4. See Roblox spreadsheet attached. Calculate and interpret the following: a. NOPAT b. ROIC C. EVA

Required Determine the effect each of the following situations would have on monthly profits. Each situation should be evaluated independently of all others. a. Product A is discontinued. b. Product A is discontinued, and the subsequent loss of customers causes sales of Product B to decline by 150 units. c. The selling price of A is increased to $25 with a sales decrease of 250 units. d. The price of Product B is increased to $20 with a resulting sales decrease of 300 units. However, some of these customers shift to Product A; sales of Product A increase by 200 units. e. Product A is discontinued, and the plant in which A was produced is used to produce D, a new prod- uct. Product D has a unit contribution margin of $2. Monthly sales of Product D are predicted to be 1,500 units. f. The selling price of Product C is increased to $35, and the selling price of Product B is decreased to $10. Sales of C decline by 350 units, while sales of B increase by 400 units.

P16-31 CVP Analysis and Special Decisions Smoothie Company produces fruit purees which it sells to smoothie bars and health clubs. Assume the most recent year's sales revenue was $5,800,000. Variable costs were 55% of sales and fixed costs totaled $1,560,000. Smoothie is evaluating two alternatives designed to enhance profitability. • One staff member has proposed that Smoothie purchase more automated processing equipment. This strategy would increase fixed costs by $250,000 but decrease variable costs to 50% of sales. • Another staff member has suggested that Smoothie rely more on outsourcing for fruit processing. This would reduce fixed costs by $250,000 but increase variable costs to 60% of sales. Required a. What is the current break-even point in sales dollars? b. Assuming an income tax rate of 20%, what dollar sales volume is currently required to obtain an after-tax profit of $1,000,000? c. In the absence of income taxes, at what sales volume will both alternatives (automation and out- sourcing) provide the same profit? d. Briefly describe one strength and one weakness of both the automation and the outsourcing alternatives.

a. The table below gives information extracted from the annual financial statements of Management plc for the past year. Calculate the length of the operating cycle (assuming 365 days in the year). b. Highlight four problems with the use of financial ratios as a measure of performance measurement for an organisation.(8 marks)

The Cornell Co. is considering replacing one of its weaving machines with a new, more efficient machine. The old machine is being depreciated on a straight-line basis down to a salvage value of zero over the next 5 years. It has a book value of $200,000 and could be sold for $120,000. The replacement machine would cost $600,000 and have an expected life of 5 years, after which it could be sold for $100,000. Because of reductions in defects and material savings, the new machine would produce cash benefits of $180,000 per year before depreciation and taxes. The present value of $1 at 15% received after 5 periods at 15% is 0.49718. The present value of an annuity of $1 for 4 periods at 15% is 2.85498, and for 5 periods is 3.35216. Assuming straight-line depreciation, a 40% marginal state and federal tax rate, and a required rate of return of 15%, find: a. the payback period; and b. the net present value.

Question 3) Define what you understand about project financing and explain the variety of funding sources available. What are the advantages and disadvantages of the different internal and external sources of funds?

A company is considering an investment proposal that will require the purchase of $80,000 of machinery and an initial investment in working capital of $40,000. The proposal is expected to yield cash flows and income (before depreciation and taxes) of $48,000 annually for four years. Depreciation is to be taken for tax purposes using the straight-line method and no salvage value. The investment in working capital will be recovered at the end of four years. The company will not accept a proposal that will not earn at least 15%. The present value of an annuity of $1 for four periods at 15% is 2.85498; the present value of $1 due in four periods at 15% is 0.57175. The tax rate in effect is 40%. Determine whether the project is acceptable using the net present value method.

a. Distinct between Systematic Risk (Market Risk) and Unsystematic Risk. b. Compare and contrast preference shares with ordinary shares.

a. What is the estimated life of the new machine? b. Compute the payback period for the new machine; ignore income taxes. c. Assume the same data as given above except that the repair costs on the new machine are expected to increase by $9,600 per year. Compute the payback period for the new machine.