"A firm is considering purchasing a computer system. The following data has been collected.
- Cost of the system: $159,000
- Project life: 6 years
- Salvage value at the end of year 6: $18,000
- Depreciation method: five-year MACRS
- Tax rate: 32%
- Annual revenue from project: $105,000
- Annual expenses (not including depreciation): $66,000
The firm will borrow the entire $159,000 at 7.4% interest to be repaid in 2 annual payments.
The firm's MARR is 12%. Determine the IRR for the computer system. Enter your answer as a percentage between 0 and 100."

Each year, Florida's Best Salad Dressing, Inc. (FBSD) purchases 50,000 gallons of extra virgin

olive oil. Ordering costs are $80.00 per order, and the carrying cost, as a percentage of inventory

value is 80 percent. The purchase price to FBSD is $0.50 per gallon. FBSD’s management currently

orders the EOQ each time an order is placed. No safety stock is carried. The supplier is now offering a

quantity discount of $0.03 per gallon if FBSD orders 10,000 gallons at a time. What is the net benefit

in dollars if FBSD takes the discount?

We are evaluating a project that costs $843,617, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 56,500 units per year. Price per unit is $41, variable cost per unit is $17, and fixed costs are $417,515 per year. The tax rate is 35%, and we require a return of 22% on this project.

In percentage terms, what is the sensitivity of NPV to changes in the units sold projection?

(Round answer to 2 decimal places. Do not round intermediate calculations)

"A firm is considering purchasing a computer system. The following data has been collected.
- Cost of the system: $180,000
- Project life: 6 years
- Salvage value at the end of year 6: $14,000
- Depreciation method: five-year MACRS
- Tax rate: 21%
- Annual revenue from project: $148,000
- Annual expenses (not including depreciation): $93,000
The firm will borrow the entire $180,000 at 6.4% interest to be repaid in 2 annual payments.
The firm's MARR is 15%. Determine the IRR for the computer system. Enter your answer as a percentage rounded to the nearest tenth of a percent."

Each year, Florida's Best Salad Dressing, Inc. (FBSD) purchases 50,000 gallons of extra virgin

olive oil. Ordering costs are $95.00 per order, and the carrying cost, as a percentage of inventory

value is 80 percent. The purchase price to FBSD is $0.50 per gallon. FBSD’s management currently

orders the EOQ each time an order is placed. No safety stock is carried. The supplier is now offering a

quantity discount of $0.03 per gallon if FBSD orders 10,000 gallons at a time. What is the net benefit

in dollars if FBSD takes the discount?

Blue Eagle Recycling has a weighted-average cost of capital of 7.27 percent and is evaluating two projects: A and B. Project A involves an initial investment of 5,062 dollars and an expected cash flow of 7,745 dollars in 8 years. Project A is considered more risky than an average-risk project at Blue Eagle Recycling, such that the appropriate discount rate for it is 1.1 percentage points different than the discount rate used for an average-risk project at Blue Eagle Recycling. The internal rate of return for project A is 5.46 percent. Project B involves an initial investment of 5,615 dollars and an expected cash flow of 7,861 dollars in 9 years. Project B is considered less risky than an average-risk project at Blue Eagle Recycling, such that the appropriate discount rate for it is 0.95 percentage points different than the discount rate used for an average-risk project at Blue Eagle Recycling. The internal rate of return for project B is 3.81 percent. What is X if X equals the NPV of project A plus the NPV of project B?

Coolbrook Company has the following information available for the past year:   

   
The company’s hurdle rate is 7.26 percent.

Required:
1. Calculate return on investment (ROI) and residual income for each division for last year. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.))



2. Recalculate ROI and residual income for each division for each independent situation that follows: (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.))

a. Operating income increases by 11 percent.



b. Operating income decreases by 10 percent.



c. The company invests $241,000 in each division, an amount that generates $117,000 additional income per division.



d. Coolbrook changes its hurdle rate to 5.26 percent.

Dana’s Ribbon World makes award rosettes. Following is information about the company:

Required:

1. Suppose Dana’s would like to generate a profit of $1,020. Determine how many rosettes it must sell to achieve this target profit.

2. If Dana’s sells 1,520 rosettes, compute its margin of safety in units, in sales dollars, and as a percentage of sales.

3. Calculate Dana’s degree of operating leverage if it sells 1,520 rosettes.

4a. Using the degree of operating leverage, calculate the change in Dana’s profit if unit sales drop to 1,140 units.

4b. Prepare a new contribution margin income statement to verify change in dana's profit.

Violet Sky Consulting has a weighted-average cost of capital of 9.46 percent and is evaluating two projects: A and B. Project A involves an initial investment of 6,723 dollars and an expected cash flow of 9,748 dollars in 8 years. Project A is considered more risky than an average-risk project at Violet Sky Consulting, such that the appropriate discount rate for it is 1.21 percentage points different than the discount rate used for an average-risk project at Violet Sky Consulting. The internal rate of return for project A is 4.75 percent. Project B involves an initial investment of 4,242 dollars and an expected cash flow of 7,211 dollars in 9 years. Project B is considered less risky than an average-risk project at Violet Sky Consulting, such that the appropriate discount rate for it is 1.28 percentage points different than the discount rate used for an average-risk project at Violet Sky Consulting. The internal rate of return for project B is 6.07 percent. What is X if X equals the NPV of project A plus the NPV of project B?

Coolbrook Company has the following information available for the past year: