You are a financial analyst for a major consumer products company. They are considering the product launch of a new cereal with the following expenditures: $10 million ($5 million upfront, S5 million at end of 1st year). Plant will take 1 year to construct. $3mm salvage value at end of 10 years New Plant Cost: Feasibility studies: $50,000 upfront (will be expended regardless of whether the project goes forward or not). Straight line over 5 years to zero, beginning at end of 1st year 1 million units (sales begin at end of 1st year and grow at 5% pa Depreciation Unit Sales thereafter) Price per Unit: COGS: Fixed costs: Working capital: $5.75 per unit, growing at 2% inflation per year 60% of Sales $150,000 per annum $300,000 incurred at end of first year and recouped at end of 10 years Cost of Capital: 11% Marginal Tax Rate: 25% 1. Forecast the project's after-tax cashflows for 10 years using excel 2. What is the NPV? 3. What is the IRR? 4. Which single variable (holding the others constant) has the greatest impact on the NPV? (change each of the discount rate, price per unit, COGS, inflation rate, and tax rate by 1% holding the other variables constant). 5. Create a 2-variable data table (columns and rows) showing NPV at 10%, 11%, and 12% cost of capital and 20%, 25%, and 30% tax rates. 6. Is this project is worth pursuing? Why or why not?

Zachary company produces commercial gardening equipment. since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. the costs and cost drivers associated with the four overhead activity cost pools follow: activities unit level batch level product level facility level cost $ 64,800 $ 27,730 $ 15,000 $ 154,000 cost driver 2,400 labor hrs. 47 setups percentage of use 11,000 units production of 780 sets of cutting shears, one of the company’s 20 products, took 240 labor hours and 7 setups and consumed 15 percent of the product-sustaining activities. required: (a) had the company used labor hours as a company wide allocation base, how much overhead would it have allocated to the cutting shears? (b) how much overhead is allocated to the cutting shears using activity-based costing? (c) compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 780 units are produced. if direct product costs are $150 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system? (d) assuming that activity-based costing provides a more accurate estimate of cost, indicate whether the cutting shears would be over- or underpriced if direct labor hours are used as an allocation base. explain how over-or undercosting can affect vaulker's profitability. (e) comment on the validity of using the allocated facility-level cost in the pricing decision. should other costs be considered in a cost- plus pricing decision? if so, which ones? what costs would you include if you were trying to decide whether to accept a special order?

Ajax corp's sales last year were $435,000, its operating costs were $362,500, and its interest charges were $12,500. what was the firm's times-interest-earned (tie) ratio? a. 4.72b. 4.97c. 5.23d. 5.51e. 5.80

6. why the aggregate supply curve slopes upward in the short run in the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. several theories explain how this might happen. for example, the misperceptions theory asserts that changes in the price level can temporarily mislead firms about what is happening to their output prices. consider a soybean farmer who expects a price level of 100 in the coming year. if the actual price level turns out to be 90, soybean prices will , and if the farmer mistakenly assumes that the price of soybeans declined relative to other prices of goods and services, she will respond by the quantity of soybeans supplied. if other producers in this economy mistake changes in the price level for changes in their relative prices, the unexpected decrease in the price level causes the quantity of output supplied to the natural level of output in the short run.