1.Adana Company is considering a project with estimated annual unit sales of 160,000; sale price per...

1.Adana Company is considering a project with estimated annual unit sales of 160,000; sale price per unit of $34; variable costs per unit of $19; and annual fixed costs of $310,000. The firm expects that the true values for unit sales, price per unit, variable costs per unit, and fixed costs will be within plus or minus 15% of these estimates. The project requires a fixed asset investment of $1,500,000 that will be depreciated straight-line to zero over the project’s 5 year life. The firm’s discount rate is 10% and the tax rate is 30%. Calculate the worst case OCF?

2.A project requires an initial investment of $14,000,000 and is depreciated straight-line to zero salvage over its 10-year life. The project produces items that sell for $2,300 each, with variable costs of $750 per unit. Fixed costs are $1,200,000 per year. If the Company is selling 4200 units of this product, what is Degree of Operating Leverage (DOL)?

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jeff jeffy answered 2 years ago

1. Adana Company is considering a project with estimated annual unit sales of 160,000; sale price...

1. Adana Company is considering a project with estimated annual unit sales of 160,000; sale price per unit of $34; variable costs per unit of $19; and annual fixed costs of $310,000. The firm expects that the true values for unit sales, price per unit, variable costs per unit, and fixed costs will be within plus or minus 15% of these estimates. The project requires a fixed asset investment of $1,500,000 that will be depreciated straight-line to zero over the...

The company sells a single product at a price of $60 per unit. The estimated sales...

The company sells a single product at a price of $60 per unit. The estimated sales volume for the next six months is as follows: September October . . November December January . . February. . 13,000 units 12,000 units 14,000 units 20,000 units 9,000 units 10,000 units All sales are on account. The company’s collection experience has been that 32% of a month’s sales are collected in the month of sale, 64% are collected in the month following the...

A project has the following estimated data: Price=$62 per unit; variable costs =$28 per unit; fixed...

A project has the following estimated data: Price=$62 per unit; variable costs =$28 per unit; fixed costs=$27,300; required return= 12 percent; initial investment= $34,800; life= four years. Ignoring the effect of taxes, what is the accounting break-even quantity? The cash break-even quantity? The financial break-even quantity? What is the degree of operating leverage at the financial break-even level of output?

A project has a projected sales price of $99 a unit, variable costs per unit of...

A project has a projected sales price of $99 a unit, variable costs per unit of $58, annual fixed costs of $238,000, and annual depreciation of $139,000. The tax rate is 22 percent. What is the contribution margin for an analysis using sales units of 12,800? Multiple Choice $27.06 $38.97 $22.41 $41.00 $42.64

A company has the following information: Unit sales 13,400 Sales price per unit $...

A company has the following information: Unit sales 13,400 Sales price per unit $ 90.00 Variable costs per unit $ 40.00 Fixed costs $ 500,000 A. What is the company’s contribution margin per unit? B. What is the company’s total contribution margin? C. What is the company’s operating income? D. What is the company’s margin of safety in units? E. If the company had a target operating income of $636,000, what would be the target sales in...

the More Company have 12% operating income per unit on the sales. price per unit. The...

the More Company have 12% operating income per unit on the sales. price per unit. The managerial . reported that the target price is $750 per unit. 1‘ Compute the target operating income per unit 2. It" the company would like to have total profit to be $450,000, how many units, would they have to sell given the desired 12% operating income per unit? 3 Compute the target cost per unit at the 12% target operating income per unit. t...

The machine produces annual units of 1,000 units. Each unit has sale price of $200 per...

The machine produces annual units of 1,000 units. Each unit has sale price of $200 per unit and cost of $100 per unit. Sale price and cost will increase 3% per year. The tax rate is 25%. If NWCt= 12% * Sale (t+1), what is FCF at year 2? Given the machine is bought at $200,000 with shipping cost of $10,000 and installation cost of $30,000. The machine has economic life of 4 years. Year MACRS 1 33% 2 45%...

A project has the following estimated data: price = $72 per unit; variable costs = $27.36...

A project has the following estimated data: price = $72 per unit; variable costs = $27.36 per unit; fixed costs = $8,000; required return = 14 percent; initial investment = $7,000; life = six years. Ignore the effect of taxes. a. What is the accounting break-even quantity? b. What is the cash break-even quantity? c. What is the financial break-even quantity? d. What is the degree of operating leverage at the financial break-even level of output?

A project has the following estimated data: price = $80 per unit; variable costs = $28.80...

A project has the following estimated data: price = $80 per unit; variable costs = $28.80 per unit; fixed costs = $5,500; required return = 10 percent; initial investment = $8,000; life = seven years. Ignore the effect of taxes. a. What is the accounting break-even quantity? b. What is the cash break-even quantity? c. What is the financial break-even quantity? d. What is the degree of operating leverage at the financial break-even level of output?

A project has the following estimated data: price = $75 per unit; variable costs = $29.25...

A project has the following estimated data: price = $75 per unit; variable costs = $29.25 per unit; fixed costs = $5,200; required return = 9 percent; initial investment = $9,000; life = seven years. Ignore the effect of taxes. a. What is the accounting break-even quantity? 142 114 170 156 135 b. What is the cash break-even quantity? 114 142 108 91 103 c. What is the financial break-even quantity? 153 184 168 138 122 d. What is the...

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