Question and Problem Sets

Complete the following Questions and Problems from each chapter as indicated. Show all work and analysis. Prepare in Microsoft® Excel® or Word. Ch. 9: Questions 7 & 8 (Questions and Problems section)Ch. 10: Questions 3 & 13 (Questions and Problems section)Ch. 11: Questions 1 & 7 (Questions and Problems section)Format your assignment consistent with APA guidelines if submitting in Microsoft® Word.
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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?
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?
13. Project Evaluation [LO1] Dog Up! Franks is looking at a new sausage system with an installed cost of
$540,000. This cost will be depreciated straight-line to zero over the project?s five-year life, at the end of
which the sausage system can be scrapped for $80,000. The sausage system will save the firm $170,000
per year in pretax operating costs, and the system requires an initial investment in net working capital of
$29,000. If the tax rate is 34 percent and the discount rate is 10 percent, what is the NPV of this project?
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.

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