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FX, Inc. is a volume manufacturer of high technology automotive mirrors (including cell link and voice...
FX, Inc. is a volume manufacturer of high technology automotive mirrors (including cell link and voice activation). FX is looking to expand its operations to add a second product. The equipment investment cost for this new operation is $125,000. The project falls under a 7-year MACRS class life and the company estimates that the salvage value will be $50,000 at the end of the 5-year project. The annual revenue for the new line is $100,000. The annual manufacturing costs are listed below:
- Labor: $20,000
- Materials: $12,000
- Maintenance: $8,000
Questions:
- If this project only requires operating and investing activities, determine the project cash flows and find the NPV. The income tax rate is 40% and the MARR is 15%.
- If the company borrowed $125,000 from the bank at an interest rate of 10% for 6 years. Determine the cash flow and find the NPV. The income tax rate is 40% and the MARR is 15%.
- From the initial problem, find the interest rate when the company will give up the option to borrow fund.
Solutions
jeff jeffy answered 2 years agoRelated Solutions
FX, Inc. is a volume manufacturer of high technology automotive mirrors (including cell link and voice...
FX, Inc. is a volume manufacturer of high technology automotive
mirrors (including cell link and voice activation). FX is looking
to expand its operations to add a second product. The equipment
investment cost for this new operation is $125,000. The project
falls under a 7-year MACRS class life and the company estimates
that the salvage value will be $50,000 at the end of the 5-year
project. The annual revenue for the new line is $100,000. The
annual manufacturing costs are...
FX, Inc. is a volume manufacturer of high technology automotive mirrors (including cell link and voice...
FX, Inc. is a volume manufacturer of high technology automotive
mirrors (including cell link and voice activation). FX is looking
to expand their operations to add a second product line capable of
producing 1.3 Million units per year. The equipment investment cost
for this new operation is $27 Million. The project falls under a 7
year MACRS class life and the company estimates that the salvage
value will be $2.7 Million at the end of the 6 year project. The...
FX, Inc. is a volume manufacturer of high technology automotive mirrors (including cell link and voice...
FX, Inc. is a volume manufacturer of high technology automotive
mirrors (including cell link and voice activation). FX is looking
to expand their operations to add a second product line capable of
producing 1.3 Million units per year. The equipment investment cost
for this new operation is $27 Million. The project falls under a 7
year MACRS class life and the company estimates that the salvage
value will be $2.7 Million at the end of the 6 year project. The...
X, Inc. is a volume manufacturer of high technology automotive mirrors (including cell link and voice...
X, Inc. is a volume manufacturer of high technology automotive
mirrors (including cell link and voice activation). FX is looking
to expand their operations to add a second product line capable of
producing 1.3 Million units per year. The equipment investment cost
for this new operation is $27 Million. The project falls under a 7
year MACRS class life and the company estimates that the salvage
value will be $2.7 Million at the end of the 6 year project. The...
Q: Philips Company manufactures a variety of high- and low-volume products, including product 456, in its...
Q: Philips Company manufactures a variety of high- and
low-volume products, including product 456, in its Westchester
Plant. The following information pertains to the most recent
year:
Total for product 456
Total for Westchester
Unit-level overhead
$200,000
Batch-level overhead
300,000
Product-level overhead
500,000
Plant-level overhead
400,000
Total overhead
$1,400,000
Units produced
100
5,000
Direct labor hours
200
20,000
Machine hours
90
10,000
Setups
6
120
Setup hours
30
500
Design changes
4
40
Design hours
280
4,000
REQUIRED:
(1) If...
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computers, called the iLeather. The cover is made of stitched
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distributor of accessories for consumer electronic products. Early
in 20Y3, the company began production of a leather cover for tablet
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