3.The following data are available for the Phelps Company for a recent month:Product AProduct BProduct CTotalSalesP150,000P130,000P90,000P370,000Variable expenses91,000104,00027,000222,000Contribution marginP 59,000P 26,000P63,000148,000Fixed expenses55,000Net operating incomeP 93,000The break-even sales for the month for the company are:a P91,667b P203,000c P148,000d P137,5004.Hermosilla Corporation is a single product firm with the following selling price and cost structure for next year:Selling price per unitP 1.80Contribution margin ratio 40%Total fixed expenses for the year P218,700How many units will Hermosilla have to sell next year in order to break-even?5.Mobile Machine Works had the following data regarding monthly power costs:MonthMachine hoursPower costJun300P680Jul600720Aug400695
Sept.200640Assume that management expects 500 machine hours in October. Using the high-low method, calculate October’s power cost using machine hours as the basis for prediction.6.Pinpin Trainers provides a personalized training program that is popular with many companies. The number of programs offered over the last five months, and the costs of offering these programs are as follows:Programs OfferedCosts IncurredJan55P15,400Feb4514,050Mar6018,000April5014,700May7519,000Using the high-low method, compute the variable cost per program and the total fixed cost per month.7. Determine the (after-tax) percentage cost of a P50 million debt issue that the Mattingly Corporation is planning to place privately with a large insurance company. Assume that the company has a 40% marginal tax rate. This long-term debt issue will yield 12% to the insurance company.a. 4.8%b. 7.2%c. 12.0%d. none of the above8.The Allegheny Valley Power Company common stock has a beta of 0.80. If the current risk-free rate is 6.5% and the expected return on the stock market as a whole is 16%, determine the cost of equity capital for the firm (using the CAPM). 9.The following financial information is available on Rawls Manufacturing Company: Current per share market price P 48.00Current (t = 0) per share dividendP 3.50Expected long-term growth rate 5.0%Rawls can issue new common stock to net the company P44 per share. Determine the cost of internal equity capital using the dividend capitalization model approach. (Compute answer to the nearest 0.1%).10.Calvez has annual sales of P724 million from its 600 retail stores. Calvez can reduce its mail float by 2 days through the use of wire transfers. The annual cost of the wire transfers is expected to be P105,610. If Calvez's cost of short-term funds is 9.75 percent, should the change to wire transfers be made? Assume 365 days per year.
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