Chapter 9
Chapter 9
7. Calculating IRR [LO5] A firm evaluates all of its projects by applying the IRR rule. If the required return is 14 percent, should the firm accept the following project?
8. Calculating NPV [LO1] For the cash flows in the previous problem, suppose the firm uses the NPV decision rule. At a required return of 11 percent, should the firm accept this project? What if the required return is 24 percent?
Chapter 10
3. Calculating Projected Net Income [LO1] A proposed new investment has projected sales of $635,000. Variable costs are 44 percent of sales, and fixed costs are $193,000; depreciation is $54,000. Prepare a pro forma income statement assuming a tax rate of 35 percent. What is the projected net income?
10. Calculating Project NPV [LO1] In the previous problem, suppose the required return on the project is 12 percent. What is the project’s NPV?
1. Calculating Costs and Break-Even [LO3] Night Shades, Inc. (NSI), manufactures biotech sunglasses. The variable materials cost is $9.64 per unit, and the variable labor cost is $8.63 per unit.
a. What is the variable cost per unit?
b. Suppose NSI incurs fixed costs of $915,000 during a year in which total production is 215,000 units. What are the total costs for the year?
c. If the selling price is $39.99 per unit, does NSI break even on a cash basis? If depreciation is $465,000 per year, what is the accounting break-even point?
7. Calculating Break-Even [LO3] In each of the following cases, calculate the accounting break-even and the cash break-even points. Ignore any tax effects in calculating the cash break-even
Chapter 9
7. Calculating IRR [LO5] A firm evaluates all of its projects by applying the IRR rule. If the required
return is 14 percent, should the firm accept the following project?
8. Calculating NPV [LO1] For the cash flows in the previous problem, suppose the firm uses the NPV
decision rule. At a required return of 11 percent, should the firm accept this project? What if the
required return is 24 percent?
Chapter 10
3. Calculating Projected Net Income [LO1] A proposed new investment has
projected sales of $635,000.
Variable costs are 44 percent of sales, and fixed costs are $193,000; depreciation is $54,000. Prepare a
pro forma income statement assuming a tax rate of 35 percent. What is the projected net income?
10. Calculating Project N
PV [LO1] In the previous problem, suppose the required return on the project
is 12 percent. What is the project’s NPV?
Chapter 9
7. Calculating IRR [LO5] A firm evaluates all of its projects by applying the IRR rule. If the required
return is 14 percent, should the firm accept the following project?
8. Calculating NPV [LO1] For the cash flows in the previous problem, suppose the firm uses the NPV
decision rule. At a required return of 11 percent, should the firm accept this project? What if the
required return is 24 percent?
Chapter 10
3. Calculating Projected Net Income [LO1] A proposed new investment has projected sales of $635,000.
Variable costs are 44 percent of sales, and fixed costs are $193,000; depreciation is $54,000. Prepare a
pro forma income statement assuming a tax rate of 35 percent. What is the projected net income?
10. Calculating Project NPV [LO1] In the previous problem, suppose the required return on the project
is 12 percent. What is the project’s NPV?
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