Compute the NPV statistic for Project Y if the appropriate cost of capital is 12 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.)

NPV:

Should the project be accepted or rejected?

• accepted

• rejected

Will Do, Inc. just purchased some equipment at a cost of $650,000. What is the proper methodology for computing the depreciation expense for year 3 if the equipment is classified as 5-year property for MACRS?
MACRS 5-year property
Year Rate
1 20.00%
2 32.00%
3 19.20%
4 11.52%
5 11.52%
6 5.76%

1.1 REQUIRED Use the information provided below to calculate the cost to Umhlali Stores (as a percentage) of not accepting the discount. (Assume a 365-day year.) (5) INFORMATION Jehcon Manufacturers’ credit terms to Umhlali Stores are 60 days but the manufacturer is prepared to allow a 2.5% rebate if Umhlali Stores pays the account within 10 days.

1.2 Use the information given below to calculate the:

1.2.1 EOQ (4)

1.2.2 Reorder point (4) INFORMATION Gem Enterprises intends purchasing 7 200 units of product Nutri per month during 2021 at R30 per unit. The following additional information is available: Ordering cost Stock holding cost Lead time for delivery of an order Workdays for 2021 R30 per order 10% of the purchase price 10 days 250 days

1.3 REQUIRED Use the information provided below to calculate the cash conversion cycle. (Assume a 365-day year.) (7)

INFORMATION The following information was obtained from the records of Coastal Traders for 2019:

Credit sales for the year R1 380 000 Credit purchases for the year R990 000 Inventories on 31 December 2019 R27 000 Amount owing by debtors on 31 December 2019 R150 000 Amount owing to creditors on 31 December 2019 R42 000 Average age of inventories 15 days

1. Which of the following entities bears the risk (and therefore the cost) of bankruptcy?

Select one:

a. The CEO

b. The bondholders

c. The preferred shareholders

d. The Board of Directors

e. The common shareholders

2. The retained earnings break point is used to determine at what level of capital spending the firm's WACC will increase. What figure is used in the denominator of that calculation?

Select one:

a. The weight of common equity

b. The weight of preferred equity

c. The weight of debt

d. The weighted average cost of capital

e. Addition to Retained Earnings

3. Which of the following component costs is typically the highest cost to the firm?

Select one:

a. k_p

b. k_d(1-T)

c. k_e

d. k_n

4. Which of the following component costs is typically the lowest cost to the firm?

Select one:

a. k_p

b. k_e

c. k_n

d. k_d(1-T)

Deviations from informational efficiency would result in a large cost that will be borne by all participants, namely inefficient resource allocation. Corporations with overpriced securities, for example, would be able to obtain capital too expensively while undervalued companies might forgo investment opportunities because the cost of raising capital would be too low.

True

False

1. Consider a firm whose total cost function is q³ – 6q² + 13q.
   1. If the price of a unit of output is $13, what is the profit-maximizing value of q?
   2. Find the average cost function of the firm? What is the firm’s minimum average cost?
   3. What is the equilibrium price of output? How much does each firm produce at equilibrium price? What is each firm’s profit at the equilibrium price?

"Our system of payroll taxes and unemployment benefits spreads the cost of unemployment benefits to the entire population. However, it does not fully eliminate all the costs of unemployment." Are these two statements true or false? Why?

Suppose that apples cost $1. A consumer feels that they are willing to give up 4 apples in order to consume a banana, as long as they are consuming 10 or less bananas. After the 10th banana their appreciation for them is not as high, so they are willing to trade 2 apples for an additional banana, as long as their banana consumption is less than or equal to 20. After the 20th banana they are fed up of bananas and would not give up a single apple for a banana. Note: All parts are worth 10 points. Questions: (1) What is the demand curve for bananas (a picture, fully lablled, is enough) (2) Assume the supply curve for bananas is S(p)=5p. What is the equilibrium price and quantity in the market for bananas? (3) Suppose that there is a natural disaster in apple growing countries, so now the price of apples is $2. Assume that the resources used in banana production are not suitable for apple production, so this change in the price of apples leaves supply of bananas unaffected. What is the new equilibrium price and quantity in the market for bananas?