answer plez Orion Manufacturing is currentlygenerating $800,000 in sales whileoperating at 90% of its fixed assetcapacity. Fixed assets currently total$600,000. Sales are expected to grow to$1,100,000 next year.How much in new fixed assets are needed?

4. Compute the New Fixed Assets NeededSubtract the current fixed assets from the required fixed…

Answered: Orion Manufacturing is currently…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 17EB: Caduceus Company is considering the purchase of a new piece of factory equipment that will cost...

See similar textbooks

Similar questions

Thorpe Mfg., Inc., is currently operating at only 96 percent of fixed asset capacity. Current sales are $330,000. Suppose fixed assets are $300,000 and sales are projected to grow to $352,000. How much in new fixed assets is required to support this growth in sales?
Sanders Inc. has developed a new product line that they believe will revolutionize their industry and ensure they remain an industry leader. The projected sales are as follows: Year Unit Sales 1 97,500 2 112,000 3 120,000 4 135,000 5 103,000 The project will require $750,000 in net working capital to start and additional net working capital investments each year equal to 10 percent of the projected increase in sales for the following year. Total fixed assets are $4,100,000 per year. Variable costs will be $215, and units will sell for $335 each. The company will need to purchase equipment for $15,000,000 which will be depreciated as a seven-year MACRS property. In five years, the equipment can be sold for $3,500,000. The company is in the 21 percent tax bracket and has a 14 percent required return on their projects. The company will use land that was purchased for $1,800,000 three years ago. The land could be sold today for $2,400,000 and it…
Session Inc. is expanding its manufacturing plant, which requires an investment of 4,000,000 is new equipment and plant modifications. The company’s sales are expected to increase by 3,000,000 per year as result of the expansion. Cash investments in current assets average 30% of sales; accounts payable and other current liabilities are 10% of sales. Trade in value of old machines is 600,000. Compute for the net investment cost for Session Inc?
HiTech Inc. is investing in a new production line to manufacture their newest high volume consumer product. Design costs for the past three years, leading up to production, have been $0.75 million per year. Today production machinery totaling $3.65 million is being purchased to equip the new line. Operating and maintenance expenses will total $50,000 per year, and materials and overhead costs will be $1.75 million annually. The new line will operate for 7 years, at which time equipment will be sold at 10% of purchase price. Revenue from the new product is expected to be $2.0 million the first year, increasing by $0.50 million per year for the next 4 years, then decreasing by $0.75 million in years 6 and 7. HiTech has asked you to create a cash flow table and diagram.
ABC., Inc., is currently operating at only 75 percent of fixed asset capacity. Current sales are $850,000. How much can sales increase before any new fixed assets are needed?
Cash Corporation wants to purchase a new machine for $400,000. Management predicts that the machine will produce sales of $262,000 each year for the next 5 years.
Hodgkiss Mfg., Inc., is currently operating at only 77 percent of fixed asset capacity. Fixed assets are $400,400. Current sales are $520,000 and projected to grow to $736,104. How much in new fixed assets are required to support this growth in sales? Assume the company wants to operate at full capacity.
Help
A manufacturing company is considerign the purchase of new machinery to increase its production capacity. The company has identified a new machine that costs $500,000 and is expected to increase production by 20%. The company expects to sell the additional products for $600,000, resulting in a net profit of $100,000. The company can finance the purchase through a bank loan with an interest rate of 5% over a five year term. What is the expected return on investment (ROI) for the purchase of the new machinery 5% 10% 20% 25%
Seaweed MFG, INC. is currently operating at only 78 percent of fixed asset capacity. Fixed assets are $401,800. Current sales are $ 490,000 and projected to grow to $ 747,564. How much in new fixed assets are required to support this growth in sales? Assume the company maintains its current operating capacity.
A 6 - year project with the following information: Costs of buying fixed assets is 66 billion. Net working capital is 6 billioninvested in year 0. Annual revenue is 28 billion from the end of the first year. Annual costs excluding depreciation andinterest is 9 billion. Using the straight line method. The investor plans to borrow 70% of fixed assets capital investment,including 24 billion from commercial bank at an interest rate of 18% per year. The remaining will be borrowed from VDB.with interest rate of 10% per year. Priority for paying commercial bank. Requirements: Define the project's net cash flowsthat investors can use 100% of annual depreciation for paying principal.
Acme Company plans to replace some obsolete equipment with new equipment that costs $232,000 and has a useful life of 16 years and a salvage value of $40,000. Acme expects that the new equipment will reduce operating costs (labor, energy, etc.) by $59,000 per year. Acme can sell the old equipment for $20,000. What is the simple rate of return on the investment in the new equipment? Round to one decimal place. 23.9% 21.6% 20.5% 22.2%

SEE MORE QUESTIONS

Recommended textbooks for you

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

Managerial Accounting: The Cornerstone of Busines…

Accounting

ISBN:

9781337115773

Author:

Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS

Orion Manufacturing is currently generating $800,000 in sales while operating at 90% of its fixed asset capacity. Fixed assets currently total $600,000. Sales are expected to grow to $1,100,000 next year. How much in new fixed assets are needed?