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If Christine were evaluated with RI, not at risk of termination, and planned to stay with the firm for at least four more years, which projects would she take? Would that be goal-congruent?

Sheila is the owner of a small firm that produces and sells skin care products. Currently, she only has two products: Smooist and Exfoliotic. With these two products, Sheila has been struggling. She does not understand the problem. Over the last few years, things were going ok, until inflation and tariffs increased. Suddenly, her raw materials became more expensive, her employees started demanding higher salaries, her margins narrowed, and she began incurring losses. This is her last income statement: Sheila has asked you for advice. She is worried about the Smooist product, because it shows a negative margin. She is afraid of increasing prices because competitors have not raised theirs, and she might lose market share. However, she thinks that, since the margin is negative, she might as well drop the product and save the money. Before she makes any decision, she wants you to write an ABC income statement. To do that, she gives you the following information about her overhead costs: She also provides information on the cost drivers and resource consumption for both products. Both products require careful technical supervision and are produced in batches using a mixing machine at high temperatures. Two years ago, when the economy was healthier and demand was strong, they were working at a pace that was very hard to sustain without a substantial investment in additional resources. That year, the machines ran for 5,500 hours, produced 210 batches, and required 5,000 hours of technical supervision.

Calculate the materials’ price variance. 

Which projects would shareholders want to take?

Christine is the divisional manager of a sports equipment company. Her division manufactures and sells tennis rackets. The division has performed poorly over the last two years, with an ROI of only 5%. Headquarters understands that the current economic situation has not helped, but she remains at risk of termination if she does not improve her division’s ROI very soon. To address the problem, she has designed two projects that may help. The following data should allow you to evaluate the projects:

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 11 years because the firm needs to plow back its earnings to fuel growth. The company will pay a $11 per share dividend in 12 years and will increase the dividend by 5 percent per year thereafter. Required: If the required return on this stock is 7 percent, what is the current share price? (Do not round your intermediate calculations.)

You are comparing Stock A to Stock B. Given the following information, what is the difference in the expected returns of these two securities? Normal state probability 45 percent; Normal state return for Stock A: 12 percent; Normal state return for Stock B: 17 percent; Recession state probability 55 percent; Recession state return for Stock A:-22 percent; Recession state return for Stock B:-25 percent.

The length of time a firm grants its customers to pay for their purchases is called the:

Determine the common stock for Bertinelli Corp. based on the following information: cash = $370,000; patents and copyrights = $770,000; accounts payable = $500,000; accounts receivable = $159,000; tangible net fixed assets = $3,300,000; inventory = $255,000; notes payable = $190,000; accumulated retained earnings = $1,395,000; long-term debt = $1,730,000.

Assume you can exchange $1 for either £1 or €.50 in the U.S. In the London market, you can exchange £1 for €.52. This situation creates an opportunity to profit immediately from which one of the following?