A company is considering constructing a plant to manufacture a proposed new product. The land costs 300,000.00, the building costs600,000.00, the equipment costs 250,000.00 and 100,000.00 additional working capital is required. It is expected that the product will result insales of P750,000 per year for 10 years, at which time the land can be sold for 400,000.00, the building for 350,000.00 and the equipment for50,000.00. All of the working capital would be recovered at the end of year 10. The annual expenses for labor, materials, and all other items areestimated to total 475,000.00. If the company requires a MARR of 15% per year on projects of comparable risk, determine if it should invest inthe new product line. Evaluate using Payback Period..Payback PeriodPlease answer in this format.Given:Formula (Please use this formula):Payout period (years) = investment – salvage value over net annual cash flowNote: If there is a required value before using the given formula, then solve for it to be able to use the given formula.Solution:

In this we have to calculate initial investment in projects and than calculate the payback…

company is considering constructing a plant to manufacture a proposed new pre 0,000.00, the equipment costs 250,000.00 and 100,000.00 additional working capital es of P750,000 per year for 10 years, at which time the land can be sold for 400,00 000.00. All of the working capital would be recovered at the end of year 10. The annu imated to total 475,000.00. If the company requires a MARR of 15% per year on pro new product line. Evaluate using Payback Period.. yback Period Please answer in this format. Given: Formula (Please use this formula): Payout period (years) = investment – salvage value over net annual cash Neto: If there is a roCuired value bofore using th e given formula then sol

company is considering constructing a plant to manufacture a proposed new pre 0,000.00, the equipment costs 250,000.00 and 100,000.00 additional working capital es of P750,000 per year for 10 years, at which time the land can be sold for 400,00 000.00. All of the working capital would be recovered at the end of year 10. The annu imated to total 475,000.00. If the company requires a MARR of 15% per year on pro new product line. Evaluate using Payback Period.. yback Period Please answer in this format. Given: Formula (Please use this formula): Payout period (years) = investment – salvage value over net annual cash Neto: If there is a roCuired value bofore using th e given formula then sol

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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manufacture a proposed new product. The land `costs P15,000,000, the building costs P30,000,000, the equipment costs P12,500,000, and P5,000,000 working capital is required. At the end of 12 years, the land can be sold for P25,000,000, the building for P12,000,000, the equipment for P250,000 and all of the working capital recovered. The annual disbursements for labor, materials, and all other expenses are estimated to cost P23,750,000. If the company requires a minimum return of 25%, what should be the minimum annual sales for 12 years to justify the investment? Ans. P39,748,560
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