Deforrest Marine Motors manufactures engines for the speedboat racing circuit. As part of their annual planning cycle, they forecasted demand for the next four quarters. The number of available days of production and the anticipated demand are given below. Q1 Q2 Q3 Q4
Days of Production 65 68 61 64
Demand 1,800 2,200 1,700 2,400
They also estimated many of the costs required to conduct operations planning. Some of these key figures are listed below.
Employees 30 Hire Cost $1,200/employee
Production Rate 1 unit/employee/day Fire Cost $800/employee
Production Cost $1,000/unit Subcontracting Cost $1,800/unit
Backorder Cost
$200
Subcontracting Limit
400 units maximum
Overtime Cost
$1,500
Inventory Cost
$100/unit/quarter
Overtime Limit
<= 25% of Reg. Production
Initial Inventory 280 units
1. Given the assumption that Deforrest Marine Motors will maintain the same number of employees (30 employees) for the entire year, what would be the production for the first quarter?
2. Given that the beginning inventory (start of Q1) was 280 units, what would be the average on-hand inventory for the first quarter?
3. What would be the total on-hand average inventory holding cost for the four quarters?
4. What was the total cost of producing products across the four quarters?
5. What was the total cost of backordering across the four quarters?

Bond x is noncallable and has 20 years to maturity, a 7% annual coupon, and a $1,000 par value. your required return on bond x is 10%; if you buy it, you plan to hold it for 5 years. you (and the market) have expectations that in 5 years, the yield to maturity on a 15-year bond with similar risk will be 9.5%. how much should you be willing to pay for bond x today? (hint: you will need to know how much the bond will be worth at the end of 5 years.) do not round intermediate calculations. round your answer to the nearest cent.

Afirm's before-tax cost of debt, rd, is the interest rate that the firm must pay on debt. because interest is tax deductible, the relevant cost of debt used to calculate a firm's wacc is the cost of debt, rd (1 – t). the cost of debt is used in calculating the wacc because we are interested in maximizing the value of the firm's stock, and the stock price depends on cash flows. it is important to emphasize that the cost of debt is the interest rate on debt, not debt because our primary concern with the cost of capital is its use in capital budgeting decisions. the rate at which the firm has borrowed in the past is because we need to know the cost of capital. for these reasons, the on outstanding debt (which reflects current market conditions) is a better measure of the cost of debt than the . the on the company's -term debt is generally used to calculate the cost of debt because more often than not, the capital is being raised to fund -term projects. quantitative problem: 5 years ago, barton industries issued 25-year noncallable, semiannual bonds with a $1,600 face value and a 8% coupon, semiannual payment ($64 payment every 6 months). the bonds currently sell for $845.87. if the firm's marginal tax rate is 40%, what is the firm's after-tax cost of debt? round your answer to 2 decimal places. do not round intermediate calcu

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