Barfly Inc. manufactures and markets a line of non-alcoholic mixers sold to restaurants and bars. Barfly’s Creative Bartender has recently experimented with making alcoholic versions with the intention of bottling and marketing these directly to the public through appropriate retail outlets. Prior spending on R&D was $1.5 million and Barfly anticipates spending half of that again during the first year of the project to conclude R&D (for total R&D of $2.25 million). The cost of building the manufacturing line is estimated at $1,175,000.

Marketing projects revenues from the new product line will be 800,000 units in the first year, growth in years 2 and 3 at 15%, growth in year 4 at 10%, and 5% for year 5. While Barfly anticipates the product will have a longer life than 5 years, their initial projections are for a 5 year time horizon, fully depreciating the cost of plant and equipment over that time on a straight-line basis.

Revenue per unit is projected to be $2.50 in the first year, with prices rising by 3% per year thereafter. COGS are projected to be 68% of revenues, SG&A 7% of revenues, and the company’s marginal tax rate is 32%. Net working capital required for the project is expected to be 2% of revenues annually once the project is fully online in year 1.

Barfly’s balance sheet includes $3,000,000 in total capital, of which $980,000 is debt. The market yield to maturity on debt is 3.75%, the risk free rate on a 5-year Treasury is 3%, and the market risk premium is 6.5%. The company’s beta is 1.3 and the CFO uses the CAPM to estimate cost of equity.

1. What is the project’s NPV?
2. What is the project’s IRR?
3. Should the project be accepted?

Management has been studying the company’s capital structure and is considering using a small secondary offering of stock to pay down debt. The following data is used to determine the cost of debt under varying capital structures.

4. If Barfly issues $180,000 in new equity and uses the proceeds to repurchase (and defease*) existing debt, what would the resulting weighted average cost of capital be?
5. Should management move towards this capital structure? Why or why not?

Barfly Inc. manufactures and markets a line of non-alcoholic mixers sold to restaurants and bars. Barfly’s Creative Bartender has recently experimented with making alcoholic versions with the intention of bottling and marketing these directly to the public through appropriate retail outlets. Prior spending on R&D was $1.5 million and Barfly anticipates spending half of that again during the first year of the project to conclude R&D (for total R&D of $2.25 million). The cost of building the manufacturing line is estimated at $1,175,000.

Marketing projects revenues from the new product line will be 800,000 units in the first year, growth in years 2 and 3 at 15%, growth in year 4 at 10%, and 5% for year 5. While Barfly anticipates the product will have a longer life than 5 years, their initial projections are for a 5 year time horizon, fully depreciating the cost of plant and equipment over that time on a straight-line basis.

Revenue per unit is projected to be $2.50 in the first year, with prices rising by 3% per year thereafter. COGS are projected to be 68% of revenues, SG&A 7% of revenues, and the company’s marginal tax rate is 32%. Net working capital required for the project is expected to be 2% of revenues annually once the project is fully online in year 1.

Barfly’s balance sheet includes $3,000,000 in total capital, of which $980,000 is debt. The market yield to maturity on debt is 3.75%, the risk free rate on a 5-year Treasury is 3%, and the market risk premium is 6.5%. The company’s beta is 1.3 and the CFO uses the CAPM to estimate cost of equity.

1. What is the project’s NPV?
2. What is the project’s IRR?
3. Should the project be accepted?

Management has been studying the company’s capital structure and is considering using a small secondary offering of stock to pay down debt. The following data is used to determine the cost of debt under varying capital structures.

4. If Barfly issues $180,000 in new equity and uses the proceeds to repurchase (and defease*) existing debt, what would the resulting weighted average cost of capital be?
5. Should management move towards this capital structure? Why or why not?

The condensed income statement for the Terri and Jerri partnership for 2010 is as follows.
TERRI AND JERRI COMPANY
Income Statement
For the Year Ended December 31, 2010
Sales (200,000 units)
Cost of goods sold
Gross Profit
Operating expenses
Selling
Administrative
Net Loss
$280,000
160,000
$1,200,000
800,000
400,000
440,000
($40,000)
A cost behavior analysis indicates that 75% of the cost of goods sold are variable, 50% of the selling expenses are variable, and 25% of the administrative expenses are variable.
Instructions: (Round to nearest unit, dollar, and percentage, where necessary.)
(a) Compute the break-even point in total sales dollars and in units for 2010.
(b) Terri has proposed a plan to get the partnership “out of the red” and improve its profitability. She feels that the quality of the product could be substantially improved by spending $0.25 more per unit on better raw materials. The selling price per unit could be increased to only $6.25 because of competitive pressures. Terri estimates that sales volume will increase by 30%. What effect would Terri’s plan have on the profits and the break-even point in dollars of the partnership? (Round the contribution margin ratio to two decimal places.)
(c) Jerri was a marketing major in college. She believes that sales volume can be increased only by intensive advertising and promotional campaigns. She therefore proposed the following plan as an alternative to Terri’s. (1) Increase variable selling expenses to $0.79 per unit, (2) lower the selling price per unit by $0.30, and (3) increase fixed selling expenses by $35,000. Jerri quoted an old marketing research report that said that sales volume would increase by 60% if these changes were made. What effect would Jerri’s plan have on the profits and the break-even point in dollars of the partnership?
(d) Which plan should be accepted? Explain your answer

