Problem 10.28 – Equivalent Annual Cost
Fundamentals of Corporate Finance
Ross, Westerfield, and Jordan
13th Edition
Calculate the equivalent annual cost of the LED bulb and the traditional bulb.
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Calculate the equivalent annual cost of the LED bulb and the traditional bulb.
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Calculate annual fuel savings for the car and truck, then decide which one you should upgrade.
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Calculate the variable cost per unit, total costs for the year, the cash basis break-even point, and the accounting break-even point.
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Find the total production cost, marginals cost, average cost, and the minimum acceptable total revenue.
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Calculate the unit sales, unit price, unit variable cost, and fixed costs for all three scenarios.
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Find the accounting break-even and the cash break-even points for the cases.
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Figure out the unknown variables.
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Find upper and lower bounds for projections, base-case NPV, best-case and worst-case scenarios, the sensitivity of base-case NPV to changes in fixed costs, the cash break-even level, the accounting break-even level, and the degree of operating leverage.
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Figure out the payback period, NPV, and IRR.
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Find the number of miles and what price per gallon is needed to make buying a hybrid worth it.
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