Question: The engineering manager at FXO Plastics wants to complete an alternative evaluation study. She asked the finance manager for the corporate MARR. The finance manager

The engineering manager at FXO Plastics wants to complete an alternative evaluation study. She asked the finance manager for the corporate MARR. The finance manager gave her some data on the project and stated that all projects must clear their average (pooled) cost by at least 4%.


The engineering manager at FXO Plastics wants to complete an


(a) Use the data to determine the minimum MARR.
(b) The study is after taxes and part (a) provided the before-tax MARR. Determine the correct MARR to use if the tax rate was 32% last year and the finance manager meant that the 4% above the cost is for after-taxevaluations.

Funds Source Amount, $ Retained earnings Stock sales Long-term loans 4,000,000 6,000,000 5,000,000 Average Cost, % 7.4 4.8 9.8

Step by Step Solution

★★★★★

3.45 Rating (165 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

a Total equity and debt fund is 15 million Equity WACC retained earnings fraction cost sto... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

217-B-E-M (1356).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

Q:

Deavyanne Johnston, the engineering manager at TZO Chemicals, is conducting an evaluation of alternatives based on ROR. She was given the following data and told that due to the unusually large...

Q:

Last year Perpetual Plastics Company took an average of 46 days to pay suppliers and 38 days to collect its receivables. The company's average days' sales in inventory was 52 days. What was...

Q:

Some projects are directed by project managers who have only monitoring authority. These individuals are referred to as influence project managers. What kind of projects would be under their control?...

Q:

Hello sir/mam pls help me The engineering manager at FXO Plastics wants to complete an alternative evaluation study. She asked the finance manager for the corporate MARR. The finance manager gave her...

Q:

The engineering manager at FXO Plastics wants to complete an alternative evaluation study. She asked the finance manager for the corporate MARR. The finance manager gave her some data on the project...

Q:

The engineering manager at FXO Plastics wants to complete an alternative evaluation study. She asked the finance manager for the corporate MARR. The finance manager gave her some data on the project...

Q:

The engineering manager at FXO Plastics wants to complete an alternative evaluation study. She asked the finance manager for the corporate MARR. The finance manager gave her some data on the project...

Q:

Hello sir/mam pls help me The engineering manager at FXO Plastics wants to complete an alternative evaluation study. She asked the finance manager for the corporate MARR. The finance manager gave her...

Q:

Hello sir/mam pls help me The engineering manager at FXO Plastics wants to complete an alternative evaluation study. She asked the finance manager for the corporate MARR. The finance manager gave her...

Q:

Hello sir/mam pls help me The engineering manager at FXO Plastics wants to complete an alternative evaluation study. She asked the finance manager for the corporate MARR. The finance manager gave her...

Q:

The chart below is a partial house of quality for a golf country club. Provide an importance weighting from your perspective (or that of a golfing friend) in the unshaded areas. If you can, using the...

Q:

7. Define and explain trees and binary trees. 8. What is binary search tree? Write an algorithm to insert and delete an item from a binary search tree. 9. What are different methods of binary tree...

Q:

As a C corporation, does GJ have a required tax year? If so , what would it be ?

Q:

How do you think Paul was able to keep his composure in the midst of the difficulties he and his shipmates were facing?

Q:

The cost of maintaining a permanent monument is expected to be $70,000 now and $70,000 every 10 years forever. At an interest rate of 10% per year, the capitalized cost is nearest: (a) $11,393 (b)...

Q:

The cost of replacing a high-definition television production line in 6 years is estimated to be $500,000. At an interest rate of 14% per year, compounded semiannually, the uniform amount that must...

Q:

For the cash flow diagram shown, the future worth in year 4 is closest to: (a)

Q:

A company has $6.10 per unit in variable costs and $3.80 per unit in fixed costs at a volume of 50,000 units. If the company marks up total cost by 0.47, what price should be charged if 67,000 units...

Q:

What is the total amount of stockholders' equity as of December 31, 2015? $610,000 $750,000 $1,010,000 $1,150,000 Too difficult to calculate from the data given. On February 3,2015 Bombard...

Q:

Use the following information in answering questions 1 and 2 below. On April 5, the approximate yield for security A was 7.67%. The yield for security B on the same date was 6.09%. 1. The absolute...