000c. x - y = 10,000 d. none of the above
The cost of product X is 30 percent of its selling price, and the carrying cost is 8 percent of selling price. Accounts are paid on average 60 days after sale. Sales per month average P25,000. What is the investment in accounts receivable? choose the letter of the correct answera. P8,000.00b. P9,000.00c. P19,000.00d. P29,000.00e. P39,000.00
Sanchez, Incorporated, is considering a change in its cash-only sales policy. The new terms of sale would be net one month. The required return is 1.7 percent per month. Current Policy New Policy Price per unit $ 700 $ 700 Cost per unit $ 420 $ 420 Unit sales per month 1,120 1,220 Based on the above information, determine the NPV of the new policy.
The cost of product X is 30 percent of its selling price, and the carrying cost is 8 percent of selling price. Accounts are paid on average 60 days after sale. Sales per month average P35,000. What is the investment in accounts receivable? CHOOSE THE ANSWERA. P600.00B. P6,600.00C. P19,000.00D. P16,600.00E. P26,600.00
Consider the NPV sensitivity analysis reported in the following table (the numbers in the body of the table are dollars). Deviation Cover sales Price Operating cost Discount rate +20% -108,680 -70,765 -180,678 -150,987 +10% -122,783 -98,498 -160,094 -145,876 Base case -150,929 -150,929 -150,929 -150,929 -10% -164,890 -189,756 -125,098 -138,743 -20% -189,428 -200,690 -115,867 -133,987 Range 80,748 129,925 64,811 17,000 A) Which variable is the most risky for the project? Explain why. B) Which variable is the least risky for the project? Explain why. C) If you were told that the probability of any deviation in the risky event you identified in a) was 0.001%, how would that affect the answer you gave in a)?
If a company wishes to extend credit standards in order to increase its sales and generate additional accounts receivable of ¢70,000, a strategy that represents an opportunity cost of 20% for the company, what will be the required return on the additional investment? ? if it is known that: Unit price = 600.00 Unit variable cost = 240.0
If a company has three lots of products for sale, purchase 1 (earliest) for $17, purchase 2 (middle) for $15, purchase 3 (latest) for $12, which of the following statements is true? A. This is an inflationary cost pattern. B. This is a deflationary cost pattern. C. The next purchase will cost less than $12. D. None of these statements can be verified.
Refer to Cornerstone Exercise 3.4 for data on Dohini Manufacturing Companys purchasing cost and number of purchase orders. The controller for Dohini Manufacturing ran regression on the data, and the coefficients shown by the regression program are: Required: 1. Construct the cost formula for the purchasing activity showing the fixed cost and the variable rate. 2. If Dohini Manufacturing Company estimates that next month will have 430 purchase orders, what is the total estimated purchasing cost for that month? (Round your answer to the nearest dollar.) 3. What if Dohini Manufacturing wants to estimate purchasing cost for the coming year and expects 5,340 purchase orders? What will estimated total purchasing cost be? (Round your answer to the nearest dollar.) What is the total fixed purchasing cost? Why doesnt it equal the fixed cost calculated in Requirement 1?

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