The Gigadigit Manufacturing Inc. is considering to produce a new product. The following data have been provided to management:Sales priceS17.50/unitEquipment costS250,000Incremental overhead cost|550,000/yearSales and marketing cost$150,000/yearOperating and maintenance cost $25/operating hourProduction time/1,000 units100 hoursPackaging and shipping costs0.50/unitPlanning horizonMinimum attractive rate of return 15%5 yearsThe managers would like to know the viability of this product and how it would roll out in sales.(a) To give them basis and insight what is the break-even value of units that must be sold annually to keep the product viable?(b) If the target revenue is from 30,000 units sold, what is the expected profit?(C) If the profit drops by 13% due to equipment replacement, how much must have been the cost of the alternative equipment?(d) Provide graph for (a)

A break-even analysis is a device that entrepreneurs can use to decide when their business will…

Answered: The Gigadigit Manufacturing Inc. is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Answer the problems on the basis of the above graph and the most likely estimates given as follows: If the profit (R−E) is decreased by 5%, this projectis not profitable. (a) True (b) False.
4. A rate of return analysis was conducted for the following alternatives, based on the table below. G -20,000 -30,000 -50,000 -80,000 Investment Amount, $ i* ROR, % Revenue, $ 20 35 25 20 10,500 12,500 16,000 4,000 E vs. Machines Compared DN F vs. E G vs F H vs F Ai* Incremental Analysis, 20 65 10 11 a) If the proposals are independent, which should be selected when the MARR is 20% per year. b) If the proposals are mutually exclusive, which should be selected when the MARR is 16% per year. c) If the proposals are mutually exclusive, which should be selected when the MARR is 11% per year. d) Based on the top two i* values, a selection must be made based on the MARR of 12% per year To receive full credit, for part a- d ensure you indicate for each incremental step why they are being eliminated &/or selected.
Solve this problem in Excel. The following two alternatives are mutually exclusive. (a) Which one will you select if your MARR is 15% per year? Use rate of return analysis. (b) Graph interest rate vs. present value for both option 1 and 2. ( c) Discuss how your selection between option 1 and 2 will change when MARR is changed and at which interest rate the two options are the same economically. Alternative Initial Cost Annual Benefit Life, years Ordinary (O) $38,000 $9,400 5 Above average (AA) $35,000 $9,000 6
Wall’s Pharmacy will have to sell a new product that has an estimated revenue of $5,100 per month and costs of $1,000 per month with an initial purchase of $28,000. How long will Wall's Pharmacy have to sell a new product if the MARR is 3% per month? Wall's Pharmacy will have to sell a new product for __ months.
Kaneb is evaluating two alternative pipeline welders. Welder A costs $310,000, has a /-year life, and is expected to generate net cash inflows of $78,000 in each of the 7 years. Welder B costs $320,000, has a 5-year life, and is expected to generate annual net cash inflows of $68,900 in each of the 5 years. Kaneb's cost of capital is 16%. Using the equivalent annual annuity method, which alternative should be chosen and what is its NPV?
What Term goes with what Concept
There are 5 national projects with infinite life time listed below. Select the best two projects if MARR is 8% per year using rate of return analysis? Project First Cost A 2000 B 1000 C 1500 D 7000 E 5000 ORDER: Annual income 200 130 150 600 260 Calculate i* for each alternative
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
Pls answer it manually and show a complete solution
A sportswear factory has two alternative machines for producing jerseys. Costs are shown below. Minimum acceptable rate of return is 8%.What is the annual cost for machine Y?
Alternative X Alternative Y Capital Investment Useful life $5,000 20 $200 $6,000 15 $800 in year 10 and decreasing by a constant amount of $50 per year Annual Expenses thereafter Salvage Value $1,000 (a) What is the annual worth (AW) of alternative X? Show all the steps of calculation. (4 marks) (b) What is the annual worth (AW) of alternative Y? Show all the steps of calculation. (5 marks) (c) Based on your answers in part (a) and (b), explain which alternative should be selected. (2 marks) LE10 Mec)

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