Problem 18-5A (Part Level Submission)

Viejol Corporation has collected the following information after its first year of sales. Sales were $1,600,000 on 100,000 units, selling expenses $250,000 (40% variable and 60% fixed), direct materials $510,000, direct labor $288,200, administrative expenses $284,000 (20% variable and 80% fixed), and manufacturing overhead $350,000 (70% variable and 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10% next year.

Compute (1) the contribution margin for the current year and the projected year, and (2) the fixed costs for the current year. (Assume that fixed costs will remain the same in the projected year.)

Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be replacing 5 fully-depreciated vans, which you think you can sell for $4,800 apiece and which you could probably use for another 2 years if you chose not to replace them. The NV vans will cost $47,000 each in the configuration you want them, and can be depreciated using MACRS over a 5-year life. Expected yearly before-tax cash savings due to acquiring the new vans amounts to about $5,500 each. If your cost of capital is 12 percent and your firm faces a 35 percent tax rate, what will the cash flows for this project be? (Round your answers to the nearest dollar amount.)

Q. Rotorua Products, Ltd., of New Zealand markets agricultural products for the burgeoning Asian consumer market. The company’s current assets, current liabilities, and sales over the last five years (Year 5 is the most recent year) are as follows:

Required:

1. Express all of the asset, liability, and sales data in trend percentages. Use Year 1 as the base year. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

"A company's marketing strategy will last two years and produce revenue in years 1 and 2 only. The strategy can result in a success, a moderate success, or a failure.
The marketing strategy will cost $50,000 immediately (year 0), $44,000 in year 1, and $15,000 in year 2. There is uncertainty with projected revenues, but the forecasted revenues and probabilities for the marketing strategy are as follows:
- Success: Year 1: $109,000; Year 2: $126,000; Probability: 0.35
- Moderate success: Year 1: $95,000; Year 2: $75,000; Probability: 0.52
- Failure: Year 1: $55,000; Year 2: $57,000; Probability: 0.13
The company's MARR is 25%. You can ignore any other costs except for the marketing costs.
Calculate the standard deviation of the net present worth for the strategy.
HINT: it is easier to calculate the net present worth of each separate result first (success, moderate success, failure) before dealing with the probabilities."

A company wants to buy a new management information system. The cost of the system is $10 million, with an additional $1,000,000 for delivery/installation. Immediate net working capital of $500,000 and an additional net working capital investment of $250,000 at the end of year one. The system has a life of 10 years. It will be depreciated as a 7-year asset under MACRS rules. Salvage value is $1,000,000 at end of 10 years. Tax rate is 24 percent. Rate of return is 16%.

New system will save $2,400,000 per year. Costs are $500,000 during the first year, and will increase by 6% per year for the ten year period. Sales price is $15 per unit of computer time and sales are expected to be 170,000 units. After the first year, demand for computer time will decline by 5% per year. An additional $400,000 per year in computer operating costs will be charged and will increase by 6% annully over the ten years.

Calculate the NPV.

A company's marketing strategy will last two years and produce revenue in years 1 and 2 only. The strategy can result in a success, a moderate success, or a failure. The marketing strategy will cost $60,000 immediately (year 0), $38,000 in year 1, and $12,000 in year 2. There is uncertainty with projected revenues, but the forecasted revenues and probabilities for the marketing strategy are as follows: - Success: Year 1: $89,000; Year 2: $112,000; Probability: 0.26 - Moderate success: Year 1: $78,000; Year 2: $70,000; Probability: 0.42 - Failure: Year 1: $39,000; Year 2: $50,000; Probability: 0.32 The company's MARR is 15%. You can ignore any other costs except for the marketing costs. Calculate the standard deviation of the net present worth for the strategy. HINT: it is easier to calculate the net present worth of each separate result first (success, moderate success, failure) before dealing with the probabilities

. Rawlings Company has the following equity accounts at the beginning and end of Year Three: January 1, Year Three December 31, Year Three Preferred Stock, 6%, $100 par value $2,000,000 $2,000,000 Common Stock, $1 Par Value $160,000 $200,000 Capital in Excess of Par, Common $12,000,000 $16,000,000 Retained Earnings $1,100,000 $1,800,000 The common stock account increased because 40,000 shares of common stock were issued to the public on September 1, Year Three. Preferred stock was paid its dividend during the year. A cash dividend was also distributed on the common stock. Net income for the year was $1,200,000. a. How much cash was received when the common stock was issued during Year Three? b. What was the total cash dividend paid on the common stock shares during the year? c. What was the company’s basic earnings per share for Year Three?

Barrel Corporation had service and interest costs of $50,000 related to its defined benefit plan for the year ended December 31, Year 7. THe company's unrecognized prior service cost was $200,000 at December 31, Year 6 and the average remaining service life of the company's employees was 20 years. Plan assets earned an expected and actual return of 10% during Year 7. The company made contributions to the plan of $25,000 and paid benefits of $30,000 during the year. The pension plan had plan assets with a fair value of $300,000 at December 31, Year 6. The PBO was $400,000 at December 31, Year 6 and $420,000 at December 31, Year 7. Barrel's effective tax rate is 30%.

What is funded status of Barrel Corporation's pension plan at December 31, Year 7?

a-$20,000 underfunded

b-$75,000 overfunded

c-$95,000 underfunded

d-$120,000 overfunded

Project cash flow and NPV.  The managers of Classic Autos Incorporated plan to manufacture classic Thunderbirds​ (1957 replicas). The necessary foundry equipment will cost a total of $4,100,000 and will be depreciated using a​ five-year MACRS​ life. The sales manager has an estimate for the sale of the classic Thunderbirds. The annual sales volume will be as​ follows:

If the sales price is $30,000 per​ car, variable costs are $18,000 per​ car, and fixed costs are $1,100,000 ​annually, what is the annual operating cash flow if the tax rate is 30​%? The equipment is sold for salvage for ​$500,000 at the end of year five. Net working capital increases by $600,000 at the beginning of the project​ (year 0) and is reduced back to its original level in the final year. Find the internal rate of return for the project using the incremental cash flows.

"A company's marketing strategy will last two years and produce revenue in years 1 and 2 only. The strategy can result in a success, a moderate success, or a failure. The marketing strategy will cost $71,000 immediately (year 0), $42,000 in year 1, and $13,000 in year 2. There is uncertainty with projected revenues, but the forecasted revenues and probabilities for the marketing strategy are as follows: - Success: Year 1: $107,000; Year 2: $114,000; Probability: 0.21 - Moderate success: Year 1: $94,000; Year 2: $76,000; Probability: 0.43 - Failure: Year 1: $38,000; Year 2: $48,000; Probability: 0.36 The company's MARR is 25%. You can ignore any other costs except for the marketing costs. Calculate the standard deviation of the net present worth for the strategy. HINT: it is easier to calculate the net present worth of each separate result first (success, moderate success, failure) before dealing with the probabilities."