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In: Finance
"A manufacturing company has just received an order with the following financial data. All dollar values...
"A manufacturing company has just received an order with the following financial data. All dollar values are given in constant dollars, and inflation will impact the annual revenue, annual operating cost, and the salvage value. The two-year project requires immediately purchasing equipment for $56,000. The equipment falls into the MACRS 5-year class. The machine will be sold for $22,000 at the end of two years. The project will bring in additional annual revenue of $82,000, but it is expected to incur an additional annual operating cost of $34,000. The firm expects a general inflation rate of 6% per year during the project period. The firm's tax rate is 34%, and its market interest rate is 16%. What is the net present worth of this project?"
Solutions
jeff jeffy answered 1 year agoRelated Solutions
"A manufacturing company has just received an order with the following financial data. All dollar values...
"A manufacturing company has just received an order with the
following financial data. All dollar values are given in constant
dollars, and inflation will impact the annual revenue, annual
operating cost, and the salvage value. The two-year project
requires immediately purchasing equipment for $59,000. The
equipment falls into the MACRS 5-year class. The machine will be
sold for $19,000 at the end of two years. The project will bring in
additional annual revenue of $99,000, but it is expected to...
"A manufacturing company has just received an order with the following financial data. All dollar values...
"A manufacturing company has just received an order with the
following financial data. All dollar values are given in constant
dollars, and inflation will impact the annual revenue, annual
operating cost, and the salvage value. The two-year project
requires immediately purchasing equipment for $56,000. The
equipment falls into the MACRS 5-year class. The machine will be
sold for $22,000 at the end of two years. The project will bring in
additional annual revenue of $82,000, but it is expected to...
A dollar received today has the same economic value as a dollar received tomorrow. True ...
A dollar received today has the same economic value as a dollar
received tomorrow. True
False
Market interest rate reflects both earning and purchasing power
of the money in the market. True
False
The practice of charging an interest rate to an initial sum of
money and to any previously accumulated interest that has not been
withdrawn from the initial sum is ……………
compound interest
b) simple
interest
c)
deflation
d) nominal interest
An initial amount of...
Carsen Sorensen, controller of Thayn Company, just received the following data associated with production of a...
Carsen Sorensen, controller of Thayn Company, just received the
following data associated with production of a new product:
Expected annual revenues: $750,000
Projected product life cycle: five years
Equipment: $800,000 with a salvage value of $100,000 after five
years
Expected increase in working capital: $100,000 (recoverable at
the end of five years)
Annual cash operating expenses: estimated at $450,000
Required rate of return: 8 percent
The present value tables provided in Exhibit 19B.1 and Exhibit
19B.2 must be used to...
The company you are working for just received an order for 10 castings, made from precious...
The company you are working for just received an order for 10
castings, made from precious
metals. The way the facility works is as follows: you first
schedule n castings for production
and order the first materials necessary. Then, each of the n
scheduled castings can turn out to
be of high quality with a probability of 0.90. All castings are
produced independently. You can
only sell castings of high quality to the customer. Answer the
following questions.
(a) Assume...
The following cost data relate to the manufacturing activities of Jako Company during the just completed...
The following cost data relate to the manufacturing activities
of Jako Company during the just completed year: Manufacturing
overhead costs incurred: Indirect materials . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
60,000 Indirect labor . . . . . . . . . ....
The following cost data relate to the manufacturing activities of Chang Company during the just completed...
The following cost data relate to the manufacturing activities
of Chang Company during the just completed year:
Manufacturing overhead costs
incurred:
Indirect materials
$
16,000
Indirect labor
140,000
Property taxes, factory
9,000
Utilities, factory
80,000
Depreciation, factory
251,500
Insurance, factory
11,000
Total actual manufacturing
overhead costs incurred
$
507,500
Other costs incurred:
Purchases of raw materials (both
direct and indirect)
$
410,000
Direct labor cost
$
70,000
Inventories:
Raw materials, beginning
$
21,000
Raw materials, ending
$
31,000
Work...
The following cost data relate to the manufacturing activities of Chang Company during the just completed...
The following cost data relate to the manufacturing activities
of Chang Company during the just completed year:
Manufacturing overhead costs incurred:
Indirect materials
$
15,600
Indirect labor
136,000
Property taxes, factory
8,600
Utilities, factory
76,000
Depreciation, factory
250,700
Insurance, factory
10,600
Total actual manufacturing overhead costs incurred
$
497,500
Other costs incurred:
Purchases of raw materials (both direct and indirect)
$
406,000
Direct labor cost
$
66,000
Inventories:
Raw materials, beginning
$
20,600
Raw materials, ending
$
30,600
Work...
The following cost data relate to the manufacturing activities of Chang Company during the just completed...
The following cost data relate to the manufacturing activities
of Chang Company during the just completed year: Manufacturing
overhead costs incurred: Indirect materials $ 16,100 Indirect labor
141,000 Property taxes, factory 9,100 Utilities, factory 81,000
Depreciation, factory 149,700 Insurance, factory 11,100 Total
actual manufacturing overhead costs incurred $ 408,000 Other costs
incurred: Purchases of raw materials (both direct and indirect) $
411,000 Direct labor cost $ 71,000 Inventories: Raw materials,
beginning $ 21,100 Raw materials, ending $ 31,100 Work in...
The following cost data relate to the manufacturing activities of Chang Company during the just completed...
The following cost data relate to the manufacturing activities
of Chang Company during the just completed year: Manufacturing
overhead costs incurred: Indirect materials $ 16,600 Indirect labor
146,000 Property taxes, factory 9,600 Utilities, factory 86,000
Depreciation, factory 252,700 Insurance, factory 11,600 Total
actual manufacturing overhead costs incurred $ 522,500 Other costs
incurred: Purchases of raw materials (both direct and indirect) $
416,000 Direct labor cost $ 76,000 Inventories: Raw materials,
beginning $ 21,600 Raw materials, ending $ 31,600 Work in...
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