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Suppose that Kittle Co. is a U.S. based MNC that is considering setting up a subsidiary in Singapore. Kittle would like this subsidiary to produce and sell guitars locally in Singapore, and needs assistance with capital budgeting. The duration of this project is four years, with an initial investment of S$20,000,000 (Singapore dollars). Kittle Co. managers have also provided you with forecasted expense data, including variable cost per unit, total variable cost, annual lease expense, depreciation, as well as other fixed annual overhead expense, over the next four years. The following table shows the forecasted expense data along side the previous forecasts provided by Kittle management. of the table, filling in the total expense for the project for each of the 4 years. Year 0 : e t Per Unit e Cost e Expense Annual Expense ense e S$ Year 1 60,000 units S$350 S$21,000,000 S$200 S$12,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00 S$ Year 2 60,000 units S$350 S$21,000,000 S$200 S$12,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00 S$ Year 3 100,000 units S$360 S$36,000,000 S$250 S$25,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00 S$ Year 4 100,000 units S$380 S$38,000,000 S$260 S$26,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00

Suppose that Kittle Co. is a U.S. based MNC that is considering setting up a subsidiary in Singapore. Kittle would like this subsidiary to produce and sell guitars locally in Singapore, and needs assistance with capital budgeting. The duration of this project is four years, with an initial investment of S$20,000,000 (Singapore dollars). Kittle Co. managers have also provided you with forecasted expense data, including variable cost per unit, total variable cost, annual lease expense, depreciation, as well as other fixed annual overhead expense, over the next four years. The following table shows the forecasted expense data along side the previous forecasts provided by Kittle management. of the table, filling in the total expense for the project for each of the 4 years. Year 0 : e t Per Unit e Cost e Expense Annual Expense ense e S$ Year 1 60,000 units S$350 S$21,000,000 S$200 S$12,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00 S$ Year 2 60,000 units S$350 S$21,000,000 S$200 S$12,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00 S$ Year 3 100,000 units S$360 S$36,000,000 S$250 S$25,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00 S$ Year 4 100,000 units S$380 S$38,000,000 S$260 S$26,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00

Essentials Of Investments
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
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Suppose that Kittle Co. is a U.S. based MNC that is considering setting up a subsidiary in Singapore. Kittle would like this subsidiary to produce and sell guitars locally in Singapore, and needs assistance with capital budgeting. The duration of this project is four years, with an initial investment of S$20,000,000 (Singapore dollars). Kittle Co. managers have also provided you with forecasted expense data, including variable cost per unit, total variable cost, annual lease expense, depreciation, as well as other fixed annual overhead expense, over the next four years. The following table shows the forecasted expense data along side the previous forecasts provided by Kittle management. of the table, filling in the total expense for the project for each of the 4 years. Year 0 e t Per Unit e Cost e Expense Annual Expense ense e S$ Year 1 60,000 units S$350 S$21,000,000 S$200 S$12,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00 S$ Year 2 60,000 units S$350 S$21,000,000 S$200 S$12,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00 S$ Year 3 100,000 units S$360 S$36,000,000 S$250 S$25,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00 S$ Year 4 100,000 units S$380 S$38,000,000 S$260 S$26,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00
Transcribed Image Text:Suppose that Kittle Co. is a U.S. based MNC that is considering setting up a subsidiary in Singapore. Kittle would like this subsidiary to produce and sell guitars locally in Singapore, and needs assistance with capital budgeting. The duration of this project is four years, with an initial investment of S$20,000,000 (Singapore dollars). Kittle Co. managers have also provided you with forecasted expense data, including variable cost per unit, total variable cost, annual lease expense, depreciation, as well as other fixed annual overhead expense, over the next four years. The following table shows the forecasted expense data along side the previous forecasts provided by Kittle management. of the table, filling in the total expense for the project for each of the 4 years. Year 0 e t Per Unit e Cost e Expense Annual Expense ense e S$ Year 1 60,000 units S$350 S$21,000,000 S$200 S$12,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00 S$ Year 2 60,000 units S$350 S$21,000,000 S$200 S$12,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00 S$ Year 3 100,000 units S$360 S$36,000,000 S$250 S$25,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00 S$ Year 4 100,000 units S$380 S$38,000,000 S$260 S$26,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00
Suppose that Kittle Co. is a U.S. based MNC that is considering setting up a subsidiary in Singapore. Kittle would like this subsidiary to produce and sell guitars locally in Singapore, and needs assistance with capital budgeting. The duration of this project is four years, with an initial investment of S$20,000,000 (Singapore dollars). Kittle Co. managers have also provided you with forecasted expense data, including variable cost per unit, total variable cost, annual lease expense, depreciation, as well as other fixed annual overhead expense, over the next four years. The following table shows the forecasted expense data along side the previous forecasts provided by Kittle management. Complete row 9 of the table, filling in the total expense for the project for each of the 4 years. 1. Demand 2. Price per Unit 3. Total Revenue 4. Variable Cost Per Unit 5. Total Variable Cost 6. Annual Lease Expense 7. Other Fixed Annual Expense 8. Noncash Expense (Depreciation) 9. Total Expense Year 0 S$ Year 1 60,000 units S$350 S$21,000,000 S$200 S$12,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00 S$ Year 2 60,000 units S$350 S$21,000,000 S$200 S$12,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00 S$ Year 3 100,000 units S$360 S$36,000,000 S$250 S$25,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00 S$ Ye 100,0 S$ S$38, S$ S$26, S$1,( S$1,( S$2,00
Transcribed Image Text:Suppose that Kittle Co. is a U.S. based MNC that is considering setting up a subsidiary in Singapore. Kittle would like this subsidiary to produce and sell guitars locally in Singapore, and needs assistance with capital budgeting. The duration of this project is four years, with an initial investment of S$20,000,000 (Singapore dollars). Kittle Co. managers have also provided you with forecasted expense data, including variable cost per unit, total variable cost, annual lease expense, depreciation, as well as other fixed annual overhead expense, over the next four years. The following table shows the forecasted expense data along side the previous forecasts provided by Kittle management. Complete row 9 of the table, filling in the total expense for the project for each of the 4 years. 1. Demand 2. Price per Unit 3. Total Revenue 4. Variable Cost Per Unit 5. Total Variable Cost 6. Annual Lease Expense 7. Other Fixed Annual Expense 8. Noncash Expense (Depreciation) 9. Total Expense Year 0 S$ Year 1 60,000 units S$350 S$21,000,000 S$200 S$12,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00 S$ Year 2 60,000 units S$350 S$21,000,000 S$200 S$12,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00 S$ Year 3 100,000 units S$360 S$36,000,000 S$250 S$25,000,000 S$1,000,000 S$1,000,000 S$2,000,000.00 S$ Ye 100,0 S$ S$38, S$ S$26, S$1,( S$1,( S$2,00
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