eBookItem 10 You are evaluating a proposed expansion of an existing subsidiary located in Switzerland. The cost of the expansion would be SF 16 million. The cash flows from the project would be SF 4.8 million per year for the next five years. The dollar required return is 14 percent per year, and the current exchange rate is SF 1.05. The going rate on Eurodollars is 4 percent per year. It is 3 percent per year on Euroswiss. Use the approximate form of interest rate parity in calculating the expected spot rates.

Aceramics manufacturer sold cups last year for $7.50 each. variable costs of manufacturing were $2.25 per unit. the company needed to sell 20,000 cups to break even. net income was $5,040. this year, the company expects the price per cup to be $9.00; variable manufacturing costs to increase 33.3%; and fixed costs to increase 10%. how many cups (rounded) does the company need to sell this year to break even?

crow design, inc. is a web site design and consulting firm. the firm uses a job order costing system in which each client is a different job. crow design assigns direct labor, licensing costs, and travel costs directly to each job. it allocates indirect costs to jobs based on a predetermined overhead allocation rate, computed as a percentage of direct labor costs. direct labor hours (professional) 6,250 hours direct labor costs ($1,800,000 support staff salaries ,000 computer ,000 office ,000 office ,000 in november 2012, crow design served several clients. records for two clients appear here: delicious treats mesilla chocolates direct labor 700 hours 100 hours software licensing $ 4,000 $400 travel costs 8,000 1. compute crow design’s direct labor rate and its predetermined indirect cost allocation rate for 2012. 2. compute the total cost of each job. 3. if simone wants to earn profits equal to 50% of service revenue, how much (what fee) should she charge each of these two clients? 4. why does crow design assign costs to jobs?

The management of a supermarket wants to adopt a new promotional policy of giving a free gift to every customer who spends > a certain amount per visit at this supermarket. the expectation of the management is that after this promotional policy is advertised, the expenditures for all customers at this supermarket will be normally distributed with a mean of $95 and a standard deviation of $20. if the management wants to give free gifts to at most 10% of the customers, what should the amount be above which a customer would receive a free gift?