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
president, to evaluate the project. Mr. Potato Head, operations
manager, believes the equipment will cost $600,000 with shipping
and installation being another $75,000. Mr. Potato Head believes
the cost will be $3.50 per unit or 35% of sales plus a fixed cost
of $75,000. Mr. Potato Head estimates inventory will be increased
by $82,500. Mr. Potato Head believes...
A corporation operates snow sports facilities in Canada. The corporation has an opportunity to lease a...
A corporation operates snow sports facilities in Canada. The
corporation has an opportunity to lease a location in the mountains
for 10 years for $60,000 per year to open a new snow sports
location. They will also have access to trails in the provincial
park at an additional cost of $24,000 per year for trail
maintenance. To secure the lease they paid a non-refundable deposit
of $10,000 last year. The corporation will be required to purchase
snowshoes, cross-country skis and...
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period....
Oakmont Company has an opportunity to manufacture and sell a new
product for a four-year period. The company’s discount rate is 14%.
After careful study, Oakmont estimated the following costs and
revenues for the new product:
Cost of
equipment needed
$
140,000
Working
capital needed
$
62,000
Overhaul of
the equipment in two years
$
9,000
Salvage
value of the equipment in four years
$
13,000
Annual
revenues and costs:
Sales
revenues
$
270,000
Variable
expenses
$
130,000
Fixed...
Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one...
Lou Barlow, a divisional manager for Sage Company, has an
opportunity to manufacture and sell one of two new products for a
five-year period. His annual pay raises are determined by his
division’s return on investment (ROI), which has exceeded 23% each
of the last three years. He has computed the cost and revenue
estimates for each product as follows: Product A Product B Initial
investment: Cost of equipment (zero salvage value) $ 390,000 $
585,000 Annual revenues and costs:...
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period....
Oakmont Company has an opportunity to manufacture and sell a new
product for a four-year period. The company’s discount rate is 18%.
After careful study, Oakmont estimated the following costs and
revenues for the new product:
Cost of equipment needed
$
160,000
Working capital needed
$
66,000
Overhaul of the equipment in year two
$
11,000
Salvage value of the equipment in four years
$
15,000
Annual revenues and costs:
Sales revenues
$
310,000
Variable expenses
$
150,000
Fixed out-of-pocket...
Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one...
Lou Barlow, a divisional manager for Sage Company, has an
opportunity to manufacture and sell one of two new products for a
five-year period. His annual pay raises are determined by his
division’s return on investment (ROI), which has exceeded 25% each
of the last three years. He has computed the cost and revenue
estimates for each product as follows: Product A Product B Initial
investment: Cost of equipment (zero salvage value) $ 370,000 $
530,000 Annual revenues and costs:...
Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one...
Lou Barlow, a divisional manager for Sage Company, has an
opportunity to manufacture and sell one of two new products for a
five-year period. His annual pay raises are determined by his
division’s return on investment (ROI), which has exceeded 21% each
of the last three years. He has computed the cost and revenue
estimates for each product as follows:
Product A
Product B
Initial investment:
Cost of equipment (zero salvage value)
$
210,000
$
420,000
Annual revenues and costs:...
Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one...
Lou Barlow, a divisional manager for Sage Company, has an
opportunity to manufacture and sell one of two new products for a
five-year period. His annual pay raises are determined by his
division’s return on investment (ROI), which has exceeded 25% each
of the last three years. He has computed the cost and revenue
estimates for each product as follows
Product A
Product B
Initial investment:
Cost of equipment (zero salvage value)
$
370,000
$
530,000
Annual revenues and costs:...
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period....
Oakmont Company has an opportunity to manufacture and sell a new
product for a four-year period. The company’s discount rate is 18%.
After careful study, Oakmont estimated the following costs and
revenues for the new product:
Cost of equipment needed
$
160,000
Working capital needed
$
66,000
Overhaul of the equipment in year two
$
11,000
Salvage value of the equipment in four years
$
15,000
Annual revenues and costs:
Sales revenues
$
310,000
Variable expenses
$
150,000
Fixed out-of-pocket...
Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one...
Lou Barlow, a divisional manager for Sage Company, has an
opportunity to manufacture and sell one of two new products for a
five-year period. He has computed the cost and revenue estimates
for each product as follows:
Product A
Product B
Initial investment:
Cost of equipment (zero salvage
value)
$
340,000
$
540,000
Annual revenues and costs:
Sales revenues
$
380,000
$
460,000
Variable expenses
$
170,000
$
206,000
Depreciation expense
$
68,000
$
108,000
Fixed out-of-pocket operating
costs
$...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- "Ethical Considerations" Please respond to the following: Reflect upon the responsibilities placed on auditors by the...
- A Japanese company has a bond outstanding that sells for 93 percent of its ¥100,000 par...
- What is the difference among the principles of modularization, abstraction, encapsulation, and separation of interface and...
- An investment project costs $20,100 and has annual cash flows of $4,400 for six years. ...
- PUT IN JAVA PROGRAMMING The StockB class: Design a class named StockB that contains the following...
- Draw a DFA for the following ( ∑ = {0,1}): Set of all strings with.
- In the article from Forbes notes that the goal of a leader is not to clone...
ADVERTISEMENT