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Homework answers / question archive / Question 1) Initial cost $644,000 Project life 8 Units sales 70,000 Sales value: (70,000*37) = 2,590,000 Price/unit $37
Question 1)
Initial cost |
$644,000 |
|
Project life |
8 |
|
Units sales |
70,000 |
Sales value: (70,000*37) = 2,590,000 |
Price/unit |
$37.00 |
|
Variable cost/unit |
$21.00 |
Total variable cost: 70,000*21 = 1,470,000 |
Fixed costs |
$725,000 |
|
Tax rate |
35% |
|
Required return |
15% |
|
New quantity for calculate |
71,000 |
|
Projected sales change |
(500) |
|
New VC for calculation |
$22.00 |
|
Projected VC change |
$(1.00) |
|
Question 2)
Machine cost $ 390,000
Life of machine 5
Price per unit $ 25
Variable cost per unit $ 11
Fixed costs $ 280,000
Tax rate 34%
Discount rate 12%
II = PVIFA{Deprec.+ (1−t C )[(CM ´Q)−(FC + Deprec.)]}
Question 3)
Units sold per year |
9,000 |
Net cash flow per unit |
$ 35 |
Annual operating cash flow |
$ 315,000 |
Initial investment |
$ 1,350,000 |
Life time |
10 |
Discount rate |
16% |
Abandonment value |
$ 950,000 |
Question 4)
Units per year if successful |
11,000 |
Units per year if unsuccessful |
4,000 |
Net cash flow per unit |
$ 35 |
Successful operating cash flow |
$ 385,000 |
Initial operating cash flow |
$ 315,000 |
Initial investment |
$ 1,350,000 |
Life time |
10 |
Discount rate |
16% |
Abandonment value |
$ 950,000 |
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