Question
In: Finance
The managers of PonchoParts, Inc. plan to manufacture engine blocks for classic cars from the 1960s...
The managers of PonchoParts, Inc. plan to manufacture engine blocks for classic cars from the 1960s era. They expect to sell 250 blocks annually for the next 5 years. The necessary foundry and machining equipment will cost a total of $800,000 and will be depreciated on a straight-line basis to zero over the project’s life. The firm expects to be able to dispose of the manufacturing equipment for $150,000 at the end of the project. Labor and materials costs total $500 per engine block, fixed costs are $125,000 per year. Assume a 35% tax rate and a 12% discount rate.
3. What is the minimum bid price the firm should set as a sale price for the blocks if the firm were in a bidding situation?
a. $1,692
b. $1,927
c. $2,382
d. $2,564
Please show me step by step how to solve for sales in this equation: OCF = (Sales - Cost)*(1-T)+depreciation*T
Solutions
jeff jeffy answered 2 years agoRelated Solutions
The managers of Poncho Parts, Inc. plan to manufacture engine blocks for classic cars from the...
The managers of Poncho Parts, Inc. plan to manufacture engine
blocks for classic cars from the 1960s era. They expect to sell 250
blocks annually for the next 5 years. The necessary foundry and
machining equipment will cost a total of $800,000 and belongs in a
30% CCA class for tax purposes. The firm expects to be able to
dispose of the manufacturing equipment for $150,000 at the end of
the project. Labor and materials costs total $500 per engine...
The managers of Poncho Parts, Inc. plan to manufacture engine blocks for classic cars from the...
The managers of Poncho Parts, Inc. plan to manufacture engine
blocks for classic cars from the 1960s era. They expect to sell 250
blocks annually for the next 5 years. The necessary foundry and
machining equipment will cost a total of $800,000. This amount will
be depreciated on a straight-line basis to zero over the project's
life. The firm expects to be able to dispose of the manufacturing
equipment for $150,000 at the end of the project. Labor and
materials...
The managers of Classic Autos Incorporated plan to manufacture classic Thunderbirds (1957 replicas). The necessary foundry...
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The annual sales volume will be as follows:
Year one: 240
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Year three: 340
Year four: 360
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using a five-year MACRS life, LOADING... . The sales manager has
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Incorporated plan to manufacture classic Thunderbirds (1957
replicas). The necessary foundry equipment will cost a total of
$4,100,000 and will be depreciated using a five-year MACRS life.
The sales manager has an estimate for the sale of the classic
Thunderbirds. The annual sales volume will be as follows:
Year one: 230
Year four: 370
Year two: 290
Year five: 300
Year three: 360
If the sales price is $30,000 per...
Project cash flow and NPV. The managers of Classic Autos Incorporated plan to manufacture classic Thunderbirds...
Project cash flow and NPV. The managers of Classic Autos
Incorporated plan to manufacture classic Thunderbirds (1957
replicas). The necessary foundry equipment will cost a total of $4
comma 200 comma 000 and will be depreciated using a five-year
MACRS life, The sales manager has an estimate for the sale of the
classic Thunderbirds. The annual sales volume will be as
follows:
Year one: 250 Year four: 370 Year two: 270 Year
five: 300 Year three: 350
If the sales...
The managers of Classic Autos Incorporated plan to manufacture classic Thunderbirds (1957 replicas). The necessary foundry...
The managers of Classic Autos Incorporated plan to manufacture
classic Thunderbirds (1957 replicas). The necessary foundry
equipment will cost a total of $4,200,000 and will be depreciated
using a five-year MACRS life, The sales manager has an estimate for
the sale of the classic Thunderbirds. The annual sales volume will
be as follows:
Year one: 260 Year four:
350
Year two: 290 Year five: 300
Year three: 360
If the sales price is $28,000 per car, variable costs are...
Project cash flow and NPV. The managers of Classic Autos Incorporated plan to manufacture classic Thunderbirds...
Project cash flow and NPV. The managers of Classic Autos
Incorporated plan to manufacture classic Thunderbirds (1957
replicas). The necessary foundry equipment will cost a total of $3
comma 900 comma 000 and will be depreciated using a five-year
MACRS life, LOADING.... The sales manager has an estimate for the
sale of the classic Thunderbirds. The annual sales volume will be
as follows: Year one: 230 Year four: 370 Year two: 270 Year
five: 310 Year three: 360 If the...
The managers of Classic Autos Incorporated plan to manufacture classic Thunderbirds (1957 replicas). The necessary foundry...
The managers of Classic Autos Incorporated plan to manufacture
classic Thunderbirds (1957 replicas). The necessary foundry
equipment will cost a total of $3,900,000 and will be depreciated
using a five-year MACRS life, The sales manager has an estimate
for the sale of the classic Thunderbirds. The annual sales volume
will be as follows:
year one: 230, year two: 290, year three: 340, year
four: 350, year five: 310
If the sales price is $29,000 per car, variable costs are
$17,000...
Project cash flow and NPV. The managers of Classic Autos Incorporated plan to manufacture classic Thunderbirds...
Project cash flow and NPV. The managers of Classic Autos
Incorporated plan to manufacture classic Thunderbirds (1957
replicas). The necessary foundry equipment will cost a total of
$4,000,000 and will be depreciated using a five-year MACRS life,
LOADING... . The sales manager has an estimate for the sale of the
classic Thunderbirds. The annual sales volume will be as follows:
Year one: 260 Year four: 370 Year two: 270 Year five: 330
Year three: 330 If the sales price is...
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