Samuelson, Inc., has just purchased a $675,000 machine to produce calculators. The machine will be fully depreciated by the straight-line method over its economic life of five years and will produce 21,000 calculators each year. The variable production cost per calculator is $17 and total fixed costs are $910,000 per year. The corporate tax rate for the company is 30 percent. For the firm to break even in terms of accounting profit, how much should the firm charge per calculator?
Answer to relevant QuestionsTidwell Products, Inc., is considering a new product launch. The firm expects to have an annual operating cash flow of $13 million for the next 10 years. Tidwell Products uses a discount rate of 14 percent for new product ...In each of the following cases, find the unknown variable. Ignore taxes. A stock has had returns of –17.62 percent, 15.38 percent, 10.95 percent, 26.83 percent, and 5.31 percent over the past five years, respectively. What was the holding period return for the stock? In the previous problem, what is the probability that the return is less than –100 percent? (Think.) What are the implications for the distribution of returns? Stock Y has a beta of 1.35 and an expected return of 14.2 percent. Stock Z has a beta of .75 and an expected return of 9.1 percent. If the risk-free rate is 4.3 percent and the market risk premium is 7 percent, are these ...
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