Answer the following statements true (T) or false (F)
Ultimate Travel Company fabricates automobiles. Each auto includes one wiring harness, which is currently made in-house. Details of the harness fabrication are as follows:
A factory in India has offered to supply Ultimate Travel with ready-made units for a cost of $8 each. Assume that Ultimate Travel's fixed costs are unavoidable, but the company could use the vacated production facilities to earn an additional $5,000 of profit per month. In order to maximize operating income, Ultimate Travel should outsource.
TRUE
As the relevant cost in outsourcing is less than in-house, the company should outsource to maximize operating income.
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When a note receivable is discounted, the bank charges an interest fee for the time between the date of discounting and the due date of the note
Indicate whether the statement is true or false
The ________ ________ ________ is an international organization that regulates trade among participating countries and helps importers and exporters conduct their business.
What will be an ideal response?
Any system composed of resources that are operating at maximum output will, by definition, have maximum output for the entire system
Indicate whether the statement is true or false
Project X's IRR is 19% and Project Y's IRR is 17%. The projects have the same risk and the same lives, and each has constant cash flows during each year of their lives. If the WACC is 10%, Project Y has a higher NPV than X. Given this information, which of the following statements is CORRECT?
A. The crossover rate must be less than 10%. B. The crossover rate must be greater than 10%. C. If the WACC is 8%, Project X will have the higher NPV. D. If the WACC is 18%, Project Y will have the higher NPV. E. Project X is larger in the sense that it has the higher initial cost.