HomeworkLib
Question

Here is your family bakery project. The bakery would cost you $600,000 per year to operate....

Here is your family bakery project. The bakery would cost you $600,000 per year to operate. The expected annual operating revenue is $1,200,000.

1. Would you accept or reject the project, given budget constraints?

2. Why? Justify this case.

3. List the 2 specific economic concepts that best support you answers to part 1 and 2.

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Ans 1)

In this question we are given with expected annual revenue that means it should have outcomes lower than and greater than $1,200,000

If all the possible expected revenue are greater than $600,000 the we can accept the project but if there are more possiblilty of getting lower revenues than that of cost we would not be able to make any profit if these outcomes happen then it is not a good idea to accept the project.

Ans 3)

Expectation hypothesis in which E(Revenue)=Sum (Prob. Of Outcome * Outcome)

Lowest Outcome <E(Outcome)<Highest Outcome

0 0
Add a comment
Know the answer?
Add Answer to:
Here is your family bakery project. The bakery would cost you $600,000 per year to operate....
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • You are considering a new product launch. The project will cost $910,000, have a 5-year life,...

    You are considering a new product launch. The project will cost $910,000, have a 5-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 300 units per year; price per unit will be $15,905, variable cost per unit will be $11,750, and fixed costs will be $600,000 per year. The required return on the project is 9 percent and the relevant tax rate is 23 percent. Based on your experience, you think the unit...

  • You are considering a new product launch. The project will cost $1,550,000, have a four-year life,...

    You are considering a new product launch. The project will cost $1,550,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 150 units per year; price per unit will be $19,000, variable cost per unit will be $11,000, and fixed costs will be $460,000 per year. The required return on the project is 12 percent, and the relevant tax rate is 34 percent. a. Based on your experience, you think the...

  • You are considering a new product launch. The project will cost $1,900,000, have a 4-year life,...

    You are considering a new product launch. The project will cost $1,900,000, have a 4-year life, and have no salvage value; depreciation is straight-line to 0. Sales are projected at 180 units per year, price per unit will be $23,000; variable cost per unit will be $14,500, and fixed costs will be $530,000 per year. The required return on the project is 15%, and the relevant tax rate is 35%. a. Based on your experience, you think the unit sales,...

  • You are considering a new product launch. The project will cost $1,950,000, have a 4-year life,...

    You are considering a new product launch. The project will cost $1,950,000, have a 4-year life, and have no salvage value; depreciation is straight-line to 0. Sales are projected at 180 units per year; price per unit will be $24,000; variable cost per unit will be $15,000; and fixed costs will be $540,000 per year. The required return on the project is 10%, and the relevant tax rate is 34%. a. Based on your experience, you think the unit sales,...

  • You are considering a new product launch. The project will cost $2,100,000, have a 4-year life,...

    You are considering a new product launch. The project will cost $2,100,000, have a 4-year life, and have no salvage value; depreciation is straight-line to 0. Sales are projected at 160 units per year; price per unit will be $27,000; variable cost per unit will be $16,500; and fixed costs will be $570,000 per year. The required return on the project is 14%, and the relevant tax rate is 32%. a. Based on your experience, you think the unit sales,...

  • Delia Landscaping is considering a new 4-year project. The equipment necessary would cost $173,000 and be...

    Delia Landscaping is considering a new 4-year project. The equipment necessary would cost $173,000 and be depreciated on a 3-year MACRS to a book value of zero. The MACRS percentages each year are 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. At the end of the project, the equipment can be sold for 10 percent of its initial cost. The project will have annual sales of $110,000, variable costs of $27,700, and fixed costs of $12,300. The project...

  • You are considering a new product launch. The project will cost $1,975,000, have a four- year...

    You are considering a new product launch. The project will cost $1,975,000, have a four- year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 220 units per year; price per unit will be $17,700, variable cost per unit will be $11,750, and fixed costs will be $570,000 per year. The required return on the project is 9 percent, and the relevant tax rate is 21 percent a. Based on your experience, you think...

  • You are considering a new product launch. The project will cost $2,275,000, have a four-year life,...

    You are considering a new product launch. The project will cost $2,275,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 300 units per year; price per unit will be $19,400, variable cost per unit will be $13,550, and fixed costs will be $690,000 per year. The required return on the project is 10 percent, and the relevant tax rate is 23 percent.    a. Based on your experience, you think...

  • You are considering a new product launch. The project will cost $2,175,000, have a four-year life,...

    You are considering a new product launch. The project will cost $2,175,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 260 units per year; price per unit will be $19,300, variable cost per unit will be $12,950, and fixed costs will be $650,000 per year. The required return on the project is 10 percent, and the relevant tax rate is 24 percent.    a. Based on your experience, you think...

  • You are considering a new product launch. The project will cost $2,275,000, have a four-year life,...

    You are considering a new product launch. The project will cost $2,275,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 300 units per year; price per unit will be $19,400, variable cost per unit will be $13,550, and fixed costs will be $690,000 per year. The required return on the project is 10 percent, and the relevant tax rate is 23 percent. a. Based on your experience, you think the...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT