Question
In: Accounting
Your company makes $10M revenue of year, has $3M in COGS, $2M in S&A, and a...
Your company makes $10M revenue of year, has $3M in COGS, $2M
in S&A, and a 40% tax rate. Marketing costs are $500,000 and
are included in SG&A
You are considering buying a machine worth $1M to produce more
product. It will lead to $300,000 of revenues in the first year,
and will increase each year by 20% over five years. The CCA rate
used to depreciate the asset is 20% per year. The equipment will
have no salvage value after 5 years. A discount rate of 10% will be
assigned. Goods produced will have the same gross profit of the
company. Additional marketing costs will be needed for the new
products produced from the equipment, estimated to be 10% of
revenue. You would be replacing an asset with a salvage value of
$50,000 after considering leftover tax shield for that asset.
Should you invest in this equipment?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
A fluidic storage tank has a square cross-section (3m x 3m) and a height of 10m....
A fluidic storage tank has a square cross-section (3m x 3m) and
a height of 10m. The tank is half-filled with a fluid with the
density of 200kg/m3. The tank suddenly develops a leak. A sensor
inside the tank instantaneously alerts the owner that the height of
the fluid in the tank is decreasing by 1mm/min. Find the flow rate
out of the tank at that moment in time.
The cell Ag(s), AgI(s)|KI(10−2M)||KCl(10−3M)|Cl2(g,1bar), Pt(s) has the voltage 1.5702 V at 298 K. Part A Write...
The cell Ag(s),
AgI(s)|KI(10−2M)||KCl(10−3M)|Cl2(g,1bar),
Pt(s)
has the voltage 1.5702 V
at 298 K.
Part A
Write the cell reaction.
Express your answer as a chemical equation. Identify all of the
phases in your answer.
Part B
What is ΔrG at 298 K?
Express your answer to five significant figures and include the
appropriate units.
Part C
What is ΔG∘ at 298 K?
Express your answer to three significant figures and include the
appropriate units.
Part D
Calculate the standard reduction...
A trapezoidal concrete dam (s = 2.4) 8.1m high and a horizontal base 10m long has...
A trapezoidal concrete dam (s = 2.4) 8.1m high and a horizontal
base 10m long has a vertical upstream side. The downstream face is
sloping 2-horizontal to 3-vertical. Water stands 7m on one
side.
Compute for the total weight of the dam.
What is the overturning moment?
Where will the resultant force cut the base from the toe?
Company X has an investment project requiring a $10m investment today and that has a $1m...
Company X has an investment project requiring a $10m investment
today and that has a
$1m net present value. The company has 1 million shares, no
internal funds and, given the
nature of its business, cannot get debt financing. Hence it must
raise funds by issuing equity
or abandon the project. While the market knows all about the
investment project, it does
not know whether the value of the company’s existing assets
(i.e., excluding the new
project) is $10m or...
Company X has an investment project requiring a $10m investment today and that has a $1m...
Company X has an investment project requiring a $10m investment
today and that has a $1m net present value. The company has 1
million shares, no internal funds and, given the nature of its
business, cannot get debt financing. Hence it must raise funds by
issuing equity or abandon the project. While the market knows all
about the investment project, it does not know whether the value of
the company’s existing assets (i.e., excluding the new project) is
$10m or...
XYZ has Sale s= 4,000, COGS = 2,000, Depreciation = 400, Interest = 600. The tax...
XYZ has Sale s= 4,000, COGS = 2,000, Depreciation = 400,
Interest = 600.
The tax rates are:10% for taxable income up to 500, 15%
for the next 500, and 20% for any taxable income above
1,000
1. What is XYZ’s Interest Tax Shield (ITS)?
A. 90
B. 120
C. 85
D. none of the above
2. What would be the ITS if depreciation is increased to
1,000?
A. 90
B. 120
C. 85
D. none of the above
A company has the capacity to generate a revenue of $3,000,000 a year. The break even...
A company has the capacity to generate a revenue of $3,000,000 a
year. The break even revenue is $2,000,000 a year. From the
breakeven point every $100 extra revenue generates $40 extra profit
and every $100 decrease in revenue results in $40 extra loss. The
costs consist of fixed cost , variable costs which are linear
related to the revenue. 1-calculate the fix cost 2-calcualte the
variable cost at revenue of $1,500,000 a year. The company decides
to purchase another...
ABC Company reports the following comparative income statement: 2017 Revenue $100,000 COGS 42,000 Gross Profit 58,000...
ABC Company reports the following comparative income
statement:
2017
Revenue $100,000
COGS 42,000
Gross Profit 58,000
SGA Expenses 25,000
Income before tax 33,000
Income tax expense. 11,000
Net Income 22,000
2016
Revenue $70,000
COGS 25,000
Gross Profit 45,000
SGA Expenses 28,000
Income before tax 17,000
Income tax expense. 6,000
Net Income 11,000
Prepare a vertical and horizontal analysis for ABC Company and
then calculate the profit margin for ABC Company
X Company is considering buying a part next year that it currently makes. A company has...
X Company is considering buying a part next year that it
currently makes. A company has offered to supply this part for
$15.34 per unit. This year's total production costs for 59,000
units were:
Materials
300,900
Direct Labor
241,900
Total overhead
383,500
$265,500 of X Company's total overhead costs were variable; $34,220
of X Company's fixed overhead costs can be avoided if it buys the
part. If X Company buys the part, there are no alternative uses of
the resources...
X Company is considering buying a part next year that it currently makes. A company has...
X Company is considering buying a part next year that it
currently makes. A company has offered to supply this part for
$17.18 per unit. This year's total production costs for 57,000
units were:
Materials $387,600
Direct labor 285,000
Total overhead 290,700
$205,200 of X Company's total overhead costs were variable;
$24,795 of X Company's fixed overhead costs can be avoided if it
buys the part. If X Company buys the part, there are no alternative
uses of the resources...
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