Question
In: Finance
The Pixar Corporation has an opportunity to sell Buzz Lightyear flying action figures. Woody, the CEO,...
The Pixar Corporation has an opportunity to sell Buzz Lightyear flying action figures. Woody, the CEO, would like for Rex, the vice president, to evaluate the project. Mr. Potato Head, operations manager, believes the equipment will cost $900,000 with shipping and installation being another $125,000. Mr. Potato Head believes the cost will be $5.70 per unit plus a fixed cost of $95,000. Mr. Potato Head estimates inventory will be increased by $120,000. Mr. Potato Head believes after the four-year run of action figures, the equipment will be worth $150,000. Bo Peep, marketing manager, believes that the demand for the Buzz Lightyear flying action figures will be 100,000 units in the first year; 75,000 in the second year, 60,000 units in the third year and 50,000 in the fourth year. Bo Peep tells Rex that she believes the price will be $12 per unit. Slinky Dog, the CFO, says the equipment will fall under the 3-years MACRS schedule. Slinky Dog believes accounts payable will increase by $10,000 and accounts receivable will increase by $35,000. Slinky Dog tells Rex that the corporate tax rate is a flat 40%. Rex needs to report the NPV, IRR, Payback and the accept/reject decision to Woody.
|
MACRS |
|
|
Year |
3-year |
|
1 |
33% |
|
2 |
45 |
|
3 |
15 |
|
4 |
7 |
Please provide answer and also explanation for how to get answer.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
The Pixar Corporation has an opportunity to sell Buzz Lightyear flying action figures. Woody, the CEO,...
The Pixar Corporation has an opportunity to sell Buzz Lightyear
flying action figures. Woody, the CEO, would like for Rex, the vice
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manager, believes the equipment will cost $600,000 with shipping
and installation being another $75,000. Mr. Potato Head believes
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108,000
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