Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 2, Problem 9P
To determine
The incorrect statement.
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1. Coal provide a cheap source of energy and it is a major source of energy for the world. Coal consumption is hampered mainly by
a. Environmental concerns
b. Technological concerns
c. Political concerns
d. Financial concerns
2. JJ Alfred Ltd. Is an energy company and their financing comes from 60% equity and 40% debt, risk free rate is 3% and expected market rate is 10%, loan interest is 8% and tax deductible under a tax rate of 28%, beta (β) is 1.4 showing higher risk. What is the WEIGHTED AVERAGE COST OF CAPITAL
a. 9.3%
b. 9.2%
c. 9.1%
d. 9.0.%
4. A producer holding a commodity is said to be _______________ and could hedge by going __________ a futures contract
a. Long long
b. Long short
c. Short short
d. Short long
5. __________________refers to the benefits of holding some inventory rather than completely depending on the futures market for supply
a. Contract yield
b. Convenience yield
c. Storage benefit
d. Holding benefit
5. In the LNG business value chain, which of the…
4.1REQUIREDStudy the information given below and calculate the following if the sales manager’s proposal is accepted:4.1.1 Break-even quantity.4.1.2 The number of units that must be sold to achieve the company’s profit objective.
INFORMATIONSirloin Enterprises manufactures a product that sells for R9 each. The company presently produces and sells 90 000 units per year. Total variable manufacturing costs and selling costs are R405 000 and R81 000 (10% of sales) respectively. Fixed costs are R226 440 for manufacturing overheads and R97 200 for selling and administrative activities.The sales manager has proposed that the price be increased to R10.80 per unit. The company’s profit objective is 10% of sales.
4.2 ENO Ltd, a pharmaceutical company, is seeking finance for the development of a vaccine aimed at reducing the spread the Corona virus. The company is seeking funding only from the public in the form of equity as well as long-term borrowing.In light of the above, critically discuss…
A financial services consulting company bought an office building for $900,000. The company has 10 professional staff members. Monthly expenses for salaries, utilities, grounds maintenance, etc. are $1.1 million. The average billing rate per professional is $90 per hour. Use an interest rate of 1% per month and assume the building will have a resale value of $1.5 million after 10 years. (a) How many hours per month must be billed in order to make a profit of $15,000 per month? (b) How many hours per professional per month must be billed? (c) There are 260 eight-hour workdays per year. Of the total work hours available per month, what percentage does the hours per professional in part (b) represent?
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Contemporary Engineering Economics (6th Edition)
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