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You?ve recently learned that the company




11. You?ve recently learned that the company where you work is being sold for $275,000. The company?s income statement indicates current profits of $10,000, which have yet to be paid out as dividends. Assuming the company will remain a ?going concern? indefinitely and that the interest rate will remain constant at 10%, at what constant rate does the owner believe that profits will grow? Does this seem reasonable?;12. You are in the market for a new refrigerator for you company?s lounge, and you have narrowed the search down to two models. The energy efficient model sells for $500 and will save you $25 at the end of each of the next five years in electricity costs. The standard model has features similar to the energy efficient model but provides no future saving in electricity costs. It is priced at only $400. Assuming your opportunity cost of funds in 5 %, which refrigerator should you purchase?;13. You are the human resources manager for a famous retailer, and you are trying to convince the president of the company to change the structure of employee compensation. Currently, the company?s retail sales staff is paid a flat hourly wage of $18 per hour for each eight-hour shift worked. You proposed a new pay structure whereby each salesperson in a store would be compensated $8 per hour, plus five-tenths of 1 percent of the store?s maximum daily profits are $40,000. Outline the arguments that support your proposed plan.;14. Tara in considering leaving her current job, which pays $56,000 per year, to start a new company that manufactures a line of special pens for personal digital assistants. Based on market research, she sell about 160,000 units during the first year at a price of $20 per unit. With annual overhead costs and operating expenses amounting to $3,160,000, Tara expects a profit margin of 25%. This margin is 6% percent larger than that of her largest competitor, Pens, Inc.;a. If Tara decides to embark on her new venture, what will her accounting costs be during the first year of operation? Her implicit costs? Her opportunity costs?;b. Suppose that Tara?s estimated selling price is lower than originally projected during the first year. How much revenue would she need in order to earn positive accounting profits? Profits economic profits?


Paper#30621 | Written in 18-Jul-2015

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