Why is it important to know how to calculate a firm's cost of money? Explain.

Kolby’s Korndogs is looking at a new sausage system with an installed cost of $695,000. This cost will be depreciated straight-line to zero over the project’s 5-year life, at the end of which the sausage system can be scrapped for $93,000. The sausage system will save the firm $199,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $51,000. If the tax rate is 23 percent and the discount rate is 8 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

1. Given that tariffs and quotas cost consumers and that they are grossly inefficient means for creating or preserving jobs, why do citizens allow these policies to exist?

2. Which industries are more heavily protected in the United States and Japan? Are high-income or low-income nations more affected by American and Japanese trade barriers? Explain.

If average revenue is less than average cost there will be a negative cash flow and the firm will be forced to shutdown. Is this correct? Why or why not?

Analyze the cost of regulations and enforcement, versus the benefit in reduced worker injury?

Explain the preferred use of historical cost as the basis for recording property and equipment and intangible assets?

During the current year, merchandise is sold for $8,920,000. The cost of the goods sold is $6,065,600. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

1. What is the amount of the gross profit? Round your answer to the nearest dollar.

   $  

2. Compute the gross profit percentage (gross profit divided by sales). Round your answer to the nearest whole number.

   %

3. Will the income statement always report a operating income?

The cash flows associated with an investment project are an immediate cost of $1300 and benefits of $1000 in one year, $1900 in two years, and $1500 in three years. The cost of capital (WACC) is 10%. What is the project's NPV?

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