Multiple choice question 121 the following information pertains to ortiz company. assume that all balance sheet amounts represent both average and ending balance figures. assume that all sales were on credit. assets cash and short-term investments $ 45000 accounts receivable (net) 25000 inventory 12000 property, plant and equipment (net) 21 total assets $292000 liabilities and stockholders’ equity current liabilities $ 5 long-term liabilities 9 stockholders’ equity—common 152000 total liabilities and stockholders’ equity $292000 income statement sales (net) $ 12 cost of goods sold 66000 gross profit 54000 operating expenses 3 net income $24000 number of shares of common stock 6000 market price of common stock $20 dividends per share 0.5 what is the inventory turnover for ortiz?

How will firms solve the problem of an economic surplus a. decrease prices to the market equilibrium price b. decrease prices so they are below the market equilibrium price c.increase prices

Shrieves casting company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by sidney johnson, a recently graduated mba. the production line would be set up in unused space in the main plant. the machinery’s invoice price would be approximately $200,000, another $10,000 in shipping charges would be required, and it would cost an additional $30,000 to install the equipment. the machinery has an economic life of 4 years, and shrieves has obtained a special tax ruling that places the equipment in the macrs 3-year class. the machinery is expected to have a salvage value of $25,000 after 4 years of use. the new line would generate incremental sales of 1,250 units per year for 4 years at an incremental cost of $100 per unit in the first year, excluding depreciation. each unit can be sold for $200 in the first year. the sales price and cost are both expected to increase by 3% per year due to inflation. further, to handle the new line, the firm’s net working capital would have to increase by an amount equal to 12% of sales revenues. the firm’s tax rate is 40%, and its overall weighted average cost of capital, which is the risk-adjusted cost of capital for an average project (r), is 10%. define “incremental cash flow.” (1) should you subtract interest expense or dividends when calculating project cash flow?

Parks corporation is considering an investment proposal in which a working capital investment of $10,000 would be required. the investment would provide cash inflows of $2,000 per year for six years. the working capital would be released for use elsewhere when the project is completed. if the company's discount rate is 10%, the investment's net present value is closest to (ignore income taxes) ?