QUESTION A quality characteristic of interest for a tea-bag-filling process is the weight of the tea in the individual bags. If the bags are under filled, two problems arise. First, customers may not be able to brew the tea to be as strong as they wish. Second, the company may be in violation of the […]
Date: September 2nd, 2020
QUESTION A 20-year-old student wants to save $3 a day for her retirement. Every day she places $3 in a drawer. At the end of each year, she invests the accumulated savings ($1,095) in a brokerage account with an expected annual return of 12%. (1) If she keeps saving in this manner, how much will […]
Date: September 2nd, 2020
QUESTION Allied Products, Inc., is considering a new product launch. The firm expects to have an annual operating cash flow of $25 million for the next 10 years. Allied Products uses a discount rate of 20 percent for new product launches. The initial investment is $100 million. Assume that the project has no salvage value […]
Date: September 2nd, 2020
QUESTION J. Smythe, Inc., manufactures fine furniture. The company is deciding whether to introduce a new mahogany dining room table set. The set will sell for $5,600, including a set of eight chairs. The company feels that sales will be 1,300; 1,325; 1,375; 1,450; and 1,320 sets per year for the next five years, respectively. […]
Date: September 2nd, 2020
QUESTION Problem (20 points) The McKeever Corporation recently paid a $2.50 dividend; this dividend is expected to grow at a constant rate of 3 percent per year for the indefinite future. The 1-year T-Bill is currently yielding 4.5 percent, and the required return on the overall market is 8.5 percent. McKeevers stock has a beta […]
Date: September 2nd, 2020
QUESTION With the growing popularity of casual surf print clothing, two recent MBA graduates decided to broaden this casual surf concept to encompass a surf lifestyle for the home. With limited capital, they decided to focus on surf print table and floor lamps to accent peoples homes. They projected unit sales of these lamps to […]
Date: September 2nd, 2020
QUESTION Rite Bite Enterprises sells toothpicks. Gross revenues last year were $3 million, and total costs were $1.5 million. Rite Bite has 1 million shares of common stock outstanding. Gross revenues and costs are expected to grow at 5 percent per year. Rite Bite pays no income taxes. All earnings are paid out as dividends. […]
Date: September 2nd, 2020
QUESTION P5-4 Risk analysis Solar Designs is considering an investment in an expanded product line. Two possible types of expansion are being considered. After investigating the possible outcomes, the company made the estimates shown in the following table: Expansion A Expansion B Initial Investment $12,000 $12,000 Annual Rate of Return Pessimistic 16% 10% Most likely […]
Date: September 2nd, 2020
QUESTION You would like to establish a trust fund that will provide $120,000 a year forever for your heirs. The trust fund is going to be invested very conservatively so the expected rate of return is only 5.75 percent. How much money must you deposit today to fund this gift for your heirs? As per […]
Date: September 2nd, 2020
QUESTION The following data represent total personnel expenses for the Palmdale Human Service Agency for past four fiscal years: 20X1 $5,250,000 20X2 $5,500,000 20X3 $6,000,000 20X4 $6,750,000 Forecast personnel expenses for fiscal year 20X5 using moving averages, weighted moving averages, exponential smoothing, and time series regression. For moving averages and weighted moving averages, use only […]
Date: September 2nd, 2020
