Questions from Corporate Finance

Q: Silver Polygon, Inc., has determined that if its revenues were

Silver Polygon, Inc., has determined that if its revenues were to increase by 10 percent, then EBIT would increase by 25 percent to $100,000. The fixed costs (cash only) for the firm are $100,000. Giv...

Q: If a firm’s costs (both variable as well as fixed)

If a firm’s costs (both variable as well as fixed) are known with certainty, then what are the only two sources of volatility for the firm’s operating profits or its operating cash flows?

Q: Using the same logic as with the accounting break-even calculation

Using the same logic as with the accounting break-even calculation in Problem 12.19, adapt the formula for crossover level of unit sales to find the number of units sold where the pretax operating cas...

Q: You are the project manager for Eagle Golf Corporation. You are

You are the project manager for Eagle Golf Corporation. You are considering manufacturing a new golf wedge with a unique groove design. You have put together the estimates in the following table abo...

Q: How is the per-unit contribution related to the accounting operating

How is the per-unit contribution related to the accounting operating profit break-even point?

Q: Commodore Motors management is considering a project to produce toy cars.

Commodore Motors management is considering a project to produce toy cars. The project would require an initial outlay of $100,000 and have an expected life of 10 years. Management estimates that eac...

Q: The Fulcrum Company produces decorative swivel platforms for home televisions. If

The Fulcrum Company produces decorative swivel platforms for home televisions. If Fulcrum produces 40 million units, it estimates that it can sell them for $100 each. The variable production costs are...

Q: WalkAbout Kangaroo Shoe Stores forecasts that it will sell 9,500

WalkAbout Kangaroo Shoe Stores forecasts that it will sell 9,500 pairs of shoes next year. The firm buys its shoes for $50 per pair from the wholesaler and sells them for $75 per pair. If the firm wil...

Q: The degree of pretax cash flow operating leverage at Rackit Corporation is

The degree of pretax cash flow operating leverage at Rackit Corporation is 2.7 when it sells 100,000 units of its new tennis racket and its EBITDA is $95,000. Ignoring the effects of taxes, what are...

Q: Caterpillar, Inc. is a manufacturer of large earth-moving

Caterpillar, Inc. is a manufacturer of large earth-moving and mining equipment. This firm, and other heavy equipment manufacturers, have accounting degrees of operating leverage that are relatively hi...