Deep Mining and Precious Metals are separate firms that are both considering a silver mining project. Deep Mining is in the actual mining business and has an aftertax cost of capital of 16.2 percent. Precious Metals is in the precious gem retail business and has an aftertax cost of capital of 13.4 percent. The project under consideration has initial costs of $950,000 and anticipated annual cash inflows of $165,000 a year for 12 years. Which firm(s), if either, should accept this project?

Over the past four years, Preston’s investment account earned annual returns of 6.5 percent, −24 percent, 12.5 percent, and 21.2 percent. To determine the compound annual growth rate of the investment account, he should use the ________ average of ________ percent.

A project has an estimated sales price of $71 per unit, variable costs of $44.03 per unit, fixed costs of $57,000, a required return of 14 percent, an initial investment of $79,500, no salvage value, and a life of four years. Ignore taxes. What is the degree of operating leverage at the financial break-even level of output?

A stock had annual returns of 5.5 percent, −12 percent, and 15.5 percent for the past three years, respectively. What is the standard deviation of returns for this stock?

A company is analyzing two machines to determine which one it should purchase. The company requires a rate of return of 15 percent and uses straight-line depreciation to a zero book value over the life of its equipment. Ignore bonus depreciation. Machine A has a cost of $462,000, annual aftertax cash outflows of $46,200, and a four-year life. Machine B costs $898,000, has annual aftertax cash outflows of $16,500, and has a seven-year life. Whichever machine is purchased will be replaced at the end of its useful life. Which machine should the company purchase and how much less is that machine’s EAC as compared to the other machine’s?

Duck-n-Run has projected sales of $280,000 for January, $315,000 for February, and $336,000 for March. The company collects 62 percent of sales in the month of sale, 35 percent in the month after sale, and 3 percent two months after sale. The accounts receivable balance at the end of the previous quarter was $9,600. What is the amount of the February collections?

Schubach Ranch Supply offers its credit customers a two percent discount if they pay within ten days. This discount is referred to as a ____ discount.

A proposed project has fixed costs of $42,106 per year. The operating cash flow at 12,000 units is $56,900. Ignore taxes. What will be the new degree of operating leverage if the number of units sold rises to 12,600?

You purchased a stock at a price of $61.45. The stock paid a dividend of $1.67 per share and the stock price at the end of the year is $55.01. What are your capital gains on this investment?

Carnival Sweets expects to sell $135,900 of toys in December, $64,700 in January, $74,400 in February, and $56,800 in March. The wholesale cost is 58 percent of the retail price. The receivables period is 30 days, the payables period is 60 days, and all inventory is purchased one month prior to selling it. What is the accounts payable balance at the end of February? Assume a year has 360 days.