D&R Corp. has annual revenues of $250,000, an average contribution margin ratio of 35%, and fixed expenses of $118,200.

a. Management is considering adding a new product to the company's product line. The new item will have $8.8 of variable costs per unit. Calculate the selling price that will be required if this product is not to affect the average contribution margin ratio. (Round your answer to 2 decimal places.)

b. If the new product adds an additional $31,000 to D&R's fixed expenses, how many units of the new product must be sold at the price calculated in part a to break-even on the new product? (Do not round intermediate calculations.)

c. If 24,800 units of the new product could be sold at a price of $14.6 per unit, and the company's other business did not change, calculate D&R's total operating income and average contribution margin ratio. (Round your intermediate calculations to 2 decimal places. Round "Average contribution margin ratio" to 2 decimal places.)

The following table gives the total area in square miles​ (land and​ water) of seven states. Complete parts​ (a) through​ (c).

State   Area
1   52,300
2   615,400
3   115,000
4   53,600
5   159,500
6   104,800
7   6,100

a. Find the mean area and median area for these states.

The mean is __ square miles.

​(Round to the nearest integer as​ needed.)

The median is ___ square miles.

b. Which state is an outlier on the high​ end? If you eliminate this​ state, what are the new mean and median areas for this data​ set?

State___ is an outlier on the high end.

The new mean is_____square miles.

​(Round to the nearest integer as​ needed.)

The new median is____square miles.

​(Round to the nearest integer as​ needed.)

c. Which state is an outlier on the low​ end? If you eliminate this​ state, what are the new mean and median areas for this data​ set?

State____is an outlier on the low end.

The new mean is_____square miles.

​(Round to the nearest integer as​ needed.)

The new median is_____square miles.

​(Round to the nearest integer as​ needed.)

A restaurant chain that has 3 locations in Portland is trying to determine which of their 3 locations they should keep open on New Year’s Eve. They survey a random sample of customers at each location and ask each whether or not they plan on going out to eat on New Year’s Eve. The results are below. Run a test for independence to decide if the proportion of customers that will go out to eat on New Year’s Eve is dependent on location. Use α=0.05.

Hypotheses:

H,0): The choice to go out on New Year's Eve is _____ restaurant location.

(H,1): The choice to go out on New Year's Eve is _____ restaurant location.

Enter the test statistic - round to 4 decimal places. ______

Enter the P-Value - round to 4 decimal places. ______

Can it be concluded that the choice to go out on New Year's Eve is dependent on restaurant location?

What effect will a four-for-one stock split have on the following items found on a firm's financial statements?

1. Earnings per share $5.00. Round your answer to the nearest cent.

   Initial amount	New amount	Effect
   $5.00	$	-Select-increasedecreaseno change

2. Total equity $9,000,000. Round your answer to the nearest dollar.

   Initial amount	New amount	Effect
   $9,000,000	$	-Select-increasedecreaseno change

3. Long-term debt $4,300,000. Round your answer to the nearest dollar.

   Initial amount	New amount	Effect
   $4,300,000	$	-Select-increasedecreaseno change

4. Additional paid-in capital $1,564,000. Round your answer to the nearest dollar.

   Initial amount	New amount	Effect
   $1,564,000	$	-Select-increasedecreaseno change

5. Number of shares outstanding 900,000. Round your answer to the nearest whole number.

   Initial amount	New amount	Effect
   900,000		-Select-increasedecreaseno change

6. Earnings $4,500,000. Round your answer to the nearest dollar.

   Initial amount	New amount	Effect
   $4,500,000	$	-Select-increasedecreaseno change

Consider the case of Alexander Industries:

Alexander Industries is considering a project that requires an investment in new equipment of $3,360,000. Under the new tax law, the equipment is eligible for 100% bonus depreciation at t = 0 so the equipment will be fully depreciated at the time of purchase. Alexander estimates that its accounts receivable and inventories need to increase by $640,000 to support the new project, some of which is financed by a $256,000 increase in spontaneous liabilities (accounts payable and accruals). The company's tax rate is 25%.

