Use the Information Below to Answer the Following Question(s)

question 4

Multiple Choice

Use the information below to answer the following question(s) .Northwoods manufactures rustic furniture.The cost accounting system estimates manufacturing costs to be $90 per table, consisting of 80% variable costs and 20% fixed costs.The company has surplus capacity available.It is Northwoods' policy to add a 50% markup to full costs.
-Northwoods is invited to bid on a one-time-only special order to supply 100 rustic tables.What is the lowest price Northwoods should bid on this special order?

• A)$6,300
• B)$7,200
• C)$10,800
• D)$13,500
• E)$9,000

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Definitions:

Risk-Free Rate

A hypothetical profit rate from a risk-free investment, usually shown by the earnings on state-backed securities.

Yield-to-Maturity

The total return anticipated on a bond if the bond is held until its maturity date, considering all interest payments and the repayment of principal.

Internal Rate of Return

The discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Beta

A gauge of the variability in a stock's price relative to the whole market.