Dimitrova Inc. is a Lawrence, Kansas-based health care holding company. In the past the firm’s managers have used the firm's cost of capital of 14.4 percent as the discount rate to evaluate all capital spending proposals. However, the firm has long recognized that its oxidation equipment division is significantly less risky than the biotechnology innovation division. Based on an analysis of comparable firms in the oxidation equipment and biotech innovation business along with their capital structures and tax rates, Dimitrova’s managers have decided to assign equity betas to the oxidation equipment division of 1.8, and 2.3 to the biotech innovation division. Given the importance of getting the best possible discount rate to use in project analysis, the firm's CFO has asked you to prepare cost of capital estimates for each of the two divisions.
The requisite information to accomplish your task is presented below:
(i) The company’s cost of debt financing is 8.2 percent before taxes of 25 percent. However, the before-tax cost of debt assigned to the oxidation equipment division is 7.5 percent, and 11.9 percent for the biotech innovation division. These debt costs are after any flotation costs the firm would incur. Both divisions face the same tax rate as the firm overall.
(ii) Assume the risk-free rate of interest on U.S. Treasury bonds is currently 1.4 percent and the market risk premium is anticipated to be 8.5 percent.
(iii) The oxidation equipment division funds 40 percent of its capital projects with debt, whereas the biotech innovation division utilizes 25 percent borrowed funds.
(iv) The firm has sufficient internally-generated funds so that no new stock will have to be sold to raise equity financing. a. Estimate the divisional costs of capital for the oxidation equipment and biotech innovation divisions.
In: Finance
Compared to the 2010 Incoterms convention, there are 4 changes in the 2020 Incoterms convention. Vrai Faux
In: Operations Management
Innovation often involves a temporary monopoly before it is copied by others. You’ll know from studying microeconomics that monopolyinvolves a deadweight loss in terms of social welfare. Why then might governments not look on temporary monopoly as a problem when it is associated with innovation?
In: Economics
A 140-mH inductor and a 4.80-Ω
resistor are connected with a switch to a 6.00-V battery as shown
in the figure above.
(a) After the switch is first thrown to a (connecting
the battery), what time interval elapses before the current reaches
220 mA?
ms
(b) What is the current in the inductor 10.0 s after the switch is
closed?
A
(c) Now the switch is quickly thrown from a to b.
What time interval elapses before the current in the inductor falls
to 160 mA?
ms
In: Physics
play "Innovation Simulation: Breaking News"
This online simulation, you will manage the innovation process for The Citizen Sun, a struggling newspaper company. Working with limited time and budget, students design innovation initiatives-open innovation campaigns, customer focus groups, internal R&D projects-to generate a pool of innovation ideas. You will then review, test, and make a selection from among those ideas in order to choose the best possible innovation for The Citizen Sun news organization. The simulation teaches students about managing the innovation process, the different modes of innovation, idea generation and selection, and the role of organizational context in innovation.
After simulation write a 2 page brief about your outcomes and observations of this simulation.
In: Operations Management
On January 1, 2018, a machine was purchased for $100,000. The machine has an estimated salvage value of $6,400 and an estimated useful life of 5 years. The machine can operate for 104,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2018, 20,800 hrs; 2019, 26,000 hrs; 2020, 15,600 hrs; 2021, 31,200 hrs; and 2022, 10,400 hrs.
Compute the annual depreciation charges over the machine’s life assuming a December 31 year-end for each of the following depreciation methods. (Round answers to 0 decimal places, e.g. 45,892.)
On January 1, 2018, a machine was purchased for $100,000. The machine has an estimated salvage value of $6,400 and an estimated useful life of 5 years. The machine can operate for 104,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2018, 20,800 hrs; 2019, 26,000 hrs; 2020, 15,600 hrs; 2021, 31,200 hrs; and 2022, 10,400 hrs.
