Questions from Corporate Finance

Q: Esfandairi Enterprises is considering a new three-year expansion project that

Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.18 million. The fixed asset will be depreciated straight-line to zero ove...

Q: Night Shades, Inc., manufactures biotech sunglasses. The variable materials

Night Shades, Inc., manufactures biotech sunglasses. The variable materials cost is $12.14 per unit, and the variable labor cost is $6.89 per unit. a. What is the variable cost per unit? b. Suppose th...

Q: Consider a project with the following data: Accounting break-even

Consider a project with the following data: Accounting break-even quantity = 14,300 units; cash break-even quantity = 9,700 units; life = 5 years; fixed costs = $205,000; variable costs = $19 per unit...

Q: At an output level of 40,000 units, you calculate

At an output level of 40,000 units, you calculate that the degree of operating leverage is 3.19. If output rises to 44,000 units, what will the percentage change in operating cash flow be? Will the ne...

Q: In the previous problem, suppose fixed costs are $183,

In the previous problem, suppose fixed costs are $183,000. What is the operating cash flow at 38,000 units? The degree of operating leverage? Problem 11: At an output level of 40,000 units, you calcu...

Q: A proposed project has fixed costs of $76,000 per

A proposed project has fixed costs of $76,000 per year. The operating cash flow at 9,200 units is $108,700. Ignoring the effect of taxes, what is the degree of operating leverage? If units sold rise f...

Q: At an output level of 14,500 units, you have

At an output level of 14,500 units, you have calculated that the degree of operating leverage is 3.41. The operating cash flow is $81,000 in this case. Ignoring the effect of taxes, what are fixed cos...

Q: In the previous problem, what will be the new degree of

In the previous problem, what will be the new degree of operating leverage in each case? Problem 14: At an output level of 14,500 units, you have calculated that the degree of operating leverage is 3...

Q: Consider a four-year project with the following information: Initial

Consider a four-year project with the following information: Initial fixed asset investment = $655,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $28; va...

Q: In the previous problem, what is the degree of operating leverage

In the previous problem, what is the degree of operating leverage at the given level of output? What is the degree of operating leverage at the accounting break-even level of output? Problem 17: Cons...