For each of the determinants of demand in Equation 2.1, identify an example illustrating the effect on the demand for hybrid gasoline-electric vehicles such as the Toyota Prius. Then do the same for each of the determinants of supply in Equation 2.2. In each instance, would equilibrium market price increase or decrease? Consider substitutes such as plug-in hybrids, the Nissan Leaf ad Chevy Volt, and complements such as gasoline and lithium ion laptop computer batteries.

Answer Grid

Chapter 2, Question 1

Question 1*

Q_D = f(P, P_S, P_C, Y, A, A_C, N, C_P, P_E, T_A, T/S . . .)

There are two ways to deal with each part of the question, namely, you can explain what would happen to the demand for the Toyota Prius if the the determinant in question (such as the price of a substitute good) increased, or, what would happen to the demand for the Toyota Prius if the the determinant decreased. As long as your conclusions are correct, your will have properly responded to the question. I strongly suggest that you use a table to present your responses to this question, so much so that I created a blank table for you to use to record and submit your answers.

Is there any way that you all can help me with this? I'm really confused, I have no idea what they are talking about.

Please explain step by step!

Slick Corporation is a small producer of synthetic motor oil. During May, the company produced 5,000 cases of lubricant. Each case contains 12 quarts of synthetic oil. To achieve this level of production, Slick purchased and used 16,500 gallons of direct materials at a cost of $20,647. It also incurred average direct labor costs of $14 per hour for the 3,997 hours worked in May by its production personnel. Manufacturing overhead for the month totaled $9,369, of which $2,200 was considered fixed. Slick's standard cost information for each case of synthetic motor oil is as follows.

Required:

a. Compute the materials price and quantity variances.

b. Compute the labor rate and efficiency variances.

c. Compute the manufacturing overhead spending and volume variances.

d. Prepare the journal entries to:

1. Charge materials (at standard) to Work in Process.

2. Charge direct labor (at standard) to Work in Process.

3. Charge manufacturing overhead (at standard) to Work in Process.

4. Transfer the cost of the 5,000 cases of synthetic motor oil produced in May to Finished Goods.

5. Close any over- or underapplied overhead to cost of goods sold.

SUGAR’S BITTER TASTE Sugar prices have slumped to a 20-year low… In the last 5 years, annual supply increased by 3.6 percent, while consumption expanded by a mere 1.5 percent. Stocks of sugar doubled while prices tumbled from 134 cents to 50 cents. Higher incomes increased the demand for sugar but supply increased more. New countries began sugar production, agricultural productivity increased and there was a collapse of the 1989 agreement to place quantity ceilings on exports. For many Third World sugar producers – some of whom get 70 percent of their export revenue from sugar – low prices have been a disaster. The power of multinationals has not helped. In some cases, farmers get only 6% of the retail price in the shops. Nestlé now controls about half the world market for instant sugar. (i). Using a relevant demand and supply diagram, analyse the reasons why the price of sugar tumbled from 134 cents to 50 cents. [5] (ii). Producers’ Associations usually fix minimum prices to encourage production. Analyse the constraints in making minimum price policies successful. Support your answer with relevant examples. [7] (iii). Analyse the reasons why some farmers get only 6% of the retail price in the shops and suggest policy measures which can be adopted to increase the revenue accruing to farmers. [8] 2 (b) The own price elasticity of demand for food is negative. The demand for food is inelastic. A higher food price raises spending on food. Higher food prices imply less is spent on all other goods. The quantity demanded of each of these other goods falls. Discuss each of the above statements, and indicate whether they are correct or incorrect. [10]

act19
In payroll proceedings
Create a pay period to-do checklist
Create an end of month to-do checklist

Create an end of quarter to-do checklist

Create an end of financial year to-do checklist

Arrange four quarter coins touching each other as a 2-D square lattice. Calculate the area of the air-space (dead-space). (Ignore the thickness of the quarters.) Repeat the problem for a triangular lattice.

What is the future value in 18 years of an ordinary annuity cash flow of $2,802 every quarter of a year at the end of the period, at an annual interest rate of 11.84 percent per year, compounded quarterly

A company wants to replay a $117,053 debt making $463 quarterly payment for 21 quarters, then one final payment. If the interest is 14 per year, compounded quarter, how much is the final payment?