Question
In: Finance
Shade Your Eyes, Inc. makes sunglasses that cost $115 per pair. They want to buy equipment...
Shade Your Eyes, Inc. makes sunglasses that cost $115 per pair. They want to buy equipment necessary to reduce their costs by $1 per pair. It will cost $350,000 and will be depreciated on a straight-line basis over the 6-year life of the machine. There is no increase in Net Working Capital for this project. The margin before is $310,900, and with the new machine it will increase to $475,100.
The required return is 15%, and the tax rate is 40%.
You want to determine if you should buy this new equipment.
13)What is the NPV of this investment (8 points)?
round to nearest dollar. enter the number with commas if necessary.
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Shade Your Eyes, Inc. makes sunglasses that cost $115 per pair. They want to buy equipment...
Shade Your Eyes, Inc. makes sunglasses that cost $115 per pair.
They want to buy equipment necessary to reduce their costs by $1
per pair. It will cost $350,000 and will be depreciated
on a straight-line basis over the 6-year life of the
machine. There is no increase in Net Working
Capital for this project. The margin before is $310,900,
and with the new machine it will increase to $475,100.
The required return is 15%, and the tax rate is 40%.
You want...
Shade Your Eyes, Inc. makes sunglasses that cost $115 per pair. They want to buy equipment...
Shade Your Eyes, Inc.
makes sunglasses that cost $115 per pair. They want to buy
equipment necessary to reduce their costs by $1 per
pair. It will cost $350,000 and will be depreciated on a
straight-line basis over the 6-year life of the
machine. There is no increase in Net Working
Capital for this project. The margin before is $310,900,
and with the new machine it will increase to $475,100.
The required return is
15%, and the tax rate is 40%.
You
want...
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Night Shades Inc. (NSI) manufactures biotech sunglasses. The
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a.
What is the variable cost per unit? (Do not round
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Variable cost ?
b.
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Jasper McKnight Sunglasses sell for about $150 per pair. Suppose the company incurs the following average...
Jasper McKnight Sunglasses sell for about $150 per pair. Suppose
the company incurs the following average costs per pair:
Direct materials
......................................................................................
$40
Direct labor
..............................................................................................
12
Variable manufacturing overhead
..............................................................
8
Variable marketing expenses
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3
Fixed manufacturing overhead
..............................................................
25*
Total costs
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You want to buy a new piece of equipment for your business that costs $500,000. You...
You want to buy a new piece of equipment for your business that
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You believe you can use the equipment to increase your gross
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1) Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $1.55 per unit,...
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Suppose that your company makes 100 doorbells at a cost of $600 per month. They can...
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