Question
In: Finance
The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $50. The...
The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $50. The unit cost of the giftware is $30. Year Unit Sales 1 31,000 2 39,000 3 13,000 4 7,000 Thereafter 0 It is expected that net working capital will amount to 20% of sales in the following year. For example, the store will need an initial (Year 0) investment in working capital of .20 × 31,000 × $50 = $310,000. Plant and equipment necessary to establish the giftware business will require an additional investment of $209,000. This investment will be depreciated using MACRS and a 3-year life. After 4 years, the equipment will have an economic and book value of zero. The firm’s tax rate is 21%.
What is the net present value of the project? The discount rate is 14%. Use the MACRS depreciation schedule. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)
Solutions
Expert Solution
Solution:-
To Calculate NPV of the Project-
NPV of the Project is $8,52,235
If you have any query related to question then feel free to ask me in a comment.Thanks.
jeff jeffy answered 2 years agoRelated Solutions
The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $30. The...
The following table presents sales forecasts for Golden Gelt
Giftware. The unit price is $30. The unit cost of the giftware is
$20.
Year Unit Sales
1 27,000
2 35,000
3 19,000
4 10,000
Thereafter 0
It is expected that net working capital will amount to 20% of
sales in the following year. For example, the store will need an
initial (Year 0) investment in working capital of .20 × 27,000 ×
$30 = $162,000. Plant and equipment necessary to...
The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $40. The...
The following table presents sales forecasts for Golden Gelt
Giftware. The unit price is $40. The unit cost of the giftware is
$30.
Year Unit Sales
1 - 36,000
2 - 44,000
3 - 13,000
4 - 7,000
Thereafter 0
It is expected that net working capital will amount to 20% of
sales in the following year. For example, the store will need an
initial (Year 0) investment in working capital of .20 × 36,000 ×
$40 = $288,000. Plant...
The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $40. The...
The following table presents sales forecasts for Golden Gelt
Giftware. The unit price is $40. The unit cost of the giftware is
$20.
Year
Unit Sales
1
34,000
2
42,000
3
16,000
4
10,000
Thereafter
0
It is expected that net working capital will amount to 20% of
sales in the following year. For example, the store will need an
initial (Year 0) investment in working capital of .20 × 34,000 ×
$40 = $272,000. Plant and equipment necessary...
The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $20. The...
The following table presents sales forecasts for Golden Gelt
Giftware. The unit price is $20. The unit cost of the giftware is
$10.
Year
Unit Sales
1
32,000
2
40,000
3
14,000
4
8,000
Thereafter
0
It is expected that net working capital will amount to 20% of
sales in the following year. For example, the store will need an
initial (Year 0) investment in working capital of .20 × 32,000 ×
$20 = $128,000. Plant and equipment necessary...
The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $40. The...
The following table presents sales forecasts for Golden Gelt
Giftware. The unit price is $40. The unit cost of the giftware is
$20.
Year
Unit Sales
1
40,000
2
45,000
3
17,000
4
10,000
Thereafter
0
It is expected that net working capital will amount to 20% of
sales in the following year. For example, the store will need an
initial (Year 0) investment in working capital of .20 × 40,000 ×
$40 = $320,000. Plant and equipment necessary to...
Price of eggs and milk: The following table presents the average price in dollars for a...
Price of eggs and milk: The following table
presents the average price in dollars for a dozen eggs and a gallon
of milk for each month from February through November
2001. Use a TI-84 calculator to answer the following.
Dozen Eggs
Gallon of Milk
1.21
2.66
1.13
2.67
1.01
2.69
1.20
2.68
1.15
2.71
1.28
2.67
1.26
2.90
1.33
2.91
1.45
2.94
1.56
2.95
If the price of eggs differs by $0.30 from one month to the
next, by how...
Price of eggs and milk: The following table presents the average price in dollars for a...
Price of eggs and milk: The following table
presents the average price in dollars for a dozen eggs and a gallon
of milk for each month from January through October
2010
.
Dozen Eggs
Gallon of Milk
1.79
3.12
1.77
2.69
1.28
3.76
1.78
2.78
0.88
3.00
0.98
3.08
1.15
3.31
1.05
3.15
1.86
2.94
1.83
2.73
If the price of eggs differs by $0.25 from one month to the
next, by how much would you expect the price of...
using the table, If the selling price is now $50 a unit, calculate the profit (or...
using the table, If the selling price is now $50 a unit,
calculate the profit (or loss) for each level of units
produced. How many units should the firm produce? copy
the table in the answer space and fill in the table.
units
Total Cost
Total Revenue
Marginal revenue
Profit
0
$100
undefined
1
$150
2
$180
3
$220
4
$280
5
$370
6
$500
Engle Manufacturing Company established the following standard price and cost information: sales price $50 per unit...
Engle Manufacturing Company established the following standard
price and cost
information:
sales price
$50 per unit
variable Manufacturing cost
32 per unit
fixed manufacturing cost
$100,000 total
fixed selling and administrative cost
$40,000 tota
Engle expected
to produce and sell 15,000 units. Actual production and sales
amounted to 16,000 units.
Required:
(a) Determine the sales volume variances, including variances for
number of units, sales
revenue, variable manufacturing cost, fixed manufacturing cost, and
fixed selling and
administrative cost.
(b) Classify the...
The following table presents information for Golden Fleece Financial. Long-term debt outstanding $ 470,000 Current yield...
The following table presents information for Golden Fleece
Financial.
Long-term debt outstanding
$
470,000
Current yield to maturity on debt
9.00
%
Number of shares of common stock
18,500
Price per share
$
67
Book value per share
$
42
Expected rate of return on stock
18.00
%
Calculate the company cost of capital.
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