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Lady_Fox
3 days ago
7

The Card Shoppe needs to maintain 18 percent of its sales in net working capital. Currently, the store is considering a four-yea

r project that will increase sales from its current level of $279,000 to $308,000 the first year and to $314,000 a year for the following three years of the project. What amount should be included in the project analysis for net working capital in Year 4 of the project?
Business
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You are offered a chance to buy an asset for $7,250 that is expected to produce cash flows of $750 at the end of Year 1, $1,000
soldi70 [3635]
The return rate for the asset in this scenario is calculated to be 6.14%. This is determined by evaluating the Internal Rate of Return for the given cash flows, as outlined in the provided information.
4 0
2 months ago
Global Tek plans on increasing its annual dividend by 15 percent a year for the next four years and then decreasing the growth r
Free_Kalibri [3773]

Answer:

A) $1.82

Explanation:

The dividends discount model calculates stock value based on dividends distributed and the required return rate:

current dividend $0.20 per share

dividends for year 1 = $0.23 per share

dividends for year 2 = $0.2645 per share

dividends for year 3 = $0.3042 per share

dividends for year 4 = $0.35 per share

After year 4, we compute the growing perpetuity as follows: dividend / (return rate - growth rate) = $0.35 / (17.4% - 2.5%) = $0.35 / 14.9% = $2.35

Next, we find the present value of the cash flows:

PV = $0.23/1.174 + $0.2645/1.174² + $0.3042/1.174³ + $0.35/1.174⁴ + $2.35/1.174⁵ = $0.1959 + $0.1919 + $0.188 + $0.1842 + $1.0537 = $1.82

6 0
2 months ago
Paine Corporation processes sugar beets in batches that it purchases from farmers for $72 a batch. A batch of sugar beets costs
harina [3808]

Answer:

The Beet Juice should undergo additional processing

Explanation:

A business should opt for further processing of a product if the income gained from the split-off point exceeds the costs associated with that further processing.

It’s also vital to understand that all expenses incurred before the crushing stage are considered irrelevant to the decision on further processing.

Product           Additional Rev.     Further process cost.     Net income(loss) ($)

Beet Fiber       40-27 =13                         16                              (3) See notes

Beet Juice       100- 43 = 57                28                              29

It is advisable to further process the beet juice into refined sugar while the beet fiber should not be processed any more. Processing the Beet Juice further will yield an additional profit of $29 per unit while Beet Fiber would lead to a deficit of  $(3)

Notes

The net income(loss) is calculated as the difference between income from further processing and the expenses for that processing. The net income(loss) for each product is worked out in the following way:

Beet Fiber  = 13- 16 = (3)

Beet Juice  = 57 - 28 = 29

8 0
1 month ago
Which of the following M&A transaction equations is correct? Review Later Value created = Hard synergies + Soft synergies –
stepan [3596]
The equation for value created is the sum of hard and soft synergies minus transaction costs. M&A transaction equations capture the merging and acquisition dynamics, where 'value created' signifies earnings surpassing initial expectations. Synergies reflect enhanced efficiency from resource integration, resulting in combined valuations exceeding individual contributions. Hard synergies represent cost savings from shared resources while soft synergies arise from increased revenues. Transaction costs are the expenses linked to the merging and acquisition process.
6 0
1 month ago
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