You are the head of the Beijing Division of Ming Xi Corporation. Your division is evaluated as a profit center. You are currently considering two possible alternatives for the use of your production and selling facilities. Option 1 is to buy 25,000 units of a proprietary product, Alpha, from the Shanghai Division of your company, spend an extra $20 per unit in variable costs to process it further into a new product called Beta and sell 25,000 units of Beta for $80 per unit. Option 2 is to make 10,000 units of a product, Gamma, that uses material bought from outside suppliers, and sell Gamma for a contribution of $100 per unit. The fixed costs for the Beijing Division are expected to be the same across the two options. What is the maximum transfer price per unit of Alpha that you would be willing to pay the Shanghai division?

(Hint: At what transfer price will Beijing division make the same income under the two alternatives?)

The following information is available for jase company: market price per share of common stock $25.00 earnings per share on common stock $1.25 which of the following statements is correct? a. the price-earnings ratio is 20 and a share of common stock was selling for 20 times the amount of earnings per share at the end of the year. b. the market price per share and the earnings per share are not statistically related to each other. c. the price-earnings ratio is 5% and a share of common stock was selling for 5% more than the amount of earnings per share at the end of the year. d. the price-earnings ratio is 10 and a share of common stock was selling for 125 times the amount of earnings per share at the end of the year.

4. the condition requires that only one of the selected criteria be true for a record to be displayed.

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?