In which building would you recommend that The Metlock Inc. locate, assuming a 12% cost of funds? (Round factor values to 5 decimalplaces, eg. 1.25124 and final answer to O decimal places, eg. 458,581.)Net Present ValueBuilding A$4Building B%24Building C24The Metlock Inc. should locate itself in The Metlock Inc., a manufacturer of low-sugar, low-sodium, low-cholesterol TV dinners, would like to increase its market share in theSunbelt. In order to do so, Metlock has decided to locate a new factory in the Panama City area, Metlock will either buy or lease a sitedepending upon which is more advantageous. The site location committee has narrowed down the available sites to the followingthree very similar buildings that will meet their needs.Building A: Purchase for a cash price of $ 610,600, useful life 27 years.Building B: Lease for 27 years with annual lease payments of $ 70,870 being made at the beginning of the year.Building C: Purchase for $ 657,200 cash. This building is larger than needed; however, the excess space can be sublet for 27 years at anet annual rental of $ 6,110. Rental payments will be received at the end of each year. The Metlock Inc. has no aversion to being alandlord.

Net Present Value=(Present Value of Cash Inflows-Present Value of Cash Outflows)

Answered: The Metlock Inc., a manufacturer of…

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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The Cheyenne Inc., a manufacturer of low-sugar, low-sodium, low-cholesterol TV dinners, would like to increase its market share in the Sunbelt. In order to do so, Cheyenne has decided to locate a new factory in the Panama City area. Cheyenne will either buy or lease a site depending upon which is more advantageous. The site location committee has narrowed down the available sites to the following three very similar buildings that will meet their needs. Building A: Purchase for a cash price of $615,000, useful life 28 years. Building B: Lease for 28 years with annual lease payments of $71,570 being made at the beginning of the year. Building C: Purchase for $659,900 cash. This building is larger than needed; however, the excess space can be sublet for 28 years at a net annual rental of $6,870. Rental payments will be received at the end of each year. The Cheyenne Inc. has no aversion to being a landlord. Show Transcribed Text In which building would you recommend that The Cheyenne Inc.…
Plymouth and Brockton Bus Lines (P&B) is a regional bus transportation company that operates in Eastern Massachusetts, New Hampshire, Maine, and Rhode Island. The company is in the process of choosing between two bus models for its new dedicated hourly service between Boston Logan International Airport and Manchester-Boston Regional Airport. One model, the OR-5000, is more expensive to purchase and maintain but will have a longer operational life than the other model, the SNS-2000. P&B's discount rate is 11.1%. The company plans to continue with one of the two models for the foreseeable future. Based on the purchase and operational costs of each model sbown below, which model should it choose? (Note: dollar amounts are in thousands) Model Year 0 Year 1 Year 2 Year 3 -$3.8 - $2.1 Year 4 Year 5 Year 6 Year 7 OR-5000 - $202 - $102 -%243.8 - $2.1 - $3.8 - $2.1 -$3.8 - $2.1 -$3.8 - $3.8 - $3.8 SNS-2000 Part A) Based on the costs of each model, which should it choose? (Select the best choice…
Finisterra, S.A. Finisterra, S.A., located in the state of Baja California, Mexico, manufactures frozen Mexican food which enjoys a large following in the U.S. states of California and Arizona to the north. In order to be closer to its U.S. market, Finisterra is considering moving some of its manufacturing operations to southern California. Operations in California would begin in year 1 for three years and have the following attributes: E The operations in California will pay 81% of its accounting profit to Finisterra as an annual cash dividend. Mexican taxes are calculated on grossed up dividends from foreign countries, with a credit for host-country taxes already paid. The corporate income tax rate in U.S. is 28% (the tax rate in Mexico is lower than the rate in the U.S.), the current spot exchange rate is Ps10.00/$, and the exchange rates for the next three years will be Ps11.00/S, Ps12.00/S, and Ps13.00/S, respectively. Assume the after-tax dividends received by the parent in years…
Mohave Corp. is considering eliminating a product from its Sand Trap line of beach umbrellas. This collection is aimed at people who spend time on the beach or have an outdoor patio near the beach. Two products, the Indigo and Verde umbrellas, have impressive sales. However, sales for the Azul model have been dismal. Mohave’s information related to the Sand Trap line is shown below. Segmented Income Statement for Mohave’s Sand Trap Beach Umbrella Products Indigo Verde Azul Total Sales revenue $ 60,000 $ 60,000 $ 30,000 $ 150,000 Variable costs 34,000 31,000 26,000 91,000 Contribution margin $ 26,000 $ 29,000 $ 4,000 $ 59,000 Less: Direct fixed costs 1,900 2,500 2,000 6,400 Segment margin $ 24,100 $ 26,500 $ 2,000 $ 52,600 Common fixed costs* 17,840 17,840 8,920 44,600 Net operating income (loss) $ 6,260 $ 8,660 $ (6,920 ) $ 8,000 *Allocated based on total…
