Q3/A manufacturing company leases a building for $120000 per year for its manufacturing facilities. In addition, the machinery in this building is being paid for in installments of $30000 per year. Each unit of the product produced costs $15 in labor and $10 in materials. The product can be sold for $50. 1. How many units per year must be sold for the company to breakeven? 2. If 10000 units per year are sold, what is the annual profit? 3. If the selling price is lowered to $40 per unit, how many units must be sold each year for the company to earn a profit of $150000 per year?
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- Big Sky Mining Company must install 1.5 million of new machinery in its Nevada mine. It can obtain a bank loan for 100% of the purchase price, or it can lease the machinery. Assume that the following facts apply. (1) The machinery falls into the MACRS 3-year class. (2) Under either the lease or the purchase, Big Sky must pay for insurance, property taxes, and maintenance. (3) The firms tax rate is 25%. (4) The loan would have an interest rate of 15%. It would be nonamortizing, with only interest paid at the end of each year for four years and the principal repaid at Year 4. (5) The lease terms call for 400,000 payments at the end of each of the next 4 years. (6) Big Sky Mining has no use for the machine beyond the expiration of the lease, and the machine has an estimated residual value of 250,000 at the end of the 4th year. a. What is the cost of owning? b. What is the cost of leasing? c. What is the NAL of the lease?Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.A manufacturing company leases a building for $100,000 per year for its manufacturing facilities. In addition, the machinery in this building is being paid for in installments of $20,000 per year. Each unit of the product produced costs $15 in labor and $10 in materials. The product can be sold for $40. Use this information to solve, If 10,000 units per year are sold, what is the annual profit? (a) $280,000 (b) $50,000 (c) $150,000 (d) −$50,000 (e) $30,000. Select the closest answer.
- XYZ Company is building an addition (building and machinery) to its manufacturing plant to increase its production capacity. The cost of the addition is $1,230,000. Its lender is willing to make a loan to the company at 70% loan to value, for 20 years, payments made monthly, and at an interest rate of 5% APR. a. How much of the total cost is CAPEX and how much of the total cost is OPEX? b. How much cash must the company have to make the down payment? c. What is the monthly payment?The owner of an industrial warehouse receives US$700,000. per year for leases. Monthly operation and maintenance expenses are US 160D0. The remaining useful life of the building is 9 years, at the end of which the building can be sold for US$5,000.0G0 The building has already been fully depreciated, also consider the 15% employee participation and a tax on 10% rent.The project to convert the infrastructure into an office complex that will generate annual revenues of US$600.0G0 and annual operation and maintenance costs representing 35% of profits is being studied.To do this, U5 1,000,000 must be invested in the remodeling of the building that lasts two years (equal expense each year). The total of the improvements can be depreciated over 7 years straight line, with no residual value. The remodeling will allow the building to be used for 7 years, at the end of which it can be sold for 3,000,000 Perform incremental cash flow in excel and graph with bar chart.A company wants to buy a machine with a cash sale price of 750,000 TL. The machine is economicallife is 4 years and at the end of this period the estimated scrap value will be 100,000 TL. Annual maintenance cost 20.000 TLAs per the contract, there will be no increase in maintenance costs for 4 years. From products to be produced by machine300.000 TL sales revenue will be obtained in the first year and sales revenues will increase by 15% in the following yearsIt is estimated. The labor and material expenses in the first year are estimated to be 100,000 TL and the labor costs in the following years.and supplies costs will increase by 10% each year. If the expected return rate from this investment is 20%,Calculating the present value (NPV) ”and whether the investment in machinery will be economical according to this methodspecify
- A new machine can be purchased for $1,500,000. It will cost $45,000 to ship and $55,000 to install the machine. The new machine will replace an older machine that is fully depreciated and will be sold for $125,000. The firm’s income tax rate is 40%. What is the initial outlay (IO) for the new machine? $1,525,000 $1,600,000 $1,675,000 $1,725,000C12. A contractor gets revenue of $30,000 every year on the below earthmoving contract. Buy a heavy-duty truck for $35,000, salvage is expected to be $3000 at the end of the vehicle’s 5-year MACRS depreciable life. Maintenance is $1000/year, monthly operating expenses are $1000. Is it worth signing the contract? Justify. The expected RoR is 9%.After spending $ 9 comma 100 on client-development, you have just been offered a big production contract by a new client. The contract will add $ 199 comma 000 to your revenues for each of the next five years and it will cost you $ 104 comma 000 per year to make the additional product. You will have to use some existing equipment and buy new equipment as well. The existing equipment is fully depreciated