You are analyzing the purchase of new equipment. Since you are not an expert on this type of
equipment, you hire a consulting firm to make recommendations.
The consultant charged you
$1,500 and recommended the purchase of the latest model from ACME Corp of America. The
equipment costs $80,000, and it will cost another $10,000 to modify it for special use by your firm.
The equipment will be depreciated on a straight-line basis over six years with no salvage value.
You expect the equipment will be sold after three years for $28,000. Use of the equipment will
require an increase in your company's net working capital of $4,000, but this $4,000 will be
recovered at the end of year three. The use of the equipment will have no effect on revenues, but it
is expected to save the firm $50,000 per year in before-tax operating costs. Your company's
marginal tax rate is 35%. What is the terminal cash flow for this project?
A) $24,500 B) $33,950 C) $37,950 D) ($17,000)
C
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The following are potential pitfalls of a focus strategy, except
A. focusers can become too focused to satisfy buyer needs. B. erosion of cost advantages within the narrow segment. C. even product and service offerings that are highly focused are subject to competition from new entrants and from imitation. D. all rivals share a common input or raw material.
______ allows for the coordination of raw materials purchasing, whereas ______ facilitates the development of a detailed production schedule that accounts for machine and labor capacity and for scheduling the production runs.
A. MRP; MRP II B. MRP II; MRP C. MRP; CRP D. MRP; DRP
Which is a benefit of overseas experience?
a) Improved personality b) Ability to deal with new and conflicting information c) Technical knowledge d) Better work-life balance
A company that forecasts sales, builds an inventory based on the forecast, holds the components in inventory until a customer order is received and then finalizes the product based on the order is using a
A. push-pull strategy. B. push strategy. C. supply strategy. D. pull strategy. E. demand strategy.