Company S considering adding a new line to its product mix and the production line would be set up in unused space in the main plant. It has installed machinery which generates the incremental sales of $1,250 units per year. Due to this the sale price and cost prices are increased by 3% and firm’s net working capital would have to increase by an amount equal to 12% of sales revenues. To determine: Annual sales revenue and costs except depreciation and the reasons of considering the inflation while estimating cash flows.

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Answer 1

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Chapter 13, Problem 3MC

Summary Introduction

Case summary:

Company S considering adding a new line to its product mix and the production line would be set up in unused space in the main plant. It has installed machinery which generates the incremental sales of $1,250 units per year.

Due to this the sale price and cost prices are increased by 3% and firm’s net working capital would have to increase by an amount equal to 12% of sales revenues.

To determine: Annual sales revenue and costs except depreciation and the reasons of considering the inflation while estimating cash flows.

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Answer 2

Question

Chapter 13, Problem 3MC

Summary Introduction

Case summary:

Company S considering adding a new line to its product mix and the production line would be set up in unused space in the main plant. It has installed machinery which generates the incremental sales of $1,250 units per year.

Due to this the sale price and cost prices are increased by 3% and firm’s net working capital would have to increase by an amount equal to 12% of sales revenues.

To determine: Annual sales revenue and costs except depreciation and the reasons of considering the inflation while estimating cash flows.

Expert Solution & Answer

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See solution

Answer 3

Question

Chapter 13, Problem 3MC

Summary Introduction

Case summary:

Company S considering adding a new line to its product mix and the production line would be set up in unused space in the main plant. It has installed machinery which generates the incremental sales of $1,250 units per year.

Due to this the sale price and cost prices are increased by 3% and firm’s net working capital would have to increase by an amount equal to 12% of sales revenues.

To determine: Annual sales revenue and costs except depreciation and the reasons of considering the inflation while estimating cash flows.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 4

Question

Chapter 13, Problem 3MC

Summary Introduction

Case summary:

Company S considering adding a new line to its product mix and the production line would be set up in unused space in the main plant. It has installed machinery which generates the incremental sales of $1,250 units per year.

Due to this the sale price and cost prices are increased by 3% and firm’s net working capital would have to increase by an amount equal to 12% of sales revenues.

To determine: Annual sales revenue and costs except depreciation and the reasons of considering the inflation while estimating cash flows.

Expert Solution & Answer

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Answer 5

Chapter 13, Problem 3MC

Summary Introduction

Case summary:

Company S considering adding a new line to its product mix and the production line would be set up in unused space in the main plant. It has installed machinery which generates the incremental sales of $1,250 units per year.

Due to this the sale price and cost prices are increased by 3% and firm’s net working capital would have to increase by an amount equal to 12% of sales revenues.

To determine: Annual sales revenue and costs except depreciation and the reasons of considering the inflation while estimating cash flows.

Answer 6

Chapter 13, Problem 3MC

Summary Introduction

Case summary:

Company S considering adding a new line to its product mix and the production line would be set up in unused space in the main plant. It has installed machinery which generates the incremental sales of $1,250 units per year.

Due to this the sale price and cost prices are increased by 3% and firm’s net working capital would have to increase by an amount equal to 12% of sales revenues.

To determine: Annual sales revenue and costs except depreciation and the reasons of considering the inflation while estimating cash flows.

Answer 7

Chapter 13, Problem 3MC

Summary Introduction

Case summary:

Company S considering adding a new line to its product mix and the production line would be set up in unused space in the main plant. It has installed machinery which generates the incremental sales of $1,250 units per year.

Due to this the sale price and cost prices are increased by 3% and firm’s net working capital would have to increase by an amount equal to 12% of sales revenues.

To determine: Annual sales revenue and costs except depreciation and the reasons of considering the inflation while estimating cash flows.

Answer 8

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Answer 9

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Answer 10

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Answer 11

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Solution Summary: The author explains that Company S's production line would be set up in unused space in the main plant. The sale price and cost prices are increased by 3% and firm’s net working capital would have to increase by an amount

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Chapter 13 Solutions