Claim: The average cost to repair washing machine A is the same as the average cost to repair washing machine B. Test at α = 0.1 Data: A sample of 24 washing machine A’s have an average repair cost of $208 and a standard deviation of $22. A sample of 26 washing machine B’s have an average repair cost of $221 and a standard deviation of $19. Assume that the population standard deviations for repair costs are the same for each (a) Are these data statistically significant evidence to support the claim? (b) Are these data statistically significant evidence to refute the claim?

In your analysis of the cost of capital for an ordinary share, you calculate a cost capital using a dividend discount model that is much lower than the calculation for the cost of capital using the CAPM model.

1. Explain <using max 50 words> possible sources for the discrepancy.

Which of the following statements is CORRECT?

a.   A sunk cost is any cost that must be expended in order to complete a project and bring it into operation.

b.   A sunk cost is a cost that was incurred and expensed in the past and cannot be recovered regardless of whether the project is accepted or rejected.

c.   A sunk cost is any cost that was expended in the past but can be recovered if the firm decides not to go forward with the project.

d.   Sunk costs were formerly hard to deal with, but once the NPV method came into wide use, it became possible to simply include sunk costs in the cash flows and then calculate the PV.

A company is considering a proposed new plant that would increase productive capacity. Which of the following statements is CORRECT?

a.   In calculating the project's operating cash flows, the firm should notdeduct financing costs such as interest expense, because financing costs are accounted for by discounting at the WACC. If interest were deducted when estimating cash flows, this would, in effect, “double count” it.

b.   Since depreciation is a non-cash expense, the firm does not need to deal with depreciation when calculating the operating cash flows.

c.   When estimating the project’s operating cash flows, it is important to include both opportunity costs and sunk costs, but the firm should ignore the cash flow effects of externalities since they are accounted for in the discounting process.

d.   Capital budgeting decisions should be based on before-taxcash flows.

Clemson Software is considering a new project whose data are shown below.  The required equipment has a 3-year tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 3 years. Revenues and other operating costs are expected to be constant over the project's 3-year life.  What is the project's Year 1 cash flow? Show work.

Equipment cost (depreciable basis)                            $80,000

Straight-line depreciation rate                                    33.333%

Sales revenues, each year                                           $70,000

Operating costs (excl. deprec.)                                   $40,000

Tax rate                                                                            35%

a.   $29,916.66                        b. $28.666.56              c. $27,575.55              d. $28,833.24  

when determining the cost of manufacturing a product, whay considerations are included in the cost?

Prepare a Schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold and Income Statement;

this ie the jouranl entries

Pre-determined manufacturing overhead rate = Total estimated manufacturing overheads / Estimated direct labor hours = = $3600/12 hours = $300 per direct labor hour

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answering these questions :

A and B COMPANY puchase a machine .the cost of capital is 12% .the cost ofd the machine is $35,000 and is expected to provide additional net cash flows of $5000 per year .the machine will last for 15 years .calculate the NPV and IRR. (B) The machine are willing to offer a permanent service contract for an annual fee of $500 .this will keep the machine new always for ever.the net cash flows will be reduced to $4500 per year .calculate npv and irr for the purchase accompained by service contract.

Demonstrate that the marginal production cost is equal to the average production cost for the value of the output that minimizes the average production cost.

Assume the cost of gasoline is $2.2 per gallon and the cost of electricity is $0.10 per kWh. Gasoline weighs 5.5 lbs per gallon and releases 19,000 Btu of energy per pound. a) Calculate the cost of gasoline and electricity for transportation in terms of dollars per joule. b) Which one is a more costly energy for transportation? (hint: more costly means cost more for the same amounts of energy) c) If gas engines are 25% efficient in energy use (can only use 25% of the total energy from the gasoline) and electric engines are 60% efficient, which is more economical for fuel cost? (hint: more economical means cost less to produce the same amounts of energy)

1. A firm has a cost of equity of 13 percent, a cost of preferred of 5 percent, an after-tax cost of debt of 3.4 percent and a tax rate of 21%. Given this, which of the following will increase the firm’s weighted average cost of capital?
   1. Increase the firm’s tax rate
   2. Issuing new bonds at par
   3. Increasing the firm’s beta
   4. Increasing the debt/equity ratio