machine is $122,000. In addition, delivery and installation costs will total $5,500. The machine has the capacity to produce 12,000 dozen caps per year. Sales are forecast to increase gradually, and production volumes for each of the five years of the machine's life are expected to be as follows: Use Table 6-4. (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.) 2019 3,600 dozen 5,600 dozen 8, 500 dozen 11,300 dozen 12,000 dozen 2020 2021 2022 2023 The caps have a contribution margin of $10.00 per dozen. Fixed costs associated with the additional production (other than depreciation expense) will be negligible. Salvage value and the investment in working capital should be ignored. TopCap Co's cost of capital for this capacity expansion has been set at 10%. Required: The caps have a contribution margin of $5.00 per dozen. Fixed costs associated with the additional production (other than depreciation expense) will be negligible. Salvage value and the investment in working capital should be ignored. TopCap Co's cost of capital for this capacity expansion has been set at 16%. Required: a. Calculate the net present value of the proposed investment in the new sewing machine.
machine is $122,000. In addition, delivery and installation costs will total $5,500. The machine has the capacity to produce 12,000 dozen caps per year. Sales are forecast to increase gradually, and production volumes for each of the five years of the machine's life are expected to be as follows: Use Table 6-4. (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.) 2019 3,600 dozen 5,600 dozen 8, 500 dozen 11,300 dozen 12,000 dozen 2020 2021 2022 2023 The caps have a contribution margin of $10.00 per dozen. Fixed costs associated with the additional production (other than depreciation expense) will be negligible. Salvage value and the investment in working capital should be ignored. TopCap Co's cost of capital for this capacity expansion has been set at 10%. Required: The caps have a contribution margin of $5.00 per dozen. Fixed costs associated with the additional production (other than depreciation expense) will be negligible. Salvage value and the investment in working capital should be ignored. TopCap Co's cost of capital for this capacity expansion has been set at 16%. Required: a. Calculate the net present value of the proposed investment in the new sewing machine.
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 10EB: Keleher Industries manufactures pet doors and sells them directly to the consumer via their web...
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