A company is considering a 5-year project that opens a new product line and requires an initial outlay of $81,000. The assumed selling price is $96 per unit, and the variable cost is $62 per unit. Fixed costs not including depreciation are $22,000 per year. Assume depreciation is calculated using stright-line down to zero salvage value. If the required rate of return is 13% per year, what is the financial break-even point? (Answer to the nearest whole unit.)

Detailed explanation please

Miss Yu is performing the audit on leases of TipuPte Ltd for the year ended 31 December 2016. From the ledger, Miss Yu noticed that there are three items. which are on lease, i.e. a van, a lathe machine and the oven. As part of the audit, Miss Yu would send standard confirmation letters to the lessors. Two days before the end of the fieldwork, Miss Yu received confirmation from the van's lessor. Miss Yu's client has short taken the van lease by $10,000. Miss Yu sent the second reminder confirmation and managed to receive the confirmation from the lathe machine's lessor. The lease would only start from 1 January 2017. Miss Yu has to yet receive any confirmation pertaining to the leasing of the oven.

Required

a. What should Miss Yu do in the future to make sure that the confirmation letter are received and answered promptly?

b. There are discrepancies to two of the items. What further action should Miss Yu take?

Question 2

Hydropure Ltd commenced operations at the beginning of the current year. One of the company’s products, an alkaline antioxidant water filter, sells for $299 per unit. Information related to the current year’s activities are as follows:

$

Variable costs per unit:

Direct materials 40

Direct labour   74

Manufacturing overhead 96

Annual fixed costs:

Manufacturing overhead 700,000   

Selling and administrative 880,000

Production and sales activity:

Production (units) 25,000
Sales (units) 20,000

Hydropure Ltd carries its finished goods inventory at the average unit cost of production. There was no work in process at the yearend.

Required:

(a) Determine the cost of the yearend finished goods inventory.

(b) Calculate Hydropure Ltd’s net profit for the current year. Ignore taxation.

(c) If the next year’s production decreases to 24,000 units and the general cost behaviour and patterns do not change, what is the likely effect on:

(i) Direct labour cost of $74 per unit? Explain why.

(ii) Fixed manufacturing overhead cost of $700,000? Explain why.

(iii) Fixed selling and administrative cost of $880,000? Explain why.

(iv) Average unit cost of production? Explain why.

Common information for problems 4 and 5

A 20-year loan of 150,000 is negotiated with the borrower agreeing to repay principal and interest at 5%. A level payment of 9,000 will apply during the first ten years and a higher level payment will apply during the remaining ten years. Each time the lender receives a payment from the borrower, he will deposit the portion representing the principal into a sinking fund with an annual effective interest rate of 4%. (Assume that the interest portion remains level throughout these 20 years and assume that all but the interest portion is deposited into the sinking fund.) This scheme will replace the lender’s capital.

Find the lender’s yield on this investment.

A 20-year loan of 150,000 is negotiated with the borrower agreeing to repay principal and interest at 5%. A level payment of 9,000 will apply during the first ten years and a higher level payment will apply during the remaining ten years. Each time the lender receives a payment from the borrower, he will deposit the portion representing the principal into a sinking fund with an annual effective interest rate of 4%. (Assume that the interest portion remains level throughout these 20 years and assume that all but the interest portion is deposited into the sinking fund.) This scheme will replace the lender’s capital.

What is the higher payment (rounded to the nearest dollar) that applies during the years 11-20?

A car dealer leases a small computer with software for $5,000 per year. As an alterative he could buy the computer for $7,500 and lease the software for $3,500 per year. Any time he would decide to switch to some other computer he could cancel software lease and sell the computer for $500.  

A. If he buys the computer and leases the software, what is the payback period?

B. If he kept the computer and software for 8 years, what would be the benefit-cost ratio, based on a 5% interest rate.

The stockholders’ equity section of Stellar Inc. at the beginning of the current year appears below.

Common stock, $10 par value, authorized 1,043,000 shares, 321,000 shares issued and outstanding$3,210,000Paid-in capital in excess of par—common stock562,000Retained earnings624,000

During the current year, the following transactions occurred:

(1) if five year interest rates on USD and CDN are 6% and 5% respectively, and the current spot rate for CDN is $0.90/USD. what is the imlied five year CDN spot rate?

(2) Suppose that the Brazilian real devalues by 40% against the USD. By how much will the dollar appreciate against the real?

(3) What is the 90 day forward rate if US interest is 9%, Japanese interest is 7%, and the Spot rate is $0.003700/ Yen? ( assume there are no arbitrage and 360 day and interest rate parity)

(4) what is the annualized premium on the 90 day forward rate if the spot rate is $0.003800/Yen and the forward rate is $0.003828/ Yen ?

(5) Suppose annual inflation rate in the US and Mexico are expected to be 6% and 80% respectively, over the next several years. If the current spot rate for Mexico peso is $0.005. what is the best estimate of the peso's spot value in 3 years?

(9) if the expected inflation rate is 5% and the real required return is 6% , then the fisher effect says that the nominal interest rate should be.....

(10) During the 1992 currency crisis, the bank of england borrowed DM 33 billion from the Bundesbank when a pound was worth DM 2.78 or $1.912. It sold these DM in the foreign exchange market for pounds and repaid these DM at the post- crisis rate of DM 2.50:pound 1. By then, the dollar: pound exchange rate was $1.782: pound 1. During that time, by what percentage had the pound sterling appreciated/ depreciated against the dollar?

