answer in 30 mins. A1 CAPITAL BUDGETING WITH INCOME TAXES2 Montreal Paper Company must purchase a paper sorter to replace its existing one on January 1, 2022.3 This is an essential investment because manual sorting is too demanding and causes physical problems for employees.BDEGHKNP4 Two models that would adequately meet the company's needs are the Price and Allen models.5 Information related to each model includes:7PriceAllen8Cost of machines$47,500 $95,000Working Capital neededSalvage valueLife - years20,000 $$925,00010$10,0001188.12Annual savings of operating costs$24,000 $40,00013CA30%14Income Tax rate25%After-tax Cost of capital1512%1617 Required:18 A) Compute the after-tax net present value, internal rate of return, payback periods and profitability index for both models using the total-cost approach.19PriceAllen2021YEARAnnual Net CashYEARAnnual Net22FlowCash Flow231/1/221/1/222412/31/2212/31/2212/31/2312/31/2412/31/2512/31/262512/31/232612/31/242712/31/252812/31/262912/31/2712/31/273012/31/2812/31/283112/31/2912/31/293212/31/2912/31/2933

Net Present Value=(Present Value of Cash Inflows-Present Value of Cash Outflows) IRR is a rate at…

Answered: CAPITAL BUDGETING WITH INCOME TAXES…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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E-12 At Gems in the Rough, a jewelry company, the engraving department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $56,000 per year, to ease the problem. Using the extra worker, the company will be able to engrave 8,000 more units per year. The selling price per unit is $16. The cost per unit currently is $11.85 as shown: (Refer to attached image) What is the annual financial impact of hiring the extra worker for the bottleneck process?
4. A regional super market chain is deciding whether to install a machine in each of its stores. Each machine costs $250,000. Projected income per machine is as follows: Figs are all in $ Year 1 2 3 4 5Sales 250,000 300,000 300,000 250,000 250,000Operating Expenses 200,000 200,000 200,000 200,000 200,000Depreciation 50,000 50,000 50,000 50,000 50,000Accounting Income 0 50,000 50,000 0 0 a) Why would the store continue to operate a machine in Year 4 and 5 if it produces no profits?b) What are the cash flows for investing in a machine? Assume each machine is completely depreciated and has no salvage value at the end of its 5 years life.
Waterways Continuing Problem 20 a, b1-b2 (Part 2) Waterways has discovered that a small fitting it now manufactures at a cost of $1.00 per unit could be bought elsewhere for $0.83 per unit. Waterways has fixed costs of $0.20 per unit that cannot be eliminated by buying this unit. Waterways needs 452,000 of these units each year. If Waterways decides to buy rather than produce the small fitting, it can devote the machinery and labor to making a timing unit it now buys from another company. Waterways uses approximately 400 of these units each year. The cost of the unit is $12.56. To aid in the production of this unit, Waterways would need to purchase a new machine at a cost of $2,321, and the cost of producing the units would be $9.70 a unit. ] Your answer is incorrect. Try again. Without considering the possibility of making the timing unit, evaluate whether Waterways should buy or continue to make the small fitting. The company should buy the fitting. Incremental cost / (savings) will…
Waterways Continuing Problem 20 a, b1-b2 (Part 2) Waterways has discovered that a small fitting it now manufactures at a cost of $1.00 per unit could be bought elsewhere for $0.83 per unit. Waterways has fixed costs of $0.20 per unit that cannot be eliminated by buying this unit. Waterways needs 452,000 of these units each year. If Waterways decides to buy rather than produce the small fitting, it can devote the machinery and labor to making a timing unit it now buys from another company. Waterways uses approximately 400 of these units each year. The cost of the unit is $12.56. To aid in the production of this unit, Waterways would need to purchase a new machine at a cost of $2,321, and the cost of producing the units would be $9.70 a unit. |Your answer is incorrect. Try again. Without considering the possibility of making the timing unit, evaluate whether Waterways should buy or continue to make the small fitting. The company should buy the fitting. Incremental cost / (savings) will…
Walden Industries is considering investing in production-management software that costs $600,000, has $67,000 residual value, and leads to cost savings of $2,300,000 per year over its five-year life. Calculate the average amount invested in the asset that should be used for calculating the accounting rate of return. Question content area bottom Part 1 A. $333,500 В. $667,000 С. $67,000 D. $600,000
