Grant Manufacturing is considering investing in equipment that costs $70,000. The equipment would be depreciated using the straight-line method with no half-year convention over seven years and have no salvage value. If the company has a 40 percent income tax rate and desires an after-tax rate of return of 14 percent on investments, the total present value of the depreciation tax shield is:
A) $42,883.
B) $27,972.
C) $25,730.
D) $17,153.
D
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Answer the following statements true (T) or false (F)
1. Factory rent, as well as factory property taxes and insurance, are included in manufacturing overhead. 2. Manufacturing companies have inventory accounts, but merchandising companies do not. 3. Freight costs paid to ship raw materials to a company warehouse are considered product costs. 4. Sales commissions are included in manufacturing overhead. 5. In a manufacturing company, advertising and marketing costs are examples of period costs.
Iver Roller Skates has three product lines—D, E, and F
The following information is available: D E F Sales revenue $90,000 $50,000 $30,000 Variable costs (40,000 ) (10,000 ) (11,000 ) Contribution margin $50,000 $40,000 $19,000 Fixed costs (10,000 ) (10,000 ) (24,000 ) Operating income (loss) $40,000 $30,000 $(5,000 ) The company is deciding whether to drop product line F because it has an operating loss. Assuming fixed costs are unavoidable, if Iver drops product line F and rents the space formerly used to produce product F for $19,000 per year, total income will be ________. A) $11,000 B) $65,000 C) $19,000 D) $24,000
________ is the process of naming broad product-markets and then segmenting these broad product-markets in order to select target markets and develop suitable marketing mixes.
A. Mass marketing B. Market positioning C. Strategic planning D. Implementation E. Market segmentation
Rogue Recreation, Inc has normally distributed returns with an expected return of 15% and a
standard deviation of 5%, while Lake Tours, Inc has normally distributed returns with an expected return of 15% and a standard deviation of 15%. Which of the following is true? A) Rogue Rec is likely to experience returns larger than those of Lake Tours. B) Rational investors will prefer Lake Tours, Inc. over Rogue Recreation, Inc. C) Lake Tours is more likely to have negative returns than Rogue Rec. D) Lake Tours' investors are not being adequately compensated for relevant risk.