A New Zealand company produces 20,000 ounces of gold per year. It uses 30% of its production for making gold jewelry sold at a fixed price through stores in Australia and New Zealand, and the rest is sold on the market, where the gold price is determined in US dollars. Australia’s profits are repatriated to New Zealand. The company’s CEO wants to use futures contractc to hedge the entire production. He calls you to seeks your opinion. Recommend a seinsble hedge stragtegy that would be in line with the CEO’s wishes (assume x is the quantity used for making gold jewelry in the New Zealand)
In: Finance
Calculate component cost of capital and WACC for major expansion program assuming that entire capital is raised from new bonds, preferred stock and retained earnings.
– Tax rate = 40%.
– 15-year, 12% coupon, semiannual payment noncallable bonds sell for $1,153. New bonds will be privately placed with no flotation cost.
– 10%, $100 par value, perpetual preferred stock sells for $111.10. New preferred stocks are issued at 5% flotation cost
– Common stock sells for $50. D0 = $4.19 and g = 5%. Flotation cost for new stock issued is 15%
In: Accounting
6. A standard drug is used to treat a certain disease. The probability with which the drug is effective is 0.85. A new drug is developed and it is desired to determine if the new drug performs better than the standard. An experiment was conducted with which 300 people are given the new drug.
a. State symbolically the null and alternative hypotheses.
b. What is the critical value and rejection region of the proposed test?
c. If in fact, the success rate of the drug is 0.9, what is the power of the test?
d. When the experiment was actually carried out, it was found that the new drug was effective in 269 of the patients. Find the p-value of the test.
In: Statistics and Probability
Yummy Pizza Co. is looking to purchase a new woodfire pizza oven that cost $25000. This new oven will replace their current fully depreciated oven that they can sell for $2500. The new oven will allow the company to produce more pizzas which will result in new sales of $15000 per year with increased costs of $7500 . They expect to be able to sell the pizza oven at the end oif 10 years for $2000 and will be straight line depreciated over the 10-period to zero. Yumm has marginal tax rate of 34% and its require rate of return is 10%. What is the NPV for this project?
In: Finance
Bruno Corporation is involved in the business of injection molding of plastics. It is considering the purchase of a new computer-aided design and manufacturing machine for $437,500. The company believes that with this new machine it will improve productivity and increase quality, resulting in an increase in net annual cash flows of $100,453 for the next 6 years. Management requires a 10% rate of return on all new investments. Click here to view PV table.
Calculate the internal rate of return on this new machine. (Round answer to 0 decimal places, e.g. 10. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
In: Accounting
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Consider that you are 40 years old and have just changed to a new job. You have $141,000 in the retirement plan from your former employer. You can roll that money into the retirement plan of the new employer. You will also contribute $6,300 each year into your new employer’s plan. |
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If the rolled-over money and the new contributions both earn an 7 percent return, how much should you expect to have when you retire in 25 years? (Do not round intermediate calculations and round your final answer to 2 decimal places.) |
In: Finance
| [9] UVW, Inc. had an old piece of equipment that had cost $500,000. The CFO wanted to trade-in the | ||||||
| old piece of equipment for a new piece of the same equipment. At the time of the trade-in, the | ||||||
| controller had recorded accumulated depreciation of $400,000. The fair market value of the old piece | ||||||
| of equipment at the date of the trade-in was $150,000. In order to acquire the new piece of equipment | ||||||
| the controller had to also cut a check to the vendor of the new equipment in the amount of $430,000. | ||||||
| What is the entry the controller made to the books. MAKE SURE YOU DESIGNATE EACH PIECE | ||||||
| OF EQUIPMENT AS OLD OR NEW, OR YOU WILL LOSE POINTS. | ||||||
In: Accounting
The organizational buying center varies as a function of size of
the company and product
or service being purchased. How does size of the company influence
the composition
of the buying center? How might the composition of the buying
center differ for
each of the following products?
a. Purchasing a new computer for personal use.
b. Purchasing a new copy machine for the office.
c. Selecting a different public accounting firm.
d. Selecting a new textbook for a sales management course.
e. Choosing a different source for industrial oils and
lubricants.
f. Purchasing a new machine.
g. Choosing a marketing research firm.
In: Finance
Market Research Associates is conducting research to evaluate the effectiveness of a client’s new advertising campaign. Before the new campaign began, a telephone survey of 150 households in the test market area showed 60 households “aware” of the client’s product. The new campaign has been initiated with TV and newspaper advertisements running for three weeks. A survey conducted immediately after the new campaign showed 120 of 250 households “aware” of the client’s product. Does the data support the position that the advertising campaign has provided an increased awareness of the client’s product? Use α = 0.05 and the p-value approach.
In: Statistics and Probability
In a plant that fills 12 ounce cans of soda, the mean fill amount with the current machinery is 12.2 ounces with a standard deviation of 0.03 ounces. A new machine is said to be more accurate, so the company tested this new machine on a run of 10 cans, and obtained the following fill amounts:
12.03 12.10 12.02 11.92 12.10 12.00 12.05 11.97 11.99 11.87
Test the claim that the standard deviation of the new machine is lower than the standard deviation of the original machine at a 1% significance level, because purchasing the new machines is very expensive.
The alternative hypothesis is H1:
In: Statistics and Probability