A manufacturing company HES Inc. has two product lines. Traditional product has unit price of $340 and Classic has a unit price of $480. Firm’s manufacturing overhead costs are applied as $420 per direct labor hour.   HES Inc                  Budgeted statement of gross margin 2020                                                                                                                                     Products                                                                                                         Traditional         Classic                  Total Sales in units                                                   10000                   8000                    18000 Beginning finished goods                             $480,000.00        $500,000.00       $980,000.00 Direct material                                                $2,000,000.00   $3,400,000.00   $5,400,000.00 Direct labor                                                     $370,370.00        $185,186.00       $555,556.00 Ending finished goods                                  $480,000.00 …

Jan-Stone Limited is looking into the following two (2) investment projects: Project A B Cost of Investment $450,000 $560,000 Estimated net cash flows Year $ $ 1 180,000 220,000 2 160,000 200,000 3 130,000 170,000 4 110,000 150,000 5 90,000 120,000 6 60,000 80,000 730,000 940,000 The company’s required rate of return for both projects is 15%. Required: a. Calculate the net present value (NPV) for both projects. b. Evaluate and advise the management which one of the projects to opt for, if any.

The following summary of information extracted from Jan-Stones Limited, are for a typical month: Total Sales Revenue: Total Variable cost: Fixed costs per month: Units sold per month: $82,000 $36,000 $16,000 5,000 (i) Calculate the contribution per unit. (ii) Compute the monthly break-even point in units. (iii) If a monthly net profit of $40,000 is to be achieved, how many units would have to be sold?

Jan-Stones Limited has compiled the 4-month data below: Units Total Costs May 1,200 $39,400 June 1,600 $43,200 July 1,400 $41,800 August 1,100 $37,000   Applying the high-low method, answer the following questions: (i) Calculate the variable cost per unit. (ii) Calculate the fixed cost portion of the total costs. (iii) If the company uses 1,800 units in September, how much will the total costs be?

What would be the expected price of a stock when dividends are expected to grow at a 25% rate for three years, then grow at a constant rate of 5%, if the stock’s required return is 13% and next year’s dividend will be $4.00?

What rate of return is expected from a stock that sells for $30 per share, pays $1.50 annually in dividends, and is expected to sell for $33 per share in one year?

The ordinary shares of FED Limited are selling for $26.75 on the open market. A dividend of $3.68 is expected to be distributed, and the growth rate of this company is estimated to be 5.5%. If Bob Dean, an average investor, is considering purchasing this share at the market price, what is his expected rate of return?

Healthy Foods Company (HFC) currently processes seafood with a unit it purchased several years ago. The unit, which originally cost $500,000, has a current book value of $250,000. HFC is considering replacing the existing unit with a newer, more efficient one. The new unit will cost $750,000 and will also require an initial increase in net working capital of $40,000.  The new unit will be depreciated on a straight‐line basis over five years to a zero balance. The existing unit is being depreciated at a rate of $50,000 per year. HFC expects to sell the existing machine today for $275,000. HFC’s tax rate is 30%. If HFC purchases the new unit, annual revenues are expected to increase by $100,000 (due to…

The table below gives the amount invested and betas for three stocks. Stock       Amount Invested          Beta GM            K10, 000                     1.2 IBM           K10, 000                     1.0 WMT         K20, 000                     0.7   REQUIRED: Using the CAPM, if the expected return for the market is 6% and the risk-free rate is 1.5%, what is the expected return for each stock? What is the beta for this portfolio based on the invested amounts? Using the CAPM, what is the expected return for this portfolio?