Why would you use the above sampling methods to collect data on the diversity of an area? (hint: how would the information colle

Response:

The avoidable costs linked to the segment amount to $754,000

Detailed explanation:

The costs tied to the segment under consideration for elimination are as follows:

- Advertising costs = $140,000

- Allocation of costs at the company level = $130,000

- Loss incurred from unsold building (*): $60,000

- Maintenance costs on equipment = $112,000

- Real estate taxes on the building = $12,000

The cumulative cost amounts to $754,000

(*) The earnings from the sold building (book value) = Market value of the building $160,000 - Book value of the building $100,000 = $60,000

Answer:

D. Foreign Subsidiary

Explanation:

A Foreign Subsidiary is a firm that's either partially or fully owned by a larger corporation headquartered in a different nation. This indicates that the company did not organically establish development or begin operations in the nation where it operates. Establishing foreign subsidiaries is a key method for entering international markets, which entails significant risk and commitment compared to other methods listed in the question, due to considerations like costs and time for setting up a foreign subsidiary, compliance issues, tax obligations, immigration regulations, and securing office space and employee accommodations. These factors are less of a concern in joint ventures, strategic alliances, or franchising when seeking to enter international markets.

Answer:

d. $1,376.74

Explanation:

The NPV for Project X is calculated as follows:

Year Cash outflow/inflow Present value factor      Present value

0              -$10,000.00                         1                   -$10,000.00

1                 $6,000.00                   0.900901              $5,405.41

2                 $8,500.00                     0.811622              $6,898.79

NPV                                                                        $2,304.20

For Project Y, the NPV is:

Year Cash outflow/inflow Present value factor      Present value

0                -$10,000.00                       1                   -$10,000.00

1                   $4,600.00              0.900901             $4,144.14

2                   $4,600.00                  0.811622             $3,733.46

3                    $4,600.00                   0.731191                   $3,363.48

4                    $4,600.00                  0.658731             $3,030.16

Total                                                                        $4,271.25

The formula for calculating Equivalent Annual Annuity is expressed as:

C = r*(NPV)/(1-(1+r)-n)

For Project X, where NPV = $2304.20

using r = 11% and n = 2

Plugging in values into the formula gives us:

C = 11%*$2304.20/(1-(1+11%)−2

For Project Y, where NPV = $4271.25

using r = 11% and n = 4

Inserting the values into the formula, we find C = 11%*$4271.25/(1-(1+11%)−4

   = $1376.74

Thus, the more profitable project is Y, with an equivalent annual annuity of $1376.74.

Response:

a.

16%

b.

17.3%

c.

23.25%

d.

16%

Clarification:

WACC represents the average cost of capital for a firm, based on the proportions of debt and equity multiplied by their respective costs.

Having the capital cost, the next step is to compute the equity cost.

Cost of Capital = (Cost of Equity x Proportion of equity) + (Cost of Debt x Proportion of Debt)

a.

No Debt

16% = (Cost of Equity x 1 ) + (8.75% x 0)

16% = Cost of Equity + 0

Cost of Equity = 16%

b.

15% Debt and 85% for Equity (100%-15%)

16% = (Cost of Equity x 85% ) + (8.75% x 15%)

0.16 = (Cost of Equity x 0.85) + 0.013125

0.16 - 0.013125 = Cost of Equity x 0.85

0.146875 = Cost of Equity x 0.85

Cost of Equity = 0.146875 / 0.85 = 0.17279

Cost of Equity = 17.3%

c.

50% Debt and 50% for Equity (100%-50%)

16% = (Cost of Equity x 50% ) + (8.75% x 50%)

0.16 = (Cost of Equity x 0.50) + 0.04375

0.16 - 0.04375 = Cost of Equity x 0.50

0.11625 = Cost of Equity x 0.50

Cost of Equity = 0.11625 / 0.50 = 0.2325

Cost of Equity = 23.25%

d.

WACC in b and c remains at 16%