Padre works for a trade magazine that publishes lists of power-sizing exponents (PSE) that reflect economies of scale for developing engineering esti- mates of various types of equipment. Padre has been unable to find any published data on the VMIC machine and wants to list its PSE value in his next issue. Given the following data calculate the PSE value that Padre should publish. (Note: The VMIC- 100 can handle twice the volume of a VMIC-50.) Cost of VMIC-100 today $250,000 Cost of VMIC-50 5 years ago $95,000 VMIC equipment index today = 350 VMIC equipment index 5 years ago = 235

Padre works for a trade magazine that publishes lists of power-sizing exponents (PSE) that reflect economies of scale for developing engineering esti- mates of various types of equipment. Padre has been unable to find any published data on the VMIC machine and wants to list its PSE value in his next issue. Given the following data calculate the PSE value that Padre should publish. (Note: The VMIC- 100 can handle twice the volume of a VMIC-50.) Cost of VMIC-100 today $250,000 Cost of VMIC-50 5 years ago $95,000 VMIC equipment index today = 350 VMIC equipment index 5 years ago = 235

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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I know there is a Bartleby on this, but the commas are all out of place and I'm still confused. Could you give a more in-depth solution and explain on how to calcultae FCF, specifically with excel functions? We are entering the widget business. It costs $500,000, payable in year 1, to develop a prototype. This cost can be depreciated on a straight-line basis during years 1-5. Each widget sells for $40 and incurs a variable cost of $20. During year 1 the market size is 100,000, and the market size is growing at 10% per year. Profits are taxed at 40%, but there are no taxes on negative profits. a) Given our other assumptions, what market share (in %) is needed to ensure the total free cash flow (FCF) of $0 over the five year period? Note: FCF during a year equals after-tax profits plus depreciation minus fixed costs (if any).b) Describe how an increase in percent market growth rate changes total FCF over years 1-5.c) Describe how simultaneous changes in percent market share and changes…
Consider a drill press containing three drill bits. The current policy (called individual replacement) is to replace a drill bit when it fails. The firm is considering changing to a block replacement policy in which all three drillbits are replaced whenever a single drill bit fails. Each time the drill press is shut down, the cost is $100. A drill bit costs $50, and the variable cost of replacing a drill bit is $10. Assume that the time to replace a drill bit isnegligible. Also, assume that the time until failure for a drill bit follows an exponential distribution with a mean of 100 hours. This can be modeled in @RISK with the formula 5RISKEXPON (100). (Note: If you have the academic version of @RISK, this problem will require more RISKEXPON functions than the 100 allowed, but there is an easy workaround. An exponentially distributed random variable can be generated with Excel functions only using the formula =-Mean*LN(RAND()). Then @RISK can still be used to run the simulation.)…
Danielle Hastings was recently hired as a cost analyst by CareNet Medical Supplies Inc. One of Danielle’s first assignments was to perform a net present value analysis for a new warehouse. Danielle performed the analysis and calculated a present value index of 0.75. The plant manager, Jerrod Moore, is very intent on purchasing the warehouse because be believes that more storage space is needed. Jerrod asks Danielle into his office and the following conversation takes place: Jerrod: Danielle, you’re new here, aren’t you? Danielle: Yes, I am. Jerrod: Well, Danielle, I’m not at all pleased with capital investment analysis that you performed on this new warehouse. I need that warehouse for my production. If I don’t get it, where am I going to place out output? Danielle: Well, we need to get product into our customer’s hands. Jerrod: I agree, and we need a warehouse to do that. Danielle: My analysis does not support constructing a new warehouse. The numbers don’t lie; the warehouse does not…
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