The Star Company has a WACC of 20%. The cost of debt is 12%, which is equal to the risk-free rate of interest. If Star’s debt to equity ratio is 2, Star’s equity beta is 1.5.
In: Finance
Elton Cranes is considering production of a new type of crane. The initial cost of the project is $23 million.
There is a 50% probability that demand will be strong, in which case the company will gain annual cash flows from assets of $6 million per year for 15 years. Otherwise, the annual cash flows from assets will only be $2 million per year.
The company has a weighted average cost of capital of 9%.
Part 1: What is the NPV of the project (in $ million)
Part 2: Now assume that the company can wait a year to test the demand for the new type of crane. The test costs $0.2 million and will reveal if demand will be strong or weak. If the company accepts the project after one year, the magnitude of the cash flows will be the same, but the cash inflows will occur only for 14 years.
What is the NPV of the project with the option to delay (in $ million)?
In: Finance
As of the end of June, the job cost sheets at Racing Wheels, Inc., show the following total costs accumulated on three custom jobs.
| Job 102 | Job 103 | Job 104 | |||||||
| Direct materials | $ | 41,000 | $ | 56,000 | $ | 48,000 | |||
| Direct labor | 15,000 | 28,500 | 45,000 | ||||||
| Overhead applied | 6,300 | 11,970 | 18,900 | ||||||
Job 102 was started in production in May, and the following costs
were assigned to it in May: direct materials, $9,000; direct labor,
$3,600; and overhead, $1,512. Jobs 103 and 104 were started in
June. Overhead cost is applied with a predetermined rate based on
direct labor cost. Jobs 102 and 103 were finished in June, and Job
104 is expected to be finished in July. No raw materials were used
indirectly in June. Using this information, answer the following
questions. (Assume this company’s predetermined overhead rate did
not change across these months.)
1&2. Complete the table below to calculate the
cost of the raw materials requisitioned and direct labor cost
incurred during June for each of the three jobs?
3. Using the accumulated costs of the jobs, what
predetermined overhead rate is used?
4. How much total cost is transferred to finished
goods during J
Complete the table below to calculate the cost of the raw materials requisitioned and direct labor cost incurred during June for each of the three jobs.
|
|||||||||||||||||||||||||||||||||||||||||||||||||
In: Accounting
Define criteria that make the costs of healthcare increase and criteria that make the cost of healthcare decrease. Then explain how the Affordable Care Act of 2010 has an impact on cost of care.
In: Operations Management
. A company purchased and installed a machine on January 1,
2012, at a total cost of $108,500. Straight-line depreciation was
calculated based on the assumption of a seven-year life and no
salvage value. The machine was disposed of on April 1, 2016.
(25 Points)
a. Prepare the general journal entry to update depreciation to
April 1, 2016.
b. Prepare the general journal entry to record the disposal of the
machine under each of these three independent situations:
(1) The machine was sold for $45,000 cash.
(2) The machine was sold for $36,000 cash.
(3) The machine was totally destroyed in a fire and the insurance
company settled the claim for $41,000 cash.
Answer:
a.
b.(1)
b.(2)
b.(3)
Please explain your calculations so it is easier to understand, thank you.
In: Accounting
List two examples of opportunity costs that may be considered as part of a cost of quality analysis. Why should a company consider opportunity costs when assessing quality performance?
In: Accounting
Money reports that the average annual cost of the first year of owning and caring for a large dog in 2017 is $1,448. The Irish Red and White Setter Association of America has requested a study to estimate the annual first-year cost for owners of this breed. A sample of 50 will be used. Based on past studies, the population standard deviation is assumed known with σ = $260.
1,902 2,042 1,936 1,817 1,504 1,572 1,532 1,907 1,882 2,153 1,945 1,335 2,006 1,516 1,839 1,739 1,456 1,958 1,934 2,094 1,739 1,434 1,667 1,679 1,736 1,670 1,770 2,052 1,379 1,939 1,854 1,913 2,163 1,737 1,888 1,737 2,230 2,131 1,813 2,118 1,978 2,166 1,482 1,700 1,679 2,060 1,683 1,850 2,232 2,294
(a) What is the margin of error for a 95% confidence interval of the mean cost in dollars of the first year of owning and caring for this breed? (Round your answer to nearest cent.) $
(b) The DATAfile Setters contains data collected from fifty owners of Irish Setters on the cost of the first year of owning and caring for their dogs. Use this data set to compute the sample mean. Using this sample, what is the 95% confidence interval for the mean cost in dollars of the first year of owning and caring for an Irish Red and White Setter? (Round your answers to nearest cent.)
In: Statistics and Probability
|
The cost of weddings in the United States has skyrocketed in recent years. As a result, many couples are opting to have their weddings in the Caribbean. A Caribbean vacation resort recently advertised in Bride Magazine that the cost of a Caribbean wedding was less than $10,000. Listed below is a total cost in $000 for a sample of 8 Caribbean weddings. At the .01 significance level is it reasonable to conclude the mean wedding cost is less than $10,000 as advertised? |
|
9.0 |
9.1 |
8.5 |
9.1 |
10.8 |
9.7 |
8.5 |
9.4 |
| (a) |
State the null hypothesis and the alternate hypothesis. Use a .01 level of significance. (Enter your answers in thousands of dollars.) |
| H0: μ ≥ | |
| H1: μ < | |
| (b) |
State the decision rule for .01 significance level. (Negative amount should be indicated by a minus sign. Round your answer to 3 decimal places.) |
| Reject H0 if t < |
| (c) |
Compute the value of the test statistic. (Negative amount should be indicated by a minus sign. Round your answer to 3 decimal places.) |
| Value of the test statistic |
| (d) |
At the .01 significance level is it reasonable to conclude the mean wedding cost is less than $10,000 as advertised? |
| (Click to select)RejectDo not reject H0. The cost is (Click to select)lessnot less than $10,000. |
In: Statistics and Probability
In: Finance
A new computer network system is being considered for an organization. The initial cost of the system is $400,000. Annual maintenance and operating costs would be $25,000 per year. After 6 years, the system is expected to be worth $65,000. The desired ROI is 15% for it's projects. Determine the equivalent annual cost of the system.
In: Accounting