Corporate Finance
3rd Edition
ISBN: 9780132992473
Author: Jonathan Berk, Peter DeMarzo
Publisher: Prentice Hall
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Chapter 19, Problem 2P
Summary Introduction
To determine: The production capacity.
Introduction:
The business plan is a necessary tool for the firm to analyze and take decisions on the current and future events. The firm must concentrate on the investments, capital structure, and operations to improve its potentials and future growth of the business.
Summary Introduction
To discuss: The year in which the expansion is necessary.
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The table below gives a detailed forecast of the size of the market by production volume. Assume that KMS expects to capture 10.20% of the market share in 2019 and expects that percentage will
increase by 0.27% per year. KMS currently has the capacity to produce a maximum of 1,100,000 units. What production capacity will KMS require each year? When will an expansion become
necessary (that is, when will production volume exceed 1,100,000 units)?
Year
Production Volume (000 units)
Market Size
KMS's market share for 2019 is
KMS's market share for 2021 is
KMS's market share for 2022 is
2019
KMS's market share for 2023 is
10,412
11,570
The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and
in these problems in anticipation of the return of standard depreciation practices during your career.
KMS's market share for 2024 is
2020
10,000
units.…
The table below gives a detailed forecast of the size of the market by production volume. Assume that KXS expects to capture
10.20%
of the market share in 2018 and expects that percentage will increase by
0.24%
per year. KXS currently has the capacity to produce a maximum of
1100
thousand units. What production capacity will KXS require each year? When will an expansion become necessary (that is, when will production volume exceed
1100
thousand units)?
Year 2018 2019 2020 2021 2022 2023
Production Volume (000 units)
Market Size 10,000 10,453 11,048 11,591 12,151 12,728
What is the value of an investment opportunity that will pay GH¢5,060 next year, GH¢5,500 the year after and GH¢7,800 in the third year, assuming similar investment has a return of 14.5%?
Chapter 19 Solutions
Corporate Finance
Ch. 19.1 - Prob. 1CCCh. 19.1 - Prob. 2CCCh. 19.2 - Prob. 1CCCh. 19.2 - Prob. 2CCCh. 19.3 - What is a pro forma income statement?Ch. 19.3 - Prob. 2CCCh. 19.4 - Prob. 1CCCh. 19.4 - Prob. 2CCCh. 19.5 - Prob. 1CCCh. 19.5 - Prob. 2CC
Ch. 19.6 - Prob. 1CCCh. 19.6 - Prob. 2CCCh. 19 - Prob. 1PCh. 19 - Prob. 2PCh. 19 - Prob. 3PCh. 19 - Prob. 4PCh. 19 - Prob. 5PCh. 19 - Prob. 6PCh. 19 - Prob. 7PCh. 19 - Prob. 8PCh. 19 - Prob. 11PCh. 19 - Calculate Idekos unlevered cost of capital when...Ch. 19 - Prob. 13PCh. 19 - Prob. 14PCh. 19 - Prob. 15PCh. 19 - Prob. 16P
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