The after-tax cost of Alexander’s new equipment is_____________

Alexander’s initial net investment outlay is_______________

Suppose Alexander’s new equipment is expected to sell for $200,000 at the end of its four-year useful life, and at the same time, the firm expects to recover all of its net operating working capital (NOWC) investment. Remember, that under the new tax law, this equipment was fully depreciated at t = 0. If the firm’s tax rate is 25%, what is the project’s total termination cash flow?

ASSIGNMENT

PNB Berhad is considering the purchase of a new production machine under its expansion programme. It costs RM500,000 and requires installation costs of RM50,000. The old stamping machine has zero terminal book value and five years of useful life remaining. It is being depreciated using the straight-line method. It was purchased five years ago for RM250,000, and can be sold today for RM100,000.

With the use of the new machine, sales in each of the next five years are expected to increase by RM250,000, and expenses (excluding depreciation) will represent 50% of sales. This new machine will not affect the company’s net working capital requirements. The new machine is estimated to have a useful life of five years with RM50,000 salvage value and will be depreciated using the straight-line method

The company is subject to a 25% tax rate and its cost of capital is 12%. The desired payback period is five years.

Required:

a) Determine the initial outlay and annual differential cash flows attributable to the new production machine.

b) Compute the following for the new machine:

i. Payback period

ii. Net present value

iii. Internal rate of return

c) Make a recommendation to accept or reject the new production machine. Justify your answer.

Photochronograph Corporation (PC) manufactures time series photographic equipment. It is currently at its target debt–equity ratio of .68. It’s considering building a new $65.8 million manufacturing facility. This new plant is expected to generate aftertax cash flows of $7.83 million in perpetuity. There are three financing options:

A new issue of common stock: The required return on the company’s new equity is 15 percent.

A new issue of 20-year bonds: If the company issues these new bonds at an annual coupon rate of 7.3 percent, they will sell at par.

Increased use of accounts payable financing: Because this financing is part of the company’s ongoing daily business, the company assigns it a cost that is the same as the overall firm WACC. Management has a target ratio of accounts payable to long-term debt of .13. (Assume there is no difference between the pretax and aftertax accounts payable cost.)

If the tax rate is 38 percent, what is the NPV of the new plant? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to 2 decimal places, e.g., 32.16.)

Net present value

Photochronograph Corporation (PC) manufactures time series photographic equipment. It is currently at its target debt–equity ratio of .57. It’s considering building a new $71.2 million manufacturing facility. This new plant is expected to generate aftertax cash flows of $7.87 million in perpetuity. There are three financing options:

A new issue of common stock: The required return on the company’s new equity is 15 percent.

A new issue of 20-year bonds: If the company issues these new bonds at an annual coupon rate of 7.2 percent, they will sell at par.

Increased use of accounts payable financing: Because this financing is part of the company’s ongoing daily business, the company assigns it a cost that is the same as the overall firm WACC. Management has a target ratio of accounts payable to long-term debt of .15. (Assume there is no difference between the pretax and aftertax accounts payable cost.)

If the tax rate is 30 percent, what is the NPV of the new plant? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to 2 decimal places, e.g., 32.16.)

Net present value            $

Your company's new portable phone/music player/PDA/bottle washer, the RunMan, will compete against the established market leader, the iNod, in a saturated market. (Thus, for each device you sell, one fewer iNod is sold.) You are planning to launch the RunMan with a traveling road show, concentrating on two cities, New York and Boston. The makers of the iNod will do the same to try to maintain their sales. If, on a given day, you both go to New York, you will lose 900 units in sales to the iNod. If you both go to Boston, you will lose 650 units in sales. On the other hand, if you go to New York and your competitor to Boston, you will gain 1,600 units in sales from them. If you go to Boston and they to New York, you will gain 600 units in sales. What fraction of time should you spend in New York and what fraction in Boston?

You should spend of your time in New York and in Boston.

How do you expect your sales to be affected?

The expected outcome is a net gain in RunMan sales. The expected outcome is a net loss of RunMan sales.     The expected outcome is no net gain or loss of RunMan sales.