What is the appropriate cost of capital for the project?

Empress Inc. has issued a bond with a face value of $1,000 and an interest rate of 13% to fund a new project. The bond is secured by the cash flows from the project, which will be $950 with a probability of 60% and $1,200 otherwise. Assume risk neutrality.

What is the appropriate cost of capital for the project?

In: Finance

Consider the following “Total Cost” function:

Consider the following “Total Cost” function:

                    Total Cost =   4Q³ – 204Q² + 700Q + 2500

     a.)  Solve for the “inflection point” of this function ( show your work).

     b.) Which Q has the LOWEST “Marginal Cost” ( give a numerical answer; briefly

                        explain how your answer to a.) is relevant).

In: Economics

Different Cost Classifications for Different Purposes

Dozier Company produced and sold 1,000 units during its first month of operations. It reported the following costs and expenses for the month

Required:

1. With respect to cost classifications for preparing financial statements:

a. What is the total product cost?

b. What is the total period cost?

2. With respect to cost classifications for assigning costs to cost objects:

a. What is total direct manufacturing cost?

b. What is the total indirect manufacturing cost?

3. With respect to cost classifications for manufacturers:

a. What is the total manufacturing cost?

b. What is the total nonmanufacturing cost?

c. What is the total conversion cost and prime cost?

4. With respect to cost classifications for predicting cost behavior:

a. What is the total variable manufacturing cost?

b. What is the total fixed cost for the company as a whole?

c. What is the variable cost per unit produced and sold?

5. With respect to cost classifications for decision making:

a. If Dozier had produced 1,001 units instead of 1,000 units, how much incremental manufacturing cost would it have incurred to make the additional unit?

In: Accounting

Cost-push inflation is a situation in which the:

1.

Cost-push inflation is a situation in which the:

  short-run aggregate supply curve shifts rightward.

  short-run aggregate supply curve shifts leftward.

  aggregate demand curve shifts leftward.

  aggregate demand curve shifts rightward

2. Which of the following tends to make aggregate demand decrease by more than the amount that consumer spending decreases?

  the interest rate effect

  the crowding-out effect

  the wealth effect

  the multiplier effect

3.

(Figure: Aggregate Demand Shift) Which of the following may be an explanation for the shift in aggregate demand from line A to line B?

Prices fall and increase real wealth.

  Consumer confidence declines and consumption spending falls.

  Interest rates fall and boost investments.

  Goods and services become less competitive and exports fall.

In: Economics

The cost of reworking defective components is an example of:

The cost of reworking defective components is an example of: 

• appraisal costs. 

• prevention costs. 

• internal failure costs. 

• external failure costs.

In: Accounting

Cost Approach is NOT applicable in which case?

Cost Approach is NOT applicable in which case?

Select one:

A. Old properties.

B. New construction.

C. Unique property (church or landmark)

D. Insurable value appraisal

In: Finance

_______ cost based mainly on customer service.

Fill in the blanks:

_______  cost based mainly on customer service.

In: Operations Management

If the market price exceeds _______ cost, profit will be _______

If the market price exceeds _______  cost, profit will be _______ 

In: Economics

Cost allocation downward demand spiral

Cost allocation downward demand spiral Deli One operates a chain of 10 hospitals in the Los Angeles area. Its central food-catering facility, Deliman, prepares and delivers meals to the hospitals. It has the capacity to deliver up to 1,460,000 meals a year. In 2009, based on estimates from each hospital controller, Deliman budgeted for 1,022,000 meals a year. Budgeted fixed costs in 2009 were $1,533,000. Each hospital was charged $6.00 per meal—$4.50 variable costs plus $1 .50 allocated budgeted fixed cost. Recently, the hospitals have been complaining about the quality of Deliman’s meals and their rising costs. In mid-2009, Deli One’s president announces that all Deli One hospitals and support facilities will be run as profit centers. Hospitals will be free to purchase quality-certified services from outside the system. Ron Smith, Deliman’s controller, is preparing the 2010 budget. He hears that three hospitals have decided to use outside suppliers for their meals; this will reduce the 2010 estimated demand to 876,000 meals. No change in variable cost per meal or total fixed costs is expected in 2010.

1. How did Smith calculate the budgeted fixed cost per meal of$1.50 in 2009?

2. Using the same approach to calculating budgeted fixed cost per meal and pricing as in 2009, how much would hospitals be charged for each Deliman meal in 2010? What would their reaction be?

3. Suggest an alternative cost-based price per meal that Smith might propose and that might be more acceptable to the hospitals. What can Deliman and Smith do to make this price profitable in the long run?

In: Statistics and Probability

Determine the cost of merchandise sold for november

Based on the following data,Determine the cost of merchandise sold for november

In: Accounting