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In: Finance
Cusic Music Company is considering the sale of a new sound board used in recording studios....
Cusic Music Company is considering the sale of a new sound board used in recording studios. The new board would sell for $23,700, and the company expects to sell 1,540 per year. The company currently sells 1,890 units of its existing model per year. If the new model is introduced, sales of the existing model will fall to 1,560 units per year. The old board retails for $22,100. Variable costs are 55 percent of sales, depreciation on the equipment to produce the new board will be $1,635,000 per year, and fixed costs are $3,000,000 per year. If the tax rate is 24 percent, what is the annual OCF for the project?
Solutions
jeff jeffy answered 1 month agoRelated Solutions
Cusic Music Company is considering the sale of a new sound board used in recording studios....
Cusic Music Company is considering the sale of a new sound board
used in recording studios. The new board would sell for $24,300,
and the company expects to sell 1,600 per year. The company
currently sells 1,950 units of its existing model per year. If the
new model is introduced, sales of the existing model will fall to
1,620 units per year. The old board retails for $22,700. Variable
costs are 55 percent of sales, depreciation on the equipment to...
Herrera Music is considering the sale of a new sound board used in recording studios. The new...
Herrera Music is considering the sale of a new sound board used
in recording studios. The new board would sell for
$25,500 and the company expects to sell 1,400 per
year. The company currently sells 1,900 units of its
existing model per year. If the new model is introduced,
sales of the existing model will fall to 1,720 units per
year. The old board retails for
$21,400. Variable costs are 55 percent of sales,
depreciation on the equipment to produce the new board will be...
Debby’s Dance Studios is considering the purchase of new sound equipment that will enhance the popularity...
Debby’s Dance Studios is considering the purchase of new sound
equipment that will enhance the popularity of its aerobics dancing.
The equipment will cost $20,900. Debby is not sure how many members
the new equipment will attract, but she estimates that her
increased annual cash flows for each of the next five years will
have the following probability distribution. Debby’s cost of
capital is 15 percent. Probability Cash flow 0.1 $4,570 0.3 5,550
0.4 7,400 0.2 9,930 a. What is...
Cowboy Recording Studio is considering the investment of $143,400 in a new recording equipment. It is...
Cowboy Recording Studio is considering the investment of
$143,400 in a new recording equipment. It is estimated that the new
equipment will generate additional cash flow of $21,000 per year
for each year of its 7-year life and will have a salvage value of
$13,500 at the end of its life. Cowboys’s financial managers
estimate that the firm’s cost of capital is 8%. Use Table 6-4 and
Table 6-5. (Use appropriate factor(s) from the tables provided.
Round the PV factors...
Cowboy Recording Studio is considering the investment of $130,500 in a new recording equipment. It is...
Cowboy Recording Studio is considering the investment of
$130,500 in a new recording equipment. It is estimated that the new
equipment will generate additional cash flow of $19,000 per year
for each year of its 8-year life and will have a salvage value of
$13,500 at the end of its life. Cowboys’s financial managers
estimate that the firm’s cost of capital is 8%. Use Table 6-4 and
Table 6-5.(Use appropriate factor(s) from the tables
provided. Round the PV factors to...
Cowboy Recording Studio is considering the investment of $138,600 in a new recording equipment. It is...
Cowboy Recording Studio is considering the investment of
$138,600 in a new recording equipment. It is estimated that the new
equipment will generate additional cash flow of $20,500 per year
for each year of its 8-year life and will have a salvage value of
$13,500 at the end of its life. Cowboys’s financial managers
estimate that the firm’s cost of capital is 10%. Use Table 6-4 and
Table 6-5.(Use appropriate factor(s) from the tables
provided. Round the PV factors to...
Suppose that the major music recording company Sony BMG Music Entertainment (Sony BMG) has announced that...
Suppose that the major music recording company Sony BMG Music
Entertainment
(Sony BMG) has announced that it plans to hire several college
students to form a team that will invest in the “next big things in
music.” The selected students will be paid $50,000 per year for
working part-time. Sony BMG will also allocate up to $10 million
for hiring artists, producing records, and so on based on the
team’s recommendations.
The new team has been dubbed the Top Wave...
Beyond -Say Corp. is considering purchasing $55,000 of music recording equipment. The equipment has a market...
Beyond -Say Corp. is considering purchasing $55,000 of music
recording equipment. The equipment has a market resale value of
$3,000 and is expected to be used over the next four years. Net
income after taxes is estimated to be $4,200. The company's
required rate of return is 10% and the company uses the
straight-line method. The tax rate is 40%. Is this a project that
should be undertaken?
Exercise 5 Magnolia Company is considering the production and sale of a new product with the...
Exercise 5
Magnolia Company is considering the production and sale of a new
product with the following sales and cost data: unit sales price,
$350; unit variable costs, $180; total fixed costs, $399,500; and
projected sales, $910,000. Round your answers to the nearest whole
unit or dollar.
(a) Calculate break-even in units.
(b) Calculate break-even in dollars (use four decimal places when
calculating the contribution margin ratio).
(c) Calculate number of units that would need to be sold to
generate...
Exercise 5 Magnolia Company is considering the production and sale of a new product with the...
Exercise 5
Magnolia Company is considering the production and sale of a new
product with the following sales and cost data: unit sales price,
$350; unit variable costs, $180; total fixed costs, $399,500; and
projected sales, $910,000. Round your answers to the nearest whole
unit or dollar.
(a) Calculate break-even in units.
(b) Calculate break-even in dollars (use four decimal places
when calculating the contribution margin ratio).
(c) Calculate number of units that would need to be sold to
generate...
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