Thompson & Son Has Been Busy Analyzing a New Product

question 6

Multiple Choice

Thompson & Son has been busy analyzing a new product. It has determined that an operating cash flow of $16,700 will result in a zero net present value,which is a company requirement for project acceptance. The fixed costs are $12,378 and the contribution margin is $6.20. The company feels that it can realistically capture 10% of the 50,000 unit market for this product. Should the company develop the new product? Why or why not?

• A) Yes; because 5,000 units of sales exceeds the quantity required for a zero net present value
• B) Yes; because the internal break-even point is less than 5,000 units
• C) No; because the firm cannot generate sufficient sales to obtain at least a zero net present value
• D) No; because the project has an expected internal rate of return of negative 100%
• E) No; because the project will not pay back on a discounted basis

Calculate the quantity of currency that can be exchanged or purchased given an exchange rate.

Determine financial outcomes from currency exchange rate movements in international business transactions.

Apply knowledge of exchange rates to make optimal business decisions regarding production location.

Identify the impacts of government actions on their own currency.

---

Definitions:

Aristotle's Virtues

The principle of moral virtues proposed by Aristotle, suggesting a balanced and moderate behavior as the path to a virtuous and fulfilling life.

Community

A group of people living in the same place or having a particular characteristic in common, often marked by a sense of fellowship.

Flourishing

A state of growth, prosperity, or thriving, often used in the context of personal development, happiness, and achieving a high quality of life.

Nietzsche

A German philosopher, cultural critic, poet, and philologist known for his concepts of the "will to power," the Ubermensch, and the critique of morality and religion.