1. An Investment has expected sales of 40.000 unit with the selling price of $20 each unit. The Variablecost are 65% of sales and fixed cost are $100.000. The Investment would required fixed assets costs100,000 with useful life 4 years. Assuming a tax rate of 25% percent. What is the projected netincome?2. An investment (new project) has annual cash inflow of $4,000, $5,600, $7,800, and $8,500. For thenext 4 years, the discount rate is 9%. What is the discounted payback period for these cash flows ifthe initial cost is S12,000? What if the initial cost is $16,000?3. Puma is one of the best sportswear brands in the world. To produce shoes, the variable material cost isS35 per unit and variable labor cost is $4 per unit.a. What is the variable cost per unit?b. Suppose that Puma Fixed cost of $77,000 during a year in which total production of 9,500units. What are the total costs for the year?c. If the selling price is $85 per unit, what is Puma quantity break-even on cash basis? Ifdepreciation is $10,000 per year, what is the quantity accounting break-even point? 4. Winchester Corporation is considering a change in its cash only sales policy, with the new terms ofsale of net one month. Based on the information below, determine if the company should decide toproceed with this change or not, with a required return of 3% per month.Current policyNew policyPrice per unit$1480$1630Cost per unit$730$730Unit Sales per month3100 units3440 units5. Amanda has $660,000 on deposit, she writes checks totaling $14.000 to pay it suppliers. Clearingtime are 4 days. She receives payment from her supplier totaling $38.000, The cash from thepayments is available to the company after 4 days.a. Caleulate the disbursement float, collection float, and the net float.b. Answer part a if collected funds were available after 2 days.

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1. An Investment has expected sales of 40.000 unit with the selling price of $20 each unit. The Variable cost are 65% of sales and fixed cost are $100.000. The Investment would required fixed assets cost S100,000 with useful life 4 years. Assuming a tax rate of 25% percent. What is the projected net income?

1. An Investment has expected sales of 40.000 unit with the selling price of $20 each unit. The Variable cost are 65% of sales and fixed cost are $100.000. The Investment would required fixed assets cost S100,000 with useful life 4 years. Assuming a tax rate of 25% percent. What is the projected net income?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5PA: Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated...

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

1. An Investment has expected sales of 40.000 unit with the selling price of $20 each unit. The Variable
cost are 65% of sales and fixed cost are $100.000. The Investment would required fixed assets cost
s100,000 with useful life 4 years. Assuming a tax rate of 25% percent. What is the projected net
income?
2. An investment (new project) has annual cash inflow of $4,000, $5,600, $7,800, and $8,500. For the
next 4 years, the discount rate is 9%. What is the discounted payback period for these cash flows if
the initial cost is S12,000? What if the initial cost is $16,000?
3. Puma is one of the best sportswear brands in the world. To produce shoes, the variable material cost is
S35 per unit and variable labor cost is $4 per unit.
a. What is the variable cost per unit?
b. Suppose that Puma Fixed cost of $77,000 during a year in which total production of 9,500
units. What are the total costs for the year?
c. If the selling price is $85 per unit, what is Puma quantity break-even on cash basis? If
depreciation is $10,000 per year, what is the quantity accounting break-even point?

4. Winchester Corporation is considering a change in its cash only sales policy, with the new terms of
sale of net one month. Based on the information below, determine if the company should decide to
proceed with this change or not, with a required return of 3% per month.
Current policy
New policy
Price per unit
$1480
$1630
Cost per unit
$730
$730
Unit Sales per month
3100 units
3440 units
5. Amanda has $660,000 on deposit, she writes checks totaling $14.000 to pay it suppliers. Clearing
time are 4 days. She receives payment from her supplier totaling $38.000, The cash from the
payments is available to the company after 4 days.
a. Caleulate the disbursement float, collection float, and the net float.
b. Answer part a if collected funds were available after 2 days.

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