I need answer of this question solution general accounting Steeler Insulators is analyzing a new type of insulationfor interior walls. The initial fixed asset requirement is$1.3 million, which would be depreciated straight-lineto zero over the 12-year life of the project. Projectedfixed costs are $314,800 and the anticipated operatingcash flow is $206,300.What is the degree of operating leverage for thisproject?

Step 1: Define Operating LeverageThe operating leverage indicates the changes in the operating…

Answered: Steeler Insulators is analyzing a new…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Consider a project to supply Detroit with 40,000 tons of machine screws annually forautomobile production. You will need an initial $5,600,000 investment in threadingequipment to get the project started; the project will last for 6 years. The accountingdepartment estimates that annual fixed costs will be $600,000 and that variable costsshould be $250 per ton. Further, the accounting department will depreciate the initialfixed asset investment straight-line to zero over the 6-year project life and estimate asalvage value of $450,000 after dismantling costs. The marketing department estimatesthat the automakers will let the contract at a selling price of $340 per ton. The engineeringdepartment estimates you will need an initial net working capital investment of $560,000.You require a return of 13 percent and face a marginal tax rate of 24 percent on thisproject.Suppose you’re confident about your own projections, but you’re a little unsure aboutDetroit’s actual machine screw…
You are evaluating two different silicon wafer milling machines. The Techron I costs $300,000, has a 3-year life, and has pretax operating costs of $83,000 per year. The Techron II costs $520,000, has a 5-year life, and has pretax operating costs of $49,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $60,000. If your tax rate is 24 percent and your discount rate is 12 percent, compute the EAC for both machines. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
You are evaluating two different silicon wafer milling machines. The Techron I costs $270,000, has a three-year life, and has pretax operating costs of $73,000 per year. The Techron II costs $470,000, has a five-year life, and has pretax operating costs of $46,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $50,000. If your tax rate is 35 percent and your discount rate is 9 percent, compute the EAC for both machines. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) EAC Techron I $ Techron II $ Which machine do you prefer? Techron II Techron I
You are evaluating two different silicon wafer milling machines. The Techron I costs $270,000, has a three - year life, and has pretax operating costs of $73, 000 per year. The Techron II costs $470,000, has a five-year life, and has pretax operating costs of $46, 000 per year. For both milling machines, use straight - line depreciation to zero over the project's life and assume a salvage value of $50,000. If your tax rate is 25 percent and your discount rate is 9 percent, compute the EAC for both machines.
A new manutactunng facility will produce two products, each of which requires a dnilling operation during processing Two alternative types of drilling machines (D1 and D2) are being considered for purchase. One of these machines must be selected For the same annual demand, the annual production requirements (machine hours) and the annual operating expenses (per machine) are listed in the table below Which machine should be selected if the MARR is 18% per year? Assumptions The facility will operate 2,250 hours per year Machine availability is 85% for Machine D1 and 80% for Machine D2 The yield of Df is 90%, and the yield of D2 is 80% Annual operating expenses are based on an asşsumed operation of 2,250 hours per year, and workers are paid during any idle time of Machine D1 or Machine D2 Assume repeatability Click the icon to view the allternatives descrption Click the icon to view the interest and annuity table for discrete compounding when i= 18% per year The total oquivalent annual…
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Kolby's Korndogs is looking at a new sausage system with an installed cost of $695,00o. This cost will be depreciated straight-line to zero over the project's 5-year life, at the end of which the sausage system can be scrapped for $93,000. The sausage system will save the firm $199,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $51,000. If the tax rate is 23 percent and the discount rate is 8 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV
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