Compute the annual depreciation charges over the machine’s life assuming a December 31 year-end for each of the following depreciation methods. (Round answers to 0 decimal places, e.g. 45,892.)
| 1. |
Straight-line Method |
| 2. | Activity Method | |||
| Year | ||||
| 2018 |
$ |
|||
| 2019 |
$ |
|||
| 2020 |
$ |
|||
| 2021 |
$ |
|||
| 2022 |
$ |
|||
| 3. | Sum-of-the-Years'-Digits Method | |||
| Year | ||||
| 2018 |
$ |
|||
| 2019 |
$ |
|||
| 2020 |
$ |
|||
| 2021 |
$ |
|||
| 2022 |
$ |
|||
| 4. | Double-Declining-Balance Method | |||
| Year | ||||
| 2018 |
$ |
|||
| 2019 |
$ |
|||
| 2020 |
$ |
|||
| 2021 |
$ |
|||
| 2022 |
$ |
Assume a fiscal year-end of September 30. Compute the annual depreciation charges over the asset’s life applying each of the following methods. (Round answers to 0 decimal places, e.g. 45,892.)
|
Year |
Straight-line Method |
Sum-of-the-years'-digits method |
Double-declining-balance method |
|||
| 2018 |
$ |
$ |
$ |
|||
| 2019 | ||||||
| 2020 | ||||||
| 2021 | ||||||
| 2022 | ||||||
| 2023 |
In: Accounting
As the following table shows, projections indicate that the percent of U.S. adults with diabetes could dramatically increase.
(a) Find the logarithmic model that best fits the data in the table, with t as the number of years after 2000. (Round each coefficient to three places after the decimal.) D(t) = (b) Use the model to predict the percent of U.S. adults with diabetes in 2042. US adults with Year Diabetes (percentage) (
| 2010 | 14.2 |
| 2015 | 19.2 |
| 2020 | 21.1 |
| 2025 | 24.2 |
| 2030 | 27.7 |
| 2035 | 30.1 |
| 2040 | 31.2 |
| 2045 | 32.1 |
| 2050 | 33.4 |
In: Statistics and Probability
Leading Innovation
Innovation is the essence of much of real engineering. Companies
either innovate or stagnate and eventually die to more innovate
competition. Whilst some companies and business sectors innovate
well, others are by nature more conservative. After conducting a
comprehensive review of literature in the area of innovation
management in the context of an engineering sector of your choice,
find out what innovation means and what approaches is currently use
to introduce innovation in the projects. Based on your findings and
understanding of best practices in the literature develop
recommendations for improving innovation in your sector.
In: Operations Management
smartphone industry report with data from 2010 to 2020 export and import less than 3500 word
In: Economics
On January 1, 2018, a machine was purchased for $117,500. The machine has an estimated salvage value of $10,400 and an estimated useful life of 5 years. The machine can operate for 119,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2018, 23,800 hrs; 2019, 29,750 hrs; 2020, 17,850 hrs; 2021, 35,700 hrs; and 2022, 11,900 hrs.
(a)
Compute the annual depreciation charges over the machine’s life assuming a December 31 year-end for each of the following depreciation methods. (Round answers to 0 decimal places, e.g. 45,892.)
| 1. | Straight-line Method |
$ |
||
| 2. | Activity Method | |||
| Year | ||||
| 2018 |
$ |
|||
| 2019 |
$ |
|||
| 2020 |
$ |
|||
| 2021 |
$ |
|||
| 2022 |
$ |
|||
| 3. | Sum-of-the-Years'-Digits Method | |||
| Year | ||||
| 2018 |
$ |
|||
| 2019 |
$ |
|||
| 2020 |
$ |
|||
| 2021 |
$ |
|||
| 2022 |
$ |
|||
| 4. | Double-Declining-Balance Method | |||
| Year | ||||
| 2018 |
$ |
|||
| 2019 |
$ |
|||
| 2020 |
$ |
|||
| 2021 |
$ |
|||
| 2022 |
$ |
In: Accounting