CCNY, Inc. is considering the acquistition of a new left-handed press. The base price of the press is indicated below. In addition there are modification costs, noted below, for CCNY's special use. The press falls into the MACRS 3-year class. The new press is expected to speed up production and result in an increase in gross annual sales and an increase in annual variable costs as noted below. Inventories, accounts payable, and accounts receivable are all expected to increase (as noted) to support the heightened activity. The press is expected to be sold after three years for the given salvage value. The tax rate and appropriate discount rate are noted. Find the NPV of this project and indicate if the press should be purchased. A Gross Sales A Variable cost $2,727,000|A Inventory $3,848,222 $45,450 $54,540 A Accounts Payable $204,525 Salvage Value $204,525 $1,150,853 Base Price modification $1,363,500 A Accounts Receivable Discount rate 12% Tax rate 30%

CCNY, Inc. is considering the acquistition of a new left-handed press. The base price of the press is indicated below. In addition there are modification costs, noted below, for CCNY's special use. The press falls into the MACRS 3-year class. The new press is expected to speed up production and result in an increase in gross annual sales and an increase in annual variable costs as noted below. Inventories, accounts payable, and accounts receivable are all expected to increase (as noted) to support the heightened activity. The press is expected to be sold after three years for the given salvage value. The tax rate and appropriate discount rate are noted. Find the NPV of this project and indicate if the press should be purchased. A Gross Sales A Variable cost $2,727,000|A Inventory $3,848,222 $45,450 $54,540 A Accounts Payable $204,525 Salvage Value $204,525 $1,150,853 Base Price modification $1,363,500 A Accounts Receivable Discount rate 12% Tax rate 30%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The Bremer Co. manufactures cordless telephones Bremer is planning to implement a JIT production system, which requires annual tooling costs of $150,000. Bremer estimates that the following annual benefits would arise from JIT production. a. Average inventory will decline by $700,000 from $900,000 to $200,00 b. Insurance, space, materials handling, and setup costs, which currently total $200,00 would decline by 30% c. The emphasis on quality inherent in JIT system would reduce rework costs by 20% Bremer currently incurs $350,000 on rework. d. Better quality would eneble Bremer to raise the prices of its products by $3 per unit. Bremer sells $30,000 unit each year. Bremer required rate of return on inventory investment is 12% per year Required: Calculate the net benefit or cost to the Bremer Corporation From implementing a JIT production system.
Forrester Company is considering buying new equipment that would increase monthly fixed costs from $240,000 to $270,000 and would decrease the current variable costs of $70 by $10 per unit. The selling price of $120 is not expected to change. Forrester's current break-even sales are $520,000 and current break-even units are 9,000. If Forrester purchases this new equipment, the revised contribution margin ratio would be:
The Knot manufactures men’s neckwear at its Spartanburg plant. The Knot is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production: a. Annual additional tooling costs $250,000 annually. b. Average inventory would decline by 80% from the current level of $1,000,000. c. Insurance, space, materials-handling, and setup costs, which currently total $400,000 annually, would decline by 20%. d. The emphasis on quality inherent in JIT production would reduce rework costs by 25%. The Knot currently incurs $160,000 in annual rework costs. e. Improved product quality under JIT production would enable The Knot to raise the price of its product by $2 per unit. The Knot sells 100,000 units each year. The Knot’s required rate of return on inventory investment is 15% per year. Q. Suppose The Knot implements JIT production at its Spartanburg plant. Give examples of performance measures The Knot could use to evaluate and control JIT…
Markland Manufacturing manufactures desk lamps intends to increase capacity by obtaining new equipment. Two vendors have presented proposals. The purchase cost for proposal A is $30,000, and for proposal B, $80,000. Each proposal will produce lamps of the same quality. Proposal A is expected to produce lamps at $15.00/lamp, while proposal B is significantly more efficient and will produce them at $10.00/lamp. The revenue generated by the sale of each lamp is $20.00/unit. A. What is the point of indifference?B. The manufacturer expects to sell 12,000 lamps and has informed the vendors that it has chosen proposal B. The vendor of proposal A has offered to re-negotiate the purchase price of its proposal in order to win the contract. What purchase price will cause the manufacturerto reconsider its decision?
