Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Chapter 4, Problem 52P
The Tillamook County Creamery Association manufactures Tillamook Cheddar Cheese. It markets this cheese in four varieties: aged 2 months, 9 months, 15 months, and 2 years. At the shop in the dairy, it sells 2 pounds of each variety for the following prices: $7.95, $9.49, $10.95, and $11.95, respectively. Consider the cheese maker’s decision whether to continue to age a particular 2-pound block of cheese. At 2 months, he can either sell the cheese immediately or let it age further. If he sells it now, he will receive $7.95 immediately. If he ages the cheese, he must give up the $7.95 today to receive a higher amount in the future. What is the
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Bart’s Butters receives 1,000,000 containers of raw milk each period that it subsequently processes into consumable milk by adjusting the fat content, adding vitamins, and destroying any potentially harmful bacteria. For Bart’s, one container equals one gallon of consumable milk. Bart’s then must decide whether to sell its consumable milk at split-off or to process it further into butter. Bart’s normally sells consumable milk for a per-gallon price of $3. Alternately, each gallon of milk can be processed further into one-half tub of butter (i.e., one gallon of milk equals 0.5 gallon of butter) at an additional cost of $1.50 per tub of butter. Also, butter can be sold for $6.00 per tub. What is the contribution to income from processing the consumable milk into butter?
Bart’s Butters receives 1,000,000 containers of raw milk each period that it subsequently processes into consumable milk by adjusting the fat content, adding vitamins, and destroying any potentially harmful bacteria. For Bart’s, one container equals one gallon of consumable milk. Bart’s then must decide whether to sell its consumable milk at split-off or to process it further into butter. Bart’s normally sells consumable milk for a per-gallon price of $3. Alternately, each gallon of milk can be processed further into one-half tub of butter (i.e., one gallon of milk equals 0.5 gallon of butter) at an additional cost of $1.50 per tub of butter. Also, butter can be sold for $6.00 per tub.
Required:
1. What is the contribution to income from selling the consumable milk?$fill in the blank 1
2. What is the contribution to income from processing the consumable milk into butter?$fill in the blank 2
Freshly Farms plants 80 acres of Brussels sprouts every spring. Freshly sells its sprouts to a farmers cooperative, which sells them to a wholesaler, which sells them to retailers, which sells them to consumers. The farmers cooperative buys Freshly Brussels sprouts for $0.98 per pound. The cooperative takes a 16% margin on the cooperative's selling price. The wholesaler takes a 16% markup on the wholesaler's cost. The retailer takes a 15% margin on the retailer's selling price. How much does a consumer pay to the retailer for one pound of Freshly Farms Brussels sprouts? (Rounding: penny.)
ANSWER IS: 1.59, but HOW is that the answer? Please explain.
Chapter 4 Solutions
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Ch. 4.1 - Prob. 1CCCh. 4.1 - Prob. 2CCCh. 4.2 - Prob. 1CCCh. 4.2 - Prob. 2CCCh. 4.2 - Prob. 3CCCh. 4.3 - Prob. 1CCCh. 4.3 - Prob. 2CCCh. 4.4 - Prob. 1CCCh. 4.4 - What benefit does a firm receive when it accepts a...Ch. 4.5 - How do you calculate the present value of a a....
Ch. 4.5 - How are the formulas for the present value of a...Ch. 4.6 - Prob. 1CCCh. 4.6 - Prob. 2CCCh. 4.7 - Prob. 1CCCh. 4.7 - Prob. 2CCCh. 4.8 - Prob. 1CCCh. 4.8 - Prob. 2CCCh. 4.9 - Prob. 1CCCh. 4.9 - Prob. 2CCCh. 4.A - Your grandmother bought an annuity from Rock Solid...Ch. 4.A - Prob. A.2PCh. 4 - You have just taken out a five-year loan from a...Ch. 4 - Prob. 2PCh. 4 - Calculate the future value of 2000 in a. Five...Ch. 4 - Prob. 4PCh. 4 - Your brother has offered to give you either 5000...Ch. 4 - Prob. 6PCh. 4 - Prob. 7PCh. 4 - Your daughters currently eight years old. You...Ch. 4 - Prob. 9PCh. 4 - Prob. 10PCh. 4 - Suppose you receive 100 at the end of each year...Ch. 4 - You have just received a windfall from an...Ch. 4 - You have a loan outstanding. It requires making...Ch. 4 - You have been offered a unique investment...Ch. 4 - Prob. 15PCh. 4 - Prob. 16PCh. 4 - How would your answer to Problem 16 change if the...Ch. 4 - The British government has a consol bond...Ch. 4 - What is the present value of 1000 paid at the end...Ch. 4 - You are head of the Schwartz Family Endowment for...Ch. 4 - When you purchased your house, you took out a...Ch. 4 - Prob. 22PCh. 4 - Your grandmother has been putting 1000 into a...Ch. 4 - A rich relative has bequeathed you a growing...Ch. 4 - Prob. 25PCh. 4 - You work for a pharmaceutical company that has...Ch. 4 - Your oldest daughter is about to start...Ch. 4 - A rich aunt has promised you 5000 one year from...Ch. 4 - You are running a hot Internet company. Analysts...Ch. 4 - Prob. 30PCh. 4 - Prob. 32PCh. 4 - Your firm spends 5000 every month on printing and...Ch. 4 - You have just entered an MBA program and have...Ch. 4 - Your credit card charges an interest rate of 2%...Ch. 4 - You have decided to buy a perpetuity. The bond...Ch. 4 - You are thinking of purchasing a house. The house...Ch. 4 - You would like to buy the house and take the...Ch. 4 - You have just made an offer on a new home and are...Ch. 4 - Prob. 40PCh. 4 - Prob. 41PCh. 4 - You are saving for retirement. To live...Ch. 4 - Prob. 43PCh. 4 - Prob. 44PCh. 4 - Prob. 45PCh. 4 - Prob. 46PCh. 4 - Prob. 47PCh. 4 - Prob. 48PCh. 4 - You are shopping for a car and read the following...Ch. 4 - Prob. 50PCh. 4 - Prob. 51PCh. 4 - The Tillamook County Creamery Association...
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