Lusk company produces and sells 16,100 units of product a each month. the selling price of product a is $31 per unit, and variable expenses are $25 per unit. a study has been made concerning whether product a should be discontinued. the study shows that $71,000 of the $111,000 in fixed expenses charged to product a would continue even if the product was discontinued. these data indicate that if product a is discontinued, the company's overall net operating income would:

decrease by $54,400 per month
increase by $14,400 per month
decrease by $56,600 per month
increase by $54,400 per month

Problem 9-5. net present value and taxes [lo 1, 2] penguin productions is evaluating a film project. the president of penguin estimates that the film will cost $20,000,000 to produce. in its first year, the film is expected to generate $16,500,000 in net revenue, after which the film will be released to video. video is expected to generate $10,000,000 in net revenue in its first year, $2,500,000 in its second year, and $1,000,000 in its third year. for tax purposes, amortization of the cost of the film will be $12,000,000 in year 1 and $8,000,000 in year 2. the company’s tax rate is 35 percent, and the company requires a 12 percent rate of return on its films. required what is the net present value of the film project? to simplify, assume that all outlays to produce the film occur at time 0. should the company produce the film?

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