A trader wants to open an oil shop in the area with a choice of the B City, J Cityor D City. Each of these area options has a local supplier providingThe price quote for the oil is detailed in the table below. Area Fixed Cost Variabel Cost B City 5,500,000 55,470,000 J City 11,500,000 35,500 D City 21,500,000 15,500 How much volume must be met in order to obtain economic value per area? Determine the volume range for each area AND Sketch a crossover chart that illustrates these conditions!
Kim Inc. must install a new air-conditioning unit in its main plant. Kim must install one or the other of the units; otherwise, the highly profitable plant would have to shut down. Two units are available, HCC and LCC (for high and low capital costs, respectively). HCC has a high capital cost but relatively low operating costs, while LCC has a low capital cost but higher operating costs because it uses more electricity. The costs of the units are shown here. Kim's WACC is 5%. HCC LCC 0 1 2 3 5 -$590,000 -$110,000 -$45,000 -$170,000 -$45,000 -$45,000 -$170,000 -$170,000 -$45,000 -$170,000 -$45,000 -$170,000 a. Which unit would you recommend? 1. Since all of the cash flows are negative, the NPV's cannot be calculated and an alternative method must be employed. II. Since all of the cash flows are negative, the NPV's will be negative and we do not accept any project that has a negative NPV. III. Since we are examining costs, the unit chosen would be the one that had the lower NPV of costs.…
The Bathtub Division of Pronghorn Plumbing Corporation has recently approached the Faucet Division with a proposal. The Bathtub Division would like to make a special "ivory" tub with gold-plated fixtures for the company's 50-year anniversary. It would make only 5,200 of these units. It would like the Faucet Division to make the fixtures and provide them to the Bathtub Division at a transfer price of $164. If sold externally, the estimated unit variable cost would be $148. However, by selling internally, the Faucet Division would save $7 per unit on variable selling expenses. The Faucet Division is currently operating at full capacity. Its standard unit sells for $52 per unit and has variable costs of $35. Compute the minimum transfer price that the Faucet Division should be willing to accept. Minimum transfer price $ Should they accept this offer? They this offer.
The jarvis corporation produces bucket loader assemblies for the tractor industry. The product has a long term life expectancy. Jarvis has a traditional manufacturing and inventory system. Jarvis is considering the installation of a just-in-time inventory system to improve its cost structure. In doing a full study using its manufacturing engineering team as well as consulting with industry JIT experts and the main vendors and suppliers of the components Jarvis uses to manufacture the bucket loader assemblies, the following incremental cost-benefit relevant information is available for analysis: The Jarvis cost of investment capital hurdle rate is 15%. One time cost to rearrange the shop floor to create the manufacturing cell workstations is $275,000. One time cost to retrain the existing workforce for the JIT required skills is $60,000. Anticipated defect reduction is 40%. Currently there is a cost of quality defect assessment listed as $150,000 per year. The setup time for…
The owner of Barb’s Burgers has suggested the firm should invest in more moderntechnology and created a list of potential changes she thinks may be helpful as aninvestment. She has asked you to analyze the four potential choices and comment onwhat this would change in terms of cost: Allow Barb’s Burgers to be delivered via the pre-existing food delivery systems.For example, allow people from Doordash/Uber Eats to pick-up orders and deliverthem. This would require the firm to make some minor changes and result in fewerparking spaces for customers dining at the restaurant. • Question: Argue how each of these is likely to change the cost of the firm once implemented (i.e. are any of these a fixed cost or a variable cost). How this adjust the amount of labour and/or capital currently necessary for the firm? Would the technology be a general technology, labour-saving, or capital-saving? Also mention the parking space.
Zodiac Sound Company manufactures audio systems, both made-to-order and mass-produced systems that are typically sold to large- scale manufacturers of electronics equipment. For competitive reasons, the company is trying to increase its manufacturing cycle efficiency (MCE) measure. As a strategy for improving its MCE performance, the company is considering a switch to JIT manufacturing. While the company managers have a fairly good feel for the costs of implementing JIT, they are unsure about the benefits of such a move, both in financial and nonfinancial terms. To help inform the ultimate decision regarding a move to a JIT system, you've been asked to provide some input. Fortunately, you've recently attended a continuing professional education (CPE) workshop on the costs and benefits of moving to JIT and therefore feel comfortable responding to management's request. Required: 3. Given the estimated data below, calculate the MCE for both the current manufacturing process and the…
pls answer the following questions. thanks

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