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Garrison Appliances, Inc. is considering expanding its international presence. It sells 25% of all the toaster...
Garrison Appliances, Inc. is considering expanding its international presence. It sells 25% of all the toaster ovens sold in the United States but only 3% of the toaster ovens sold outside of the United States. The organization believes that it can sell more of its product if it has a production facility located overseas. Estimates concerning two possible locations, Mumbai and Bangalore, India follow: Possible Location Mumbai Bangalore Initial cash outlay $5,000,000 $2,800,000 Useful life 20 years 20 years Net cash inflows excluding depreciation $1,100,000 $860,000 The cost of capital 9% 9% Tax rate 40% 40% The Assignment: Part 1: Prepare a spreadsheet using Excel or a similar program in which you compute the following for each proposed location Accounting rate of return on investment Payback Net present value Internal rate of return
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Global company is considering expanding its inter national presence. The company believes that it has great...
Global company is considering expanding its inter national
presence. The company believes that it has
great potential for international sales. Recently, 20% of the
Global Companys sales were in foreign
markets. The goal is to expand the foreign sales to 30%. In order
to accomplish this goal, the company
needs to invest heavily.
After considering tax, marketing, labour and political issues the
company has decided to invest in 1India
and Dubai. The following estimates have been provided:
India
Dubai
Initial...
Leonard, a company that manufactures explosion-proof motors, is considering two alternatives for expanding its international export...
Leonard, a company that manufactures explosion-proof motors, is
considering two alternatives for expanding its international export
capacity. Option 1 requires equipment purchases of $600,000 now and
$500,000 two years from now, with annual M&O costs of $90,000
in years 1 through 10. Option 2 involves subcontracting some of the
production at costs of $240,000 per year beginning now through the
end of year 10. Neither option will have a significant salvage
value. Use a present worth analysis to determine which...
Reliable Machinery Inc. is considering expanding its operations in Thailand. The initial analysis of the project...
Reliable Machinery Inc. is considering expanding its operations
in Thailand. The initial analysis of the project yields the
following results:'
■ The project is expected to generate $85 million in after-tax
cash flows every year for the next 10 years.
■ The initial investment in the project is expected to be $750
million.
■ The cost of capital for the project is 12%. If the project
generates much higher cash flows than anticipated, you will have the
exclusive right for...
"Florida Citrus Inc. (FCI) estimates its taxable income at $7,100,000. The company is considering expanding its...
"Florida Citrus Inc. (FCI) estimates its taxable income at
$7,100,000. The company is considering expanding its product line
by introducing a low-calorie sport drink for next year. It expects
that the additional taxable income next year from this sport drink
will be $1,800,000. Use the Corporate Tax Schedule, Table 9.12, to
calculate how much FCI will pay in federal income taxes next year
if it produces the low-calorie sport drink?"
Fragrances Corporation is an international manufacturer of fragrances for women. Management is considering expanding the product...
Fragrances Corporation is an international manufacturer of
fragrances for women. Management is considering expanding the
product line to men’s fragrances.
From the best estimates of the marketing and production
managers, annual cash sales for this new line are 900,000 units at
$100 per unit, cash variable cost is $70 per unit, and cash fixed
costs are $20,000,000 per year. The investment project requires
$32,000,000 of cash outflow and has a project life of 9 years. At
the end of the...
Summer Company sells all its output at 25 percent above cost. Parade Corporation purchases all its...
Summer Company sells all its output at 25 percent above cost.
Parade Corporation purchases all its inventory from Summer.
Selected information on the operations of the companies over the
past three years is as follows:
Summer Company
Parade Corporation
Year
Sales to Parade Corp.
Net Income
Inventory, Dec. 31
Operating Income
20X2
$
211,000
$
100,000
$
73,850
$
165,000
20X3
186,000
90,000
111,600
248,000
20X4
246,000
160,000
131,200
303,000
Parade acquired 70 percent of the ownership of Summer on...
Summer Company sells all its output at 25 percent above cost. Parade Corporation purchases all its...
Summer Company sells all its output at 25 percent above cost.
Parade Corporation purchases all its inventory from Summer.
Selected information on the operations of the companies over the
past three years is as follows:
Summer Company
Parade Corporation
Year
Sales to Parade Corp.
Net Income
Inventory, Dec. 31
Operating Income
20X2
$
202,000
$
102,000
$
70,700
$
157,000
20X3
177,000
92,000
106,200
253,000
20X4
273,000
162,000
145,600
304,000
Parade acquired 60 percent of the ownership of Summer on...
Summer Company sells all its output at 25 percent above cost. Parade Corporation purchases all its...
Summer Company sells
all its output at 25 percent above cost. Parade Corporation
purchases all its inventory from Summer. Selected information on
the operations of the companies over the past three years is as
follows:
Summer Company
Parade Corporation
Year
Sales to Parade Corp.
Net Income
Inventory, Dec. 31
Operating Income
20X2
$
210,000
$
118,000
$
73,500
$
160,000
20X3
185,000
108,000
111,000
248,000
20X4
237,000
178,000
126,400
312,000
Parade acquired 70 percent of the ownership of Summer on...
Summer Company sells all its output at 25 percent above cost. Parade Corporation purchases all its...
Summer Company sells
all its output at 25 percent above cost. Parade Corporation
purchases all its inventory from Summer. Selected information on
the operations of the companies over the past three years is as
follows:
Summer Company
Parade Corporation
Year
Sales to Parade Corp.
Net Income
Inventory, Dec. 31
Operating Income
20X2
$
205,000
$
117,000
$
71,750
$
166,000
20X3
180,000
107,000
108,000
242,000
20X4
276,000
177,000
147,200
308,000
Parade acquired 60 percent of the ownership of Summer on...
Badlands, Inc. manufactures a household fan that sells for $25 per unit. All sales are on...
Badlands, Inc. manufactures a household fan that sells for $25
per unit. All sales are on account, with 30 percent of sales
collected in the month of sale and 70 percent collected in the
following month. The data that follow were extracted from the
company’s accounting records.
Badlands maintains a minimum cash balance of $20,000. Total
payments in January 20x1 are budgeted at $220,000.
A schedule of cash collections for January and February of 20x1
revealed the following receipts for...
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