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The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 40 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. |
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | ||||||
| Investment | $ | 37,000 | ||||||||
| Sales revenue | $ | 19,000 | $ | 19,500 | $ | 20,000 | $ | 17,000 | ||
| Operating costs | 4,000 | 4,100 | 4,200 | 3,400 | ||||||
| Depreciation | 9,250 | 9,250 | 9,250 | 9,250 | ||||||
| Net working capital spending | 430 | 480 | 530 | 430 | ? | |||||
| a. |
Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.) |
| Year 1 | Year 2 | Year 3 | Year 4 | ||
| Net income | $ | $ | $ | $ | |
| b. |
Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.) |
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | |
| Cash flow | $ | $ | $ | $ | $ |
| c. |
Suppose the appropriate discount rate is 12 percent. What is the NPV of the project? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
| NPV | $ |
In: Finance
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The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 35 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. |
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | ||||||
| Investment | $ | 44,000 | ||||||||
| Sales revenue | $ | 22,500 | $ | 23,000 | $ | 23,500 | $ | 20,500 | ||
| Operating costs | 4,700 | 4,800 | 4,900 | 4,100 | ||||||
| Depreciation | 11,000 | 11,000 | 11,000 | 11,000 | ||||||
| Net working capital spending | 500 | 550 | 600 | 500 | ? | |||||
| a. |
Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.) |
| Year 1 | Year 2 | Year 3 | Year 4 | ||
| Net income | $ | $ | $ | $ | |
| b. |
Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.) |
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | |
| Cash flow | $ | $ | $ | $ | $ |
| c. |
Suppose the appropriate discount rate is 13 percent. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| NPV | $ |
In: Finance
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The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 34 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. |
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | ||||||
| Investment | $ | 28,000 | ||||||||
| Sales revenue | $ | 14,500 | $ | 15,000 | $ | 15,500 | $ | 12,500 | ||
| Operating costs | 3,100 | 3,200 | 3,300 | 2,500 | ||||||
| Depreciation | 7,000 | 7,000 | 7,000 | 7,000 | ||||||
| Net working capital spending | 340 | 390 | 440 | 340 | ? | |||||
| a. |
Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.) |
| Year 1 | Year 2 | Year 3 | Year 4 | ||
| Net income | $ | $ | $ | $ | |
| b. |
Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.) |
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | |
| Cash flow | $ | $ | $ | $ | $ |
| c. |
Suppose the appropriate discount rate is 12 percent. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| NPV | $ |
In: Finance
In: Economics
What are some of the key characteristics of a professional letter, such as an introductory letter by which a company seeks to attract clients and initiate a business relationship with owner firms? Focus your discussion on the characteristics that primarily define the letter content. Apart from effective communication with potential customers, what do you think
In: Civil Engineering
Question 1
Provide responses to the following questions:
Explain why the accounts receivable turnover ratio is helpful in evaluating the liquidity of a company?
Why is the amount reported on the balance sheet for receivables usually not the same as the sum of the amounts that customers have promised to pay? (hint: Explain bad debt expense / ADFA)
In: Accounting
The SB Construction Company has two divisions. The president, Su, manages the roofing division. Su has delegated authority and responsibility for management of the modular manufacturing division to Jon Gee. The company has a competent accounting staff and a full-time internal auditor. Unlike Su, however, Gee and his secretary handle all the bids for manufacturing jobs, purchase all the materials without competitive bids, control the physical inventory of materials, contract for shipping, supervise the construction work, bill the customers, approve all bid changes, and collect the payment from customers. With Su’s tacit approval, Gee has asked the internal auditor not to interfere with his busy schedule.
Required:
a. Discuss the internal control in this fact situation and identify fraud risks that could arise.
b. Assume you are the independent external auditor of SB. Explain your responsibilities to report on this situation to SB’s management and board of directors.
In: Accounting
Communication
Wholesome and Happy Foods is a farm-to-family grocery store located in the Pacific Northwest. The company recently installed four self-checkout lanes that allow customers to scan their own groceries and pay for their purchases using an automated checkout kiosk. The kiosks are monitored by a single attendant. In recent weeks, management has become concerned that some customers are not scanning all of the items that they bring through the self-checkout lanes.
Discuss your thoughts of the above, suggesting features and capabilities for the kiosks that would serve as control procedures, ensuring that all items brought through the self-checkout lanes are properly scanned and purchased. Further, do you think that the company will incur losses from people, who don't choose to scan one or two items here and there? Can the attendant even tell? Does management have a valid concern? How would they be able to tell that items have been stolen in this manner?
In: Accounting
X Company was created on September 1 and prepares monthly financial statements. During September, X Company issued stock to investors for $98,000, borrowed $83,000 from a bank, bought merchandise that it planned to sell, paying $3,416 and promising to pay $5,166 in October, bought equipment, paying $5,100 and promising to pay $4,800 in December, paid $3,603 that it had promised to pay to suppliers for previous purchases on account, sold merchandise, receiving cash of $16,879 and promises to pay from customers of $4,881; the merchandise that was sold had cost $10,880, paid off a loan for $3,370 [ignore interest], received $3,727 from customers who had promised to pay, paid $5,470 for wages, utilties, and other miscellaneous expenses. 4. What were total assets on September 30 [assume no adjusting entries on September 30]? Tries 0/2 5. What was Net Income in September [assume no adjusting entries on September 30]?
In: Accounting
The Cold Zone is a small manufacturer of refrigerated food cases
for grocery stores serving a regional area in the Northeast of the
United States. Presently, their product lines consists refrigerated
cases for the deli department and the fresh meat departments.
They would like to add 2 new products to their company in order to
grow their business and add new customers but they aren't sure what
to do or where to begin.
You are a consultant who has been hired to make a recommendation on
the new products and the corresponding new customers.
Your task:
Make a proposal to The Cold Zone, Your proposal should include the following:
In: Operations Management