Relaxation as a Coping Strategy:

College Swim Team

Introduction:

In February of this year, the captains of both the men's and women's swim teams at my college met with a sport psychologist with a request to help them deal with some of the problems that they were facing in the competitive environment. With very little time to the target meets of the season (6 weeks to conference and only 8 weeks to the NCAA meet), the project took on more of a "fix-it" approach than an educational approach.

Intervention:

A "trouble-shooting" meeting was set up so that the athletes could help prioritize their concerns. A simple strengths/weaknesses chart was filled out by each swimmer. From this list a list of perceived weaknesses were used to develop the focus of the program. The most frequently occurring weakness responses were:

a . Lack of Confidence
b . Fear of Failure
c . Inability to Relax

Following the initial meeting, an impromptu meeting was scheduled to help the athletes put their perceived weaknesses into perspective. At this time, the progressive implementation strategy was explained. The strategies were implemented every Sunday evening until the target meets (with each athlete received a paper fully explaining the strategy at each session). The strategy meetings consisted of:

I . Troubleshooting Meeting
2. Self-led Relaxation
3. Visualizing Success
4. Affirmation
5. Mastery Rehearsal and Mastery/Coping Tapes

Each session lasted from 1-11/2 hours and were well attended. After completion of the Conference Swim Championships, the athletes evaluated their performances and the
effectiveness of the program on their performances. Eleven participants completed a survey asking for responses based on a Likert scale. We also asked for responses to open-ended questions and for comments on each section.

Overview:

Troubleshooting: The Likert scale indicated a very strong positive response to the troubleshooting section. Most respondents agreed with the question regarding whether this portion aided in identifying weaknesses and focusing, with only one person disagreeing.
Relaxation: The relaxation portion showed similar positive responses. The athletes found the guided exercise to be the most helpful, but seven athletes were able to successfully utilize this strategy independently two or more times each week. The athletes had the most difficulty implementing the relaxation strategy during the meet situation.

Imagery: Responses were also favorable for the imagery portion of the project, illustrating to the athletes and us that we all have the ability to visualize. The guided exercise was once again the most helpful section. The response to the independent usage was moderate. Visualization requires practice, and the time was limited for implementation, therefore, we assumed that the swimmers did not feel as comfortable using this strategy on their own. We inquired about the type of situation the athletes visualized. Ten respondents visualized their event at race pace. Many also used a combination of visualizing different speeds and particular points of their event as well as the total performance. Seven athletes visualized one or more times each week. Five utilized imagery daily or nearly every day.

Affirmation: The respondents felt that this section was very important. The written exercise to identify low confidence areas appeared to have been very helpful. Affirmation is a very personal tool and, as a result, is very subjective. The Likert scale indicated a positive response overall. However, the athletes felt that setting their own strategies was more helpful than the written exercise we provided. All respondents felt the affirmation exercises had a positive effect outside of swimming. The methods of positive affirmation most commonly used were talking to oneself and signs and notes in visible places. One respondent also commented that "Believing" was an important aspect of affirmation.

Mental Rehearsal and Coping Scripts: Most respondents felt that the guidelines we provided were helpful, although there were three requests for more detailed instructions and possibly samples of tapes and scripts. The responses to questions based on the Likert scale were more widely distributed than those for the other sections. It is our belief that the more moderate positive feedback is due to the lack of time necessary to become comfortable with the tapes.

The athletes concentrated on the areas of imagery most frequently. Affirmation and relaxation were commonly combined with imagery or used alone. One comment identifies an important feature of mental arousal, "And I was nervous, but was 'OK' about it." Arousal is necessary for performance as long as it is under control. Mental Rehearsal and Coping tapes help build the confidence necessary to attain this control.

Nine respondents answered affirmatively when asked whether our method of mental training was effective in helping to achieve their goals. One respondent answered negatively, and one was unsure. One swimmer responded that simply making the script and tape had a strong effect on her concentration level and performance, even though she only listened to the tape two or three times.
We also inquired as to how each respondent felt the program was effective. Relaxation, focus, and positive feelings helped the respondents believe they were capable. The aspects of the program found to be most helpful were the affirmation and relaxation phases. One respondent found the affirmation "extremely helpful." One respondent felt that the troubleshooting session was useless, but the overall response to this was positive.

When we asked if the athletes would recommend the program to another coach or athlete, eight participants responded positively. Comments included the assertion that the athlete must wholeheartedly believe in the method of it to work. Another felt that "even with limited involvement the method works." Five felt the program would be beneficial to sports other than swimming, cross-country and baseball specifically. Other comments included feelings of being rushed throughout the whole process, with which we fully agree. The program should be initiated during the first weeks of the season. Another respondent had difficulty with every aspect of the program and didn't feel it was especially helpful other than making him slightly more relaxed.

Overall, the responses to the program were positive. Very few respondents did not agree that the methods helped to some extent. The comments and open responses were positive and helpful. The comments expressing problems with the athlete or the program were enlightening and were taken into consideration when recommending changes for future use of the program.

(3) The swimmers in the case study above found it difficult to practice the relaxation during the actual swim meet. The four relaxation methods discussed in our text takes hours and weeks to master. How then could any of these methods be utilized by an athlete who must be able to bring on the relaxation response in a matter of minutes or even seconds? Be sure to support your opinion with research in the field.

Suppose that the average household in a state consumes 1000 gallons of gasoline per year. A 20-cent gasoline tax is introduced, coupled with a $160 annual tax rebate per household. Will the household be better or worse off under the new program? Graphically show how you arrived at your answer