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?

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Chapter19: Capital Investment
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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?
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?
Transcribed Image Text: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.
Transcribed Image Text: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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