A distributor of fasteners is opening a new plant and considering whether to use a mechanized process or a manual process to package the product. The manual process will have a fixed cost of $36,234 and a variable cost of $2.14 per bag. The mechanized process would have a fixed cost of $84,420 and a variable cost of $1.85 per bag. The company expects to sell each bag of fasteners for $2.75. a) What is the break-even point for the manual process (in units)? b) What is the break-even point for the mechanized process (in units)? c) A point of indifference for two processes is quantity at which each process generates the same amount of profit (review video). What is the point of indifference for the two processes? (Hint: 1) Use equations to set profit of manual process equal to mechanized process and solve for quantity; 2) (Excel) If you have a break-even for each process - have only one cell that represents quantity that be used to calculates costs/revenues for each process and use Goal…
What is the OCF?
Please help me i will surely like please make sure its correct
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,030,000, and it would cost another $25,000 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $473,000. The MACRS rates for the first three years are 0.3333, 0.4445, and 0.1481. The machine would require an increase in net working capital (inventory) of $18,500. The sprayer would not change revenues, but it is expected to save the firm $396,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 25%. (Ignore the half-year convention for the straight-line method.) Cash outflows, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest dollar. What is the Year-0 net cash flow? $ What are the net operating cash flows in Years 1, 2, and 3? Year 1: $ Year 2: $ Year 3: $ What is the additional…
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,060,000, and it would cost another $20,500 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $488,000. The MACRS rates for the first three years are 0.3333, 0.4445, and 0.1481. The machine would require an increase in net working capital (inventory) of $18,000. The sprayer would not change revenues, but it is expected to save the firm $358,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 25%. (Ignore the half-year convention for the straight-line method.) Cash outflows, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest dollar. What is the Year-0 net cash flow? $ What are the net operating cash flows in Years 1, 2, and 3? Year 1: $ Year 2: $ Year 3: $ What is the additional…
Shue Music Company is considering the sale of a new sound board used in recording studios. The new board would sell for $24,700, and the company expects to sell 1,640 per year. The company currently sells 1,990 units of its existing model per year. If the new model is introduced, sales of the existing model will fall to 1,660 units per year. The old board retails for $23,100. Variable costs are 53 percent of sales, depreciation on the equipment to produce the new board will be $1,035,000 per year, and fixed costs are $3,250,000 per year. If the tax rate is 24 percent, what is the annual OCF for the project? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. OCF
Use the following to answer questions 76-79: (Ignore income taxes in this problem.) Perky Food Corporation produces and sells coffee jelly. Perky currently produces the jelly using a manual operation but is considering the purchase of machinery to automate its operations. Information related to the two operations is as follows: Cost of machinery. Useful life of machinery. Expected salvage value in 12 years. Expected annual revenue (50,000 jars).. Expected annual variable costs. Expected annual fixed costs. ***** B) 12.1% C) 14.5% D) 22.9% Manual Operation $210,000 $42,000 $72,000 Perky's discount rate is 12%. Perky uses the straight-line method of depreciation. 76. What is the net present value of automating operations using the incremental cost approach? Answer: A Level: Medium LO: 6 Automated Operation $420,000 $210,000 $135,000 $30,000 12 years $0 A) $11,940 B) $56,940 C) $(104,106) D) $112,684 Answer: C Level: Medium LO: 1 77. Within what range does the internal rate of return…
The Tolar Corporation has 300 obsolete desk calculators that are carried in inventory at a total cost of $432,000. If these calculators are upgraded at a total cost of $120,000, they can be sold for a total of $180,000. As an alternative, the calculators can be sold in their present condition for $30,000. Assume that Tolar decides to upgrade the calculators. At what selling price per unit would the company be as well off as if it just sold the calculators in their present condition? O $40 per calculator O $154 per calculator O $500 per calculator O $90 per calculator

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