Question
In: Accounting
At Little Green Apple Produce the owner is considering buying a new large walk in cooler...
At Little Green Apple Produce the owner is considering buying a new large walk in cooler for fruits and vegetables. The new cooler cost $150,000. The annual maintenance cost will be $7,000 starting in year two (the first year will be covered under warrantee). An additional employee will be needed to stock the cooler. The employee will make $16/hr, and start part-time at 20 hours per week. Sale of produce will increase by $100,000 in year one and an additional 10% in year two and 15% in year three. The cost of produce will increase $30,000 in year one and is variable with sales. The part-time employees hours will vary based on additional sales in years two and three. The employee will receive raises of 4% annually and electricity will increase 3% a year. There is no inflation on any other item.
Based on this information prepare a pro forma and calculate the project NPV using a 9% discount rate/hurdle rate and calculate the IRR. State if the project should be expected or rejected.
Please show all formulas on excel
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Dew Little Co. is considering opening a new plant to produce lawnmowers. The initial cost of...
Dew Little Co. is considering opening a new plant to produce
lawnmowers. The initial cost of the project is $6 million. This
cost will be depreciated straight-line to a zero book value over
the 15-year life of the project. The net income of the project is
expected to be $137,000 a year for the first four years and
$538,000 for years 5 through 15, respectively. What is the average
accounting return on this project?
Green Valley Farms is considering either leasing or buying some new farm equipment. The lessor will...
Green Valley Farms is considering either leasing or buying some
new farm equipment. The lessor will charge $23,000 a year lease.
The purchase price is $63,000. The equipment has a 3-year life
after which time it will be worthless. Green Valley Farms uses
straight-line depreciation, has a 32 percent tax rate, borrows
money at 9 percent, and has sufficient tax loss carryovers to
offset any potential taxable income the firm might have over the
next five years. What is the...
Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit...
Bailey, Inc., is considering buying a new gang punch that would
allow them to produce circuit boards more efficiently. The punch
has a first cost of $100,000 and a useful life of 15 years. At the
end of its useful life, the punch has no salvage value. Annual
labor costs would increase $5,000 using the gang punch, but annual
raw material costs would decrease $9,000. MARR is 5.0
%/year.
What is the present worth of this investment?
Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit...
Bailey, Inc., is considering buying a new gang punch that would
allow them to produce circuit boards more efficiently. The punch
has a first cost of $110,000 and a useful life of 15 years. At the
end of its useful life, the punch has no salvage value. Annual
labor costs would increase $3,000 using the gang punch, but annual
raw material costs would decrease $12,000. MARR is 4.25
%/year. What is the present worth of this investment? What is the...
Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit...
Bailey, Inc., is considering buying a new gang punch that would
allow them to produce circuit boards more efficiently. The punch
has a first cost of $160,000 and a useful life of 15 years. At the
end of its useful life, the punch has no salvage value. Labor costs
would increase $5,500 per year using the gang punch, but raw
material costs would decrease $16,500 per year. MARR is
5%/year.
What is the internal rate of return of this investment?
Beacon Chemicals plc is considering buying some equipment to produce a chemical named X14. The new...
Beacon Chemicals plc is considering buying some equipment to
produce a chemical named X14. The new equipment’s capital cost is
estimated at GHC100,000. If its purchase is approved now, the
equipment can be bought and production can commence by the end of
this yaer. GHC50,000 has already been spent on research and
development work. Estimates of revenue and costs arising from the
operation of the new equipment appear below:
Year 1
Year 2
Year 3
Year 4
Year 5
Sales...
Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit...
Bailey, Inc., is considering buying a new gang punch that would
allow them to produce circuit boards more efficiently. The punch
has a first cost of $70,000 and a useful life of 15 years. At the
end of its useful life, the punch has no salvage value. Labor costs
would increase $2,500 per year using the gang punch, but raw
material costs would decrease $12,500 per year. MARR is
5%/year.
What is the internal rate of return? (round final answer...
Geoffrey is the owner of a small grocery store, and is considering buying a car to...
Geoffrey is the owner of a small grocery store, and is
considering buying a car to help him transport his wares. He has
found a suitable used car online that he was able to negotiate to a
price of $27,000. After doing a bit more research, he has found the
following additional expenses involved in the purchase: Insurance
and registration will cost $580 per year, payable at the start of
each year Based on mileage estimates, petrol will cost $260...
Geoffrey is the owner of a small grocery store, and is considering buying a car to...
Geoffrey is the owner of a small grocery store, and is
considering buying a car to help him transport his wares. He has
found a suitable used car online that he was able to negotiate to a
price of $33,000. After doing a bit more research, he has found the
following additional expenses involved in the purchase:
Insurance and registration will cost $550 per year, payable at
the start of each year
Based on mileage estimates, petrol will cost $290...
Geoffrey is the owner of a small grocery store and is considering buying a car to...
Geoffrey is the owner of a small grocery store and is
considering buying a car to help him transport his wares. He has
found a suitable used car online that he was able to negotiate to a
price of $40,000. After doing a bit more research, he has found the
following additional expenses involved in the purchase:
• Insurance and registration will cost $510 per year, payable at
the start of each year
• Based on mileage estimates, petrol will...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- You have invested 30 percent of your portfolio in Jacob, Inc., 40 percent is Bella Co.,...
- Parallel Arrays This question is in MindTap Cengage Summary In this lab, you use what you...
- 5. You have invested 30 percent of your portfolio in Jacob, Inc., 40 percent is Bella...
- JAVA Write a test program that prompts the user to enter a series of integers and...
- (2) Cite an example on how organizations like Google, Facebook, Youtube etc collect data for image...
- The legal landscape is perpetually changing. Psychologists must remain abreast of these changes to avoid potentially...
- We are evaluating a project that costs $1.68 million, has a six-year life, and has no...
ADVERTISEMENT