3. Analysis of an expansion projectCompanies invest in expansion projects with the expectation of increasing the earnings of its business.Consider the case of Garida Co.:Garida Co, is considering an investment that will have the following sales, variable costs, and fixed operating costs:Unit salesSales priceVariable cost per unitFixed operating costsYear 15,500$42.57Year 25,200Year 3Year 45,7005,820$43.55 $44.76$46.79$22.83$22.97 $23.45 $23.87$66,750 $68,950 $69,690 $68,900This project will require an investment of $25,000 in new equipment. Under the new tax law, the equipment is eligible for 100% bonus deprecatit = 0, so it will be fully depreciated at the time of purchase. The equipment will have no salvage value at the end of the project's four-year life. Cpays a constant tax rate of 25%, and it has a weighted average cost of capital (WACC) of 11%. Determine what the project's net present value (would be under the new tax law.A-2aN 3No other firm would take on this project if Garida turns it down. How much should Garida reduce the NPV of this project if it discovered that thisproject would reduce one of its division's net after-tax cash flows by $700 for each year of the four-year project?$1,629$2,389$2,172$1,303The project will require an initial investment of $25,000, but the project will also be using a company-owned truck that is not currently being used.This truck could be sold for $12,000, after taxes, if the project is rejected. What should Garida do to take this information into account?Increase the NPV of the project by $12,000.Increase the amount of the initial investment by $12,000.The company does not need to do anything with the value of the truck because the truck is a sunk cost.SA-2acNL

Net present value refers to the computation of the current value of the payment paid in the…

Answered: Unit sales Sales price Variable cost…

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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Contribution margin Amon Company sells 180,000 units at $185 per unit. Variable costs are $111 per unit, and fixed costs are $8,175,000. Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) operating income. a. Contribution margin ratio b. Unit contribution margin $ c. Operating income LA % per unit
X Company Y Company Amount Percent Amount Percent Sales $ 148,000 100.00 $ 148,000 100.00 Variable costs 88,800 60.00 44,400 30.00 Contribution margin 59,200 40.00 103,600 70.00 Fixed costs 34,150 70,200 Operating income (Tig) 25,050 33,400 Y Company's margin of safety (MOS) in sales dollars (rounded) is:
Question 20 Bell Company sells several products. Information of average revenue and costs is as follows: Selling price per unit $33.00 Variable costs per unit. Direct material $6.00 Direct manufacturing labor $1.50 $0.25 Manufacturing overhead Selling costs $2.00 Annual fixed costs $111,000 The company sells 12,000 units. The contribution margin per unit is $23.25 $25.50 $14.00 $25.25
Sales fixed cost $2,000,000 units sold 50 unit selling price $140,000 profit $400,000 Find the variable cost per unit and the breakeven point.
Sales Mix and Break-Even Analysis Michael Company has fixed costs of $814,900. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products follo Product Selling Price Variable Cost per Unit Contribution Margin per Unit QQ $570 $380 $190 ZZ 330 230 100 The sales mix for Products QQ and ZZ is 50% and 50%, respectively. Determine the break-even point in units of QQ and ZZ. If required, round your answers to nearest whole number. a. Product QQ units b. Product ZZ units Previous Check My Work 2 more Check My Work uses remaining.
Assume the following information: Selling price Variable expense ratio Fixed expenses Unit sales Multiple Choice O O How many units need to be sold to achieve a target profit of $16,900? 4,150 units 1,019 units 2,817 units Amount 6,220 units $30 80% $ 8,000 per month 3,400 per month
Question Content Area Sales Mix and Break-Even Analysis Olmstead Company has fixed costs of $2,170,920. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products follow: Product Selling Price Variable Cost per Unit Contribution Margin per Unit QQ $700 $380 $320 ZZ 940 760 180 The sales mix for Products QQ and ZZ is 35% and 65%, respectively. Determine the break-even point in units of QQ and ZZ. If required, round your answers to the nearest whole number. a. Product QQ fill in the blank 1 unitsb. Product ZZ fill in the blank 2 units
What is the expected added profit from the Challenger line ? Challenger Bikes Selling Price per Unit Materials Direct Labour Overhead (40% Variable) Total Per Unit Relevant Cost Estimated Additional Contribution Margin Estimated Sales Unit Estimated Increase in profit $39.80 19.6 9.8 (40%*24.50) $69.20 $92.29 $69.20 $23.09 25000 $577,250
The sales and cost data for two companies in the transportation industry are as follows: X Company Y Company Amount Percent Amount Percent Sales $ 138,000 100.00 $ 138,000 100.00 Variable costs 82,800 60.00 41,400 30.00 Contribution margin 55,200 40.00 96,600 70.00 Fixed costs 36,450 72,500 Operating income (πB) $ 18,750 $ 24,100 Y Company's margin of safety (MOS) in sales dollars (rounded) is:
Compute for what is being asked1. Unit selling price P800 unit variable cost P350 annual sales volume, 620 units, fixed costs and expenses P200,000 per year. Compute the following.a. Contribution margin per unitb. Contribution margin percentagec. BEP sales volume (units)d. BEP peso salee. Operating income (BIT)using the break even salef. Operating income (EBIT) using the annual sales volume
Selling price per unit Variable manufacturing cost per unit Fixed manufacturing cost per unit Variable selling cost per unit Fixed selling cost per unit Expected production and sales By how many units can Granville Company Limited's sales decline, before a loss is incurred? A. 300 units B. 308 units C. 316 units D. 320 units $250 $75 $90 $45 $20 2 000 units 175

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Unit sales Sales price Variable cost per unit Fixed operating costs Year 1 5,500 $42.57 $22.83 $66,750 Year 2 5,200 Year 3 5,700 $43.55 $44.76 $22.97 $23.45 $68,950 $69,690 Year 4 5,820 $46.79 $23.87 $68,900