Refer to Scenario 13-1. For the first year of operation, what is the opportunity cost of purchasing the factory? Scenario 13-1 Joe wants to start his own business. The business he wants to start will require that he purchase a factry that costs $300,000. To finance this purchase, he will use $100,000 of his own money, on which he has been earning 10 percent interest. In addition, he will borrow $200,000, and he will pay 12 percent interest on that loan. O $24,000 O $10,000 $34,000 O $20,000

Refer to Scenario 13-1. For the first year of operation, what is the opportunity cost of purchasing the factory? Scenario 13-1 Joe wants to start his own business. The business he wants to start will require that he purchase a factry that costs $300,000. To finance this purchase, he will use $100,000 of his own money, on which he has been earning 10 percent interest. In addition, he will borrow $200,000, and he will pay 12 percent interest on that loan. O $24,000 O $10,000 $34,000 O $20,000

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter1: Introduction And Goals Of The Firm

Section: Chapter Questions

Problem 4E: In the Southern Company Managerial Challenge, which alternative for complying with the Clean Air Act...

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In the Southern Company Managerial Challenge, which alternative for complying with the Clean Air Act creates the greatest real option value? How exactly does that alternative save money? Why? Explain why installing a scrubber burns this option.
A company that produces video equipment, including videocameras and televisions, is attempting to forecast what newproducts and product innovations might be technologicallyfeasible and that customers might demand 10 years into thefuture. Speculate on what type of qualitative methods itmight use to develop this type of forecast.
You've estimated the following cash flows (in $ million) for two mutually exclusive projects: Year Project A Project B 0 -27 -43 1 30 45 2 40 50 What is the crossover rate, i.e., the discount rate at which both projects have the same NPV? What is project A's NPV at the crossover rate? What is project B's NPV at the crossover rate?
"All growth models. You are evaluating the potential purchase of a small company that currently generates $42,500 in cash flow after taxes (D0 = $42,500). Based on a review of similar risk investment opportunities, you should earn a return rate of 18% from the proposed purchase. Since you're not very sure about future cash flows, you decide to calculate the value of the company assuming some possibilities for the cash flow growth rate. a) What is the value of the company if cash flows are expected to grow at an annual rate of 0% from now on? b) What is the value of the company if cash flows are expected to grow at a constant annual rate of 7% from now on? c) What is the value of the company if cash flows are expected to grow at an annual rate of 12% for the first 2 years and then, starting from year 3, the growth rate decreases to a constant annual rate of 7%?"
Calculate the net present value (NPV) before tax of investment A: a factory. Base your calculation on the following information: The investment cost is paid in full in quarter 0, and the cost of the factory is 100000. The factory has a lifetime of 20 quarters (5 years) and the value of the factory at the end of quarter 20 is 0 Only Basic jetpacks should be manufactured at the factory throughout its lifetime. There is no investment in research to streamline production or material consumption. Suppose the quarterly demand in the market is constant and given at P = 228 - 0.007 * Q, where P is price and Q is the number of jetpacks in demand. There are 5 competitors in the market (including you), and all sell the same number of jetpacks each quarter at the price of 193 each. You produce as much as you sell. The costs associated with the quarterly production at the factory are given at K = 158 * Q + 20000, where 158 * Q is direct labor cost and materials, and 20000 is quarterly maintenance…
Engr. Roque owner of the HarRoq’s Ice Plant is monitoring the cashflow of the plant. Based on the following information, how many ice blocks must produce and able to sell per month in order to break even? Ice block price Php 50.00/ice block Cost of electricity Php 30.00/ice block Tax to be paid Php 3.00/ice block Real estate Tax Php 4,500.00/month Salaries and wages Php 30,000.00/month Others Php 15,000.00/month
firm decides to invest X units of capital in Project A and Yunits of labour in Project B. iv. The expected return for each unit of investment is $500 in Project A and $1500 in Project B. However in order to meet the expectations of the firm's ethical and environmental policy values of X and Y must satisfy the constraint x+y-5x-6y= 210. How many units of each type should firm buy in other to maximize total volume? What is the implication of a unit change in investment in capital and (or) Labour Economic Analysis?
No hand written solution and no img Consider the following information for a period of years: Arithmetic Mean Long-term government bonds 7.5% Long-term corporate bonds 7.6 Inflation 4.4 What is the real return on long-term government bonds? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. What is the real return on long-term corporate bonds? long term government bond: ? long term corporate bonds: ?
Answer the following question with (True) if the statement is correct and with(False) if the statement is wrong 1. Project is a temporary endeavor undertaken to create a unique product only ( __ )Justify:2. Time, budget, resources and customer specifications are the project limitations( __ )Justify:3. Adding working shifts to a late project will help crashing the project towards thedeadline( __ )Justify:4. Finish-to-start (FS) is a logical relationship in which a predecessor activity cannot startuntil a successor activity has finished. ( __ )Justify:5. The project customer/user not considered as a project stakeholder. ( __ )Justify:
Suppose you bought a condo for $100,000 financing it with a $20,000 down payment of your own funds and an $80,000 mortgage loan from a bank. Now, instead of (a) or (b), suppose the value of the condo fell from $100,000 to $70,000. Assuming you paid $100,000, financing it with $20,000 of your own money and $80,000 with a mortgage loan, and ignoring interest and other costs, calculate your rate of return on your asset (ROA) and your rate of return on equity (ROE). What is the value of your equity stake in the condo after the price fall?
Suppose that the one-year interest rate in Australia is 7.66% p.a. and in New Zealand, it is 8.63% p.a. Suppose also that the current spot rate is EAUD/NZD=1.1578 and the current 12-month forward rate is FAUD/NZD=1.046. Assuming there are no transaction costs, which of the following is true? Selected Answer: A. An arbitrager can make a profit of 0.1054 AUD for every AUD he borrows to invest in NZD assets. B. An arbitrager can make a profit of 0.1054 NZD for every NZD he borrows to invest in AUD assets. C. An arbitrager can make a profit of 0.0186 AUD for every AUD he borrows to invest in NZD assets. D. An arbitrager can make a profit of 0.0186 NZD for every NZD he borrows to invest in AUD assets. E. An arbitrager cannot profit in this scenario as covered interest parity holds The correct answer is B please explian it and show your calculation process
You are financial analyst for the XYZ company. The director has asked you to analyze two proposed capital investments, Project A and Project B. Each project has a cost of RM 10, 000, and the cost of capital for each project is 12 percent. The project s’ cash flows are as follows: Year Expected Net Cash Flows Project A Project B 0 (10,000) (10,000) 1 6500 3500 2 3000 3500 3 3000 3500 4 1000 3500 Calculate each project’s NPV. Which project or projects should be accepted?