Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts:a. What are the profitability indexes of the projects?b. What should Fabulous Fabricators do?Data table(Click on the following icon in order to copy its contents into a spreadsheet.)ContractANPV$1.98 millionUse of Facility100%B$1.01 million57%C$1.49 million43%PrintDone- X☑

To solve this, we need to calculate the profitability index (PI) for each contract and then…

Answered: Fabulous Fabricators needs to decide…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 11MC: Dixon Construction Materials has collected this information: Based on this Information, what is the...

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Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts: (a) Invest in A (b) Invest in C (c) Invest in C and B (d) Invest in B
9. Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts: a. What are the profitability indexes of the projects? b. What should Fabulouo Fabricators do? 1. a. What are the profitability indexes of the projects? The profitability index for contract Ais (Round to two decimal places.) The profitability index for contract B is (Round to two decimal places.) The profitability index for contract C is (Round to two decimal places.) b. What should Fabulous Fabricators do? (Select the best choice below) O A. Since the profitability index for C is the largest, it should choose C. O B. Since it has the capacity to do both B and C and NPVe +NPVC is greater than NPVA. it should do both B and C. OC. Since the NPV of A is the largest, it should choose A O D. It should take the two projects with the highest profitability indexes: C and A 1. Data Table (Click on the following icon o in order to copy its contents into a…
A local government awards a landscaping company a contract worth $1.30 million per year for five years for maintaining public parks. The landscaping company will need to buy some new machinery before they can take on the contract. If the cost of capital is 5%, what is the most that this equipment could cost if the contract is to be worthwhile for the landscaping company? A. $5.35 million B. $5.63 million C. $5.91 million D. $5.07 million
Two mutually exclusive investment alternatives for implementing an office automation plan in an engineering design firm are being considered. If the firm's MARR is 10% per year, which alternative should be selected? Compare the alternatives shown below on the basis of Incremental Analysis. Investment A Investment B Capital Investment, $ 920,000 660,000 Annual Expenses, S/ yr. 167,000 133,000 Salvage value, $ 410,000 330,000 Life, years 10 10 What is the Incremental NPV at 7%? (Round off the final answer to whole number value) What is the Incremental NPV at 13%? (Round off the final answer to whole number value)
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Two mutually exclusive investment altematives for implementing an office automation plan in an engineering design firm are being considered. If the firm's MARR is 10% per year, which alternative should be selected? Compare the altematives shown below on the basis of Incremental Analysis. Investment A Investment B Capital Investment, S 920,000 660,000 Annual Expenses, S/ yr. 167,000 133,000 Salvage value, S 410,000 330,000 Life, years 10 10 Determine IRR on incremental analysis, using 7% and 13% rates. Oa.86% Ob 11.1% 10.9% Od.95%
Optomics Ltd. is investigating an expansion of its services. After consultation with industry, the following two projects are available for investment: Project B $21,000,000 Project A CAPEX / Initial Outlay Project life Revenue (per year) $10,000,000 8 years $6,000,000 $2,000,000 7 years $9,000,000 Variable costs $1,500,000 $2,000,000 Operating expense Investment in Net Working Capital (Year 0) $1,000,000 $1,500,000 $2,500,000 The company's tax rate is 30% and uses a straight-line depreciation method. There will be no 'salvage' value associated with these projects at the end of their project life. Official Liquidators has a required rate of return of 10% per annum. a) Determine the Free Cash Flows, for each year, to the firm for both projects. b) Identify which project you recommend the company invest in. What is meant by incremental cash flows from a capital budgeting perspective? Why should only incremental cash flows be included in the project valuation process? c)
analysis Your program office has just completed of the latest Contract Performance Report on its Cost Plus Fixed Fee contract with Truman Inc. The original estimated cost of the contract is $300 million and the fixed fee is $15 million. The following information is available: "Best Case" EAC = $295 million "Most Likely" EAC = $310 million "Worst Case" EAC = $348 million Which one of the following represents the best estimate of the funding requirements for the Truman Inc. contract?
Locations under consideration for a border patrol station have their costs estimated by the federal government. Use the B/C ratio method at an interest rate of 8% per year to determine which location to select, if any. Location North N South S Initial Cost. $ 960,000 2,900,000 Annual Cost, $ per Year 480,000 450,000 Disbenefits, $ per Year 70,000 60,000 00 Life, Years 00 The AB/C ratio is Select location (Click to select) v
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