Innovation Company is thinking about marketing a new software product. Upfront costs to market and develop the product are $4.99 million. The product is expected to generate profits of $1.18 million per year for 10 years. The company will have to provide product support expected to cost $93,000 per year in perpetuity. Assume all profits and expenses occur at the end of the year.
a. What is the NPV of this investment if the cost of capital is 5.7%? Should the firm undertake the project? Repeat the analysis for discount rates of 1.1% and 17.3%, respectively.
b. What is the IRR of this investment opportunity?
c. What does the IRR rule indicate about this investment?
In: Finance
Innovation Company is thinking about marketing a new software product. Upfront costs to market and develop the product are $ 4.98 million. The product is expected to generate profits of $ 1.02 million per year for 10 years. The company will have to provide product support expected to cost $ 91 comma 000 per year in perpetuity. Assume all profits and expenses occur at the end of the year.
a. What is the NPV of this investment if the cost of capital is 6.2 %? Should the firm undertake the project? Repeat the analysis for discount rates of 1.7 % and 12.6 %, respectively.
b. What is the IRR of this investment opportunity?
c. What does the IRR rule indicate about this investment?
In: Finance
Innovation Company is thinking about marketing a new software product. Upfront costs to market and develop the product are $4.91 million. The product is expected to generate profits of $1.05 million per year for ten years. The company will have to provide product support expected to cost $95,000 per year in perpetuity. Assume all profits and expenses occur at the end of the year.
a. What is the NPV of this investment if the cost of capital is 6.1%? Should the firm undertake the project? Repeat the analysis for discount rates of 1.6 % and 13.8 % respectively.
If the cost of capital is 6.1 %,the NPV will be $_____. (Round to the nearest dollar.)
If the cost of capital is 1.6 %,the NPV will be $_____. (Round to the nearest dollar.)
If the cost of capital is 13.8 %,the NPV will be $_____. (Round to the nearest dollar.)
b. What is the IRR of this investment opportunity?
c. What does the IRR rule indicate about this investment?
In: Finance
Innovation Company is thinking about marketing a new software product. Upfront costs to market and develop the product are $ 5,300,000. The product is expected to generate profits of $ 1,400,000 per year for ten years. The company will have to provide product support expected to cost $ 95,000 per year in perpetuity. Assume all income and expenses occur at the end of each year.
a. What is the NPV of this investment if the cost of capital is 4.58 %? Should the firm undertake the project? Repeat the analysis for discount rates of 1.21 % and 20.56 %, respectively.
b. How many IRRs does this investment opportunity have? (Hint: Consider the two alternative discount rates we used in our analysis in part a.)
c. Can the IRR rule be used to evaluate this investment? Explain.
In: Finance
Innovation Company is thinking about marketing a new software product. Upfront costs to market and develop the product are $5,200,000. The product is expected to generate profits of $1,000,000 per year for ten years. The company will have to provide product support expected to cost $99,000 per year in perpetuity. Assume all income and expenses occur at the end of each year.
a. What is the NPV of this investment if the cost of capital is 4.65%?
Should the firm undertake the project? Repeat the analysis for discount rates of 2.95% and 9.73%, respectively.
b. How many IRRs does this investment opportunity have? (Hint: Consider the two alternative discount rates we used in our analysis in part a.)
c. Can the IRR rule be used to evaluate this investment? Explain.
In: Finance
Innovation Company is thinking about marketing a new software product. Upfront costs to market and develop the product are $ 5,300,000. The product is expected to generate profits of $ 1,400,000 per year for ten years. The company will have to provide product support expected to cost $ 95,000 per year in perpetuity. Assume all income and expenses occur at the end of each year.
a. What is the NPV of this investment if the cost of capital is 4.58 %? Should the firm undertake the project? Repeat the analysis for discount rates of 1.21 % and 20.56 %, respectively.
b. How many IRRs does this investment opportunity have? (Hint: Consider the two alternative discount rates we used in our analysis in part a.)
c. Can the IRR rule be used to evaluate this investment? Explain.
In: Finance
Vertical Analysis of Income Statement
Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:
| Current Year | Previous Year | |||
| Sales | $580,000 | $522,000 | ||
| Cost of goods sold | 324,800 | 261,000 | ||
| Selling expenses | 104,400 | 104,400 | ||
| Administrative expenses | 110,200 | 93,960 | ||
| Income tax expense | 17,400 | 26,100 | ||
a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.
| Innovation Quarter Inc. | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31 | ||||
| Current year Amount | Current year Percent | Previous year Amount | Previous year Percent | |
| Sales | $580,000 | % | $522,000 | % |
| Cost of goods sold | 324,800 | % | 261,000 | % |
|
$ | % | $ | % |
| Selling expenses | 104,400 | % | 104,400 | % |
| Administrative expenses | 110,200 | % | 93,960 | % |
|
$ | % | $ | % |
|
% | % | ||
| Income tax expense | 17,400 | % | 26,100 | % |
|
$ | % | $ | % |
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b. The vertical analysis indicates that the cost of goods sold as a percent of sales
In: Accounting
We live in a fast-changing world. We often hear that innovation is what’s needed to address the global challenges and local issues that we’re facing, to seize new and unexpected opportunities as they arise and to make our world a better place. Therefore, new invention derived from research developments, technical knowledge and tools independent of product and service initiatives. a. Compare disruptive and sustaining technologies. Support your answer with relevant examples. b. Explain how the Internet and WWW caused business disruption. c. Describe Web 1.0 along with ebusiness and its associated advantages. please type it do not handwritten . and not copy from chegg
In: Economics
Week 5 Discussion "Develop an Innovation Framework" Please respond to the following: Develop a simple innovative framework for a business concept of your choice using the five (5) key questions (what, when, where, who, how). Next predict whether or not this strategy will require an incremental change or radical change. Provide support for your response. Discuss three (3) ways that an organization could benefit using the search strategies of Zone 1 (Exploit), Zone 2 (Explore), Zone 3 (Reframing), and Zone 4 (Co-evolution) to explore the best space for their innovative strategy. Provide support for your response.
In: Operations Management
1.
Vertical Analysis of Income Statement
Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:
| Current Year | Previous Year | |||
| Sales | $517,000 | $460,000 | ||
| Cost of goods sold | 284,350 | 230,000 | ||
| Selling expenses | 93,060 | 92,000 | ||
| Administrative expenses | 98,230 | 82,800 | ||
| Income tax expense | 15,510 | 23,000 | ||
a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.
| Innovation Quarter Inc. | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31 | ||||
| Current year Amount | Current year Percent | Previous year Amount | Previous year Percent | |
| Sales | $517,000 | % | $460,000 | % |
| Cost of goods sold | 284,350 | % | 230,000 | % |
| ________ | $ | % | $ | % |
| Selling expenses | 93,060 | % | 92,000 | % |
| Administrative expenses | 98,230 | % | 82,800 | % |
| ___________ | $ | % | $ | % |
| ___________ | % | % | ||
| Income tax expense | 15,510 | % | 23,000 | % |
| ___________ | $ | % | $ | % |
b. The vertical analysis indicates that the cost of goods sold as a percent of sales __________ by 5 percentage points, while selling expenses ____________ by 2 percentage points, and administrative expenses ___________ by 1 percentage points. Thus, net income as a percent of sales ________ by 2 percentage points.
2.
Vertical Analysis of Balance Sheet
Balance sheet data for Alvarez Company on December 31, the end of two recent fiscal years, follows:
| Current Year | Previous Year | |||
| Current assets | $295,500 | $169,970 | ||
| Property, plant, and equipment | 591,000 | 546,860 | ||
| Intangible assets | 98,500 | 22,170 | ||
| Current liabilities | 187,150 | 110,850 | ||
| Long-term liabilities | 413,700 | 302,990 | ||
| Common stock | 108,350 | 110,850 | ||
| Retained earnings | 275,800 | 214,310 | ||
Prepare a comparative balance sheet for both years, stating each asset as a percent of total assets and each liability and stockholders' equity item as a percent of the total liabilities and stockholders' equity. If required, round percentages to one decimal place.
| Alvaraz Company | ||||
| Comparative Balance Sheet | ||||
| For the Years Ended December 31 | ||||
| Current year Amount |
Current year Percent |
Previous year Amount |
Previous year Percent |
|
| Current assets | $295,500 | __% | $169,970 | __% |
| Property, plant, and equipment | 591,000 | __% | 546,860 | __% |
| Intangible assets | 98,500 | __% | 22,170 | __% |
| Total assets | $985,000 | __% | $739,000 | __% |
| Current liabilities | $187,150 | __% | $110,850 | __% |
| Long-term liabilities | 413,700 | __% | 302,990 | __% |
| Common stock | 108,350 | __% | 110,850 | __% |
| Retained earnings | 275,800 | __% | 214,310 | __% |
| Total liabilities and stockholders' equity | $985,000 | __% | $739,000 | __% |
2.
Horizontal Analysis of the Income Statement
Income statement data for Winthrop Company for two recent years ended December 31, are as follows:
| Current Year | Previous Year | ||||
| Sales | $702,000 | $540,000 | |||
| Cost of goods sold | 588,800 | 460,000 | |||
| Gross profit | $113,200 | $80,000 | |||
| Selling expenses | $33,600 | $28,000 | |||
| Administrative expenses | 30,720 | 24,000 | |||
| Total operating expenses | $64,320 | $52,000 | |||
| Income before income tax | $48,880 | $28,000 | |||
| Income tax expenses | 19,600 | 11,200 | |||
| Net income | $29,280 | $16,800 | |||
a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place.
| Winthrop Company | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31 | ||||
| Current year Amount |
Previous year Amount |
Increase (Decrease) Amount |
Increase (Decrease) Percent |
|
| Sales | $702,000 | $540,000 | $ | % |
| Cost of goods sold | 588,800 | 460,000 | % | |
| Gross profit | $113,200 | $80,000 | $ | % |
| Selling expenses | $33,600 | $28,000 | $ | % |
| Administrative expenses | 30,720 | 24,000 | % | |
| Total operating expenses | $64,320 | $52,000 | $ | % |
| Income before income tax | $48,880 | $28,000 | $ | % |
| Income tax expense | 19,600 | 11,200 | % | |
| Net income | $29,280 | $16,800 | $ | % |
b. The net income for Winthrop Company increased between years. This increase was the combined result of an ______ in sales and _____ percentage _____ in cost of goods sold. The cost of goods sold increased at a ______ rate than the increase in sales, thus causing the percentage increase in gross profit to be ______ than the percentage increase in sales.
In: Accounting