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Exercise.3 Daniel and Evelyn are considering buyi...




Exercise.3 Daniel and Evelyn are considering buying a house valued at $250,000. They have combined savings of $20,000, and the bank approved a $200,000 second mortgage. Also, Daniel has just won $10,000 from a lottery. If Daniel and Evelyn invested their money in guaranteed certicates, they would be able to earn 4%. The interest rates offered by the bank are 6% for the first mortgage and 7% for the second. Question On the basis of the information, calculate Daniel and Evelyn?s cost of capital.? Exercise.5 A company has decided to market its products more aggressively. Current sales are 30,000 units per year, and they are expected to increase by 50% next year. Carrying costs are estimated at $0.20 per unit, and order costs are estimated at $7.00. The firm wants to minimize its inventory costs. Questions 1. What is the economic ordering quantity? 2. What is the optimal number of orders per month once the new sales level is reached? Exercise.5 With the information outlined below, calculate the following: 1. Profit 2. Break-even point in revenue 3. Cash break-even point Depreciation $30,000 Plant direct wages 100,000 Plant supervision 60,000 Advertising 30,000 Plant insurance 20,000 Sales commission 100,000 Ofice supplies 3,000 Revenue 550,000 Overtime 30,000 Rent 35,000 Property taxes 10,000 Raw Materials 100,000


Paper#13650 | Written in 18-Jul-2015

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