Finance Analysis - 1073 Words

MARKETING MANAGEMENT FINANCIAL ANALYSIS QUESTIONS Please prepare each question. Members of the class will be called at random to present their answers. 1. Executives of Studio Recordings, Inc., produced the latest compact disc by the Starshine Sisters Band, titled Sunshine/Moonshine. The following cost information pertains to the new CD: CD package and disc (direct material and labor) $1.25/CD Songwriters’ royalties’ $0.35/CD Recordings artists’ royalties’ $1.00/CD Advertising and promotion $275,000 Studio Recordings, Inc., overhead $250,000 Selling price to CD distributor $9.00 Calculate the following: a. Contribution per CD unit $9.00 - $2.60 = $6.40 b. Break-even volume $525,000†¦show more content†¦VCI will incur a fixed cost of $20,000 to add to the new model to the line. Based on the preceding data, should VCI add the new model LX4 to its line of DVRs? Why? LX1 sales before cannibalization - 150,000 (75 x 2,000) LX2 - 125,000 LX3 - 80,000 total contribution is $355,000 LX1 sales after cannibalization - 147,750 (75 x 1,970) LX2 – 113,750 LX3 – 51,200 LX4 – 45,000 Total contribution is 357,700 No, VCI should not add the new model because while the new contribution is higher than the previous, it is not enough to cover the added fix cost of 20,000 4. A sports nutrition company is examining whether a new high-performance sports drink should be added to its product line. A preliminary feasibility analysis indicated that the company would need to invest $17.5 million in a new manufacturing facility to produce and package the product. A financial analysis using sales and cost data supplied by marketing and production personnel indicated that the net cash flow (cash inflow minus cash outflows) would be $6.1 million in the first year of commercialization, $7.4 million in year 2, $7.0 million in year 3, and $5.5 million in year 4. Senior company executives were undecided whether to move forward with the development of the new product. They requested that a discounted cash flow analysis be performed using two different discount rates: 20 percent and 15 percent. a. Should theShow MoreRelatedFinance Analysis Paper2312 Words   |  10 PagesFinance Analysis Paper Yahoo! Finance Yahoo! Finance is a service from Yahoo that provides financial information in various ways including stock quotes, corporate press releases, financial reports, stock exchange rates as well as popular message boards for discussing a companys forecasts and stock valuations. It holds the title for the top financial news and research website in the United States, with an astounding 23 million visitors in February 2010. 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