You are graduating soon and would like to start your own business manufacturing wine coolers. Youcollect the following information on the initial costs:Cost of Plant and Equipment = $500,000 Licensingand Legal Costs = $50,000You can already claim an investment tax credit of 10% on plant and equipment, and the licensing andlegal costs have already been incurred. You estimate that you can sell 1 million bottles a year at $1 abottle. You estimate your costs as follows:Variable costs/bottle = $ 50 centsFixed costs/year = $200,000 Assume that you had borrowed 60% of your initial investment in theprevious question, using a five-year term loan, with an interest rate of 7.5%. Estimate the cash flows toequity on this project.

Step 1: Calculate Initial OutflowsCost of Plant and Equipment: $500,000Licensing and Legal Costs:…

Answered: You are graduating soon and would like…

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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Your bakery can produce 3,000 unit of bagel per week for 48 weeks of operation per year. You aim to stay in this business for five years. You can either make the dough for the bagels in house or buy them from a different source. If you make the dough in house, you face with annual labour costs: $30,000, annual safety regulation costs: $5,000 and annual material costs: $20,000. But, if you choose to buy the dough from a different source, you must have a special dough-mixer machine to make adjustment for your production. Therefore, you need to pay $5,000 for the dough mixer machine, which has $1,000 salvage value at the end of 5 years. Furthermore, you face with annual maintaining costs including labour costs: $20,000 and additional overhead costs: $10,000 Using this information, find the unit cost of buy the bagel option with MARR 20%. Question 4 options: a) Between $0.70 and $0.80 b) None of the answers are correct…
You are opening a coffee shop. You estimate the weekly costs of $375 for rent, $2100 for employee costs, and $125 for miscellaneous costs. The ingredients and material cost for each cup of coffee is 0.35 (cents) per cup. 1) Create a cost function for the coffee shop. 2) If the investors estimate that they will be able to sell 1100 cups of coffee per week. How much should they charge per cup to make a profit? Justify your answer and/or explain.
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After spending a year and $48,000, you finally have the design of your new product ready. In order to start production, you will need $27,000 in raw materials and you will also need to use some existing equipment that you've fully depreciated, but which has a market value of $101,000. Your colleague notes that the new product could represent 10% of the company's overall sales and that 10% of overhead is $60,000. Your tax rate is 40%. As you start your analysis of the product, what should be your initial incremental free cash flow? The initial incremental free cash flow is $ sign if the answer is negative.) . (Round to the nearest dollar. Be sure to use a negative
ABC is a company that does land surveys and engineering consulting. They have an opportunity to purchase new computer equipment that will allow them to render their drawings and surveys much more quickly. The new equipment will cost them an additional $1,200 per month, but they will be able to increase their sales by 10% per year. Their current annual cost and break-even figures are shown below. Units sold 1,400 Sales proce per unit 225 variable cost per unit 145 fixed costs 52,000 break even (in units) 650 contribution margin ratio 0.36 break even in dollars 146,250 sales 315,000 variable cost 203,000 fixed costs 52,000 net income loss 60,000 What will be the impact on the break-even point if ABC purchases the new computer? A. What will be the impact on net operating income if ABC purchases the new computer? B. What would be your recommendation to ABC regarding this purchase? Current New Computer Units sold Sales price per unit…
please solve F

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