Scenario 4.5 The T. H. King Company Has Introduced a New Product

question 4

Multiple Choice

Scenario 4.5
The T. H. King Company has introduced a new product line that requires two work centers, A and B for manufacture. Work Center A has a current capacity of 10,000 units per year, and Work Center B is capable of 12,500 units per year. This year (year 0) , sales of the new product line are expected to reach 10,000 units. Growth is projected at an additional 1,000 units each year through year 5. Pre-tax profits are expected to be $30 per unit throughout the 5-year planning period. Two alternatives are being considered:
1) Expand both Work Centers A and B at the end of year 0 to a capacity of 15,000 units per year, at a total cost for both Work Centers of $200,000;
2) Expand Work Center A at the end of year 0 to 12,500 units per year, matching Work Center B, at a cost of $100,000, then expanding both Work Centers to 15,000 units per year at the end of year 3, at an additional cost at that time of $200,000.
The King Company will not consider projects that don't show a 5th year positive net present value using a discount rate of 15%.
-Use the information in Scenario 4.5. What is the pre-tax cash flow (net present value) for alternative #1 compared to the base case of doing nothing for the next five years?

• A) negative pre-tax cash flow
• B) more than $0 but less than $40,000
• C) more than $40,000 but less than $80,000
• D) more than $80,000

Grasp the varying reach and influence of different news sources on the American public.

Chart the evolution of radio stations and their growth over time.

Understand the concepts of priming and framing in news media and their effects on public perception.

Analyze the role of the fairness doctrine, equal time rule, and related regulatory efforts in broadcast media.

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Definitions:

Glucagon

A hormone produced by the pancreas that raises blood glucose levels by promoting the breakdown of glycogen to glucose in the liver.

Adrenal Medulla

The inner part of the adrenal gland that produces adrenaline and noradrenaline, hormones involved in the body's fight-or-flight response.

Norepinephrine

A neurotransmitter and hormone involved in the body's fight or flight response, affecting heart rate, blood pressure, and blood sugar.

Erythropoietin

A hormone produced by the kidneys that stimulates the production of red blood cells in the bone marrow.