Ch. 13 McDonald's, Inc. is considering adding a new restaurant. The restaurant, CosMc's will offer standard McDonald's products in addition to other more eclectic offerings. Below is information on the potential financial impact to the company each month: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses $ 270,000 $ 145,000 $ 70,000 $ 20,000 In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $15,000 of the fixed manufacturing expenses and all of the fixed selling and administrative expenses are avoidable and can be avoided if the company decides NOT to open the new chain. The financial advantage (disadvantage) for the company of adding the new line would be: O $90,000 $50,000 $20,000 $35,000
ex3. Differential Analysis for Sales Promotion Proposal Sole Mates Inc. is planning a one-month campaign for July to promote sales of one of its two shoe products. A total of $100,000 has been budgeted for advertising, contests, redeemable coupons, and other promotional activities. The following data have been assembled for their possible usefulness in deciding which of the products to select for the campaign: Tennis Shoe Walking Shoe Unit selling price $85 $100 Unit production costs: Direct materials $19 $32 Direct labor 8 12 Variable factory overhead 7 5 Fixed factory overhead 16 11 Total unit production costs $50 $60 Unit variable selling expenses 6 10 Unit fixed selling expenses 20 15 Total unit costs $76 $85 Operating income per unit $9 $15 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 7,000 additional units of tennis…
3.1 REQUIRED Calculate the following from the information given below: 3.1.1 Break-even quantity. 3.1.2 Break-even value using the marginal income 3.1.3 Margin of safety 3.1.4 Total Marginal Income and Net Profit/Loss if the sales price is reduced to R90 per unit.INFORMATION Dynamo Ltd manufactures calculators. The following information was extracted from the budget for the year ended 31 December 2023: Sales volume 20 000 units Selling price per unit R100 Variable manufacturing cost per unit R50 Variable marketing cost per unit 10% of the unit selling price Fixed manufacturing cost R400 000 Fixed administration and marketing costs R200 000
QUESTION 3 3.1 REQUIRED Use the information provided below to answer the following questions: Calculate the number of units that must be sold to break even. Calculate the number of units that must be sold to achieve a net profit of R675 000. INFORMATION The following information was extracted from the budget of a project of Manor Limited for the year ended 31 December 2020. Only one product is produced and sold from this project. Estimated sales for the financial year Selling price per unit Direct materials cost per unit Direct labour cost per unit Variable manufacturing overheads cost per unit Fixed manufacturing overhead costs Selling and administrative costs: Fixed Variable 6 000 units R1 800 R630 R315 R180 R540 000 R270 000 7.5% of sales PROGRAMME HANDBOOK: JULY 2020 INTAKE MANCOSA: POSTGRADUATE DIPLOMA IN PROJECT MANAGEMENT 3.2 REQUIRED Use the information provided below to calculate the following variances. In each case state whether the variance is favourable or unfavourable.…
3. FedExpress has the following information about its truck fleet miles and operating costs:Year Miles Operating2017 400,000 $256,0002018 480,000 $280,0002019 560,000 $320,000What is the best estimate of total costs using the high-low method if the expected fleet mileage for 2020 is 500,000 miles?A. $288,000.B. $296,000.C. $256,000.D. $320,000. Give workings for your answer
3 https://pwcollege.brightspace.com/d21/le/content/6894/viewContent/7549/View?ou=6894 T 01 2 Cost Pay Back and NPV A company is considering investing in a project to expand the facilities for customers. There are two different ways of doing this and they have each been costed. Projected net cash flow into the company has also been estimated. Project 2 £115,000.00 Year Expected Contributions 1 3 4 Automatic Zoom 5 Project 1 £120,000.00 6 £50,000.00 £40,000.00 £50,000.00 £45,000.00 £50,000.00 £50,000,00 £40,000.00 £40,000.00 £45,000.00 £30,000.00 a. If the company used the payback method, when does each project pay for itself? b. If the company were to employ a discount rate of 12%, what would be the NPV of each project? CIRR to > A view as TexT DOWI £50,000.00 £30,000.00
Question 3Study the scenario and complete the questions that follow:Nonna Greco LimitedNonna Greco Limited manufactures and sells Italian HIP sunglasses. The following information relatesto January 2020:Units manufactured and sold: 500Income statement:RSales 261 500Less: Manufacturing costs 223 000Material 75 000Labour 50 000Manufacturing overheads (@ R20 per machine hour) 98 00038 500Less: Selling and administrative expenses (60% fixed) 17 500Net profit 21 000The following changes will come into effect on 1 February 2020: A sales price increase of 10%, resulting in a 5% decrease in sales volume. Due to negotiations with the labour union, the labour rate per hour will increase by 6%. It is expected that material costs will increase by 10%.The variable budget for manufacturing overheads indicates a total cost ofR94 400 at a capacity utilisation of 4 600 hours.Source: Hunde, T. (2020)Required:3.1 Calculate the total marginal income and marginal income per unit for the year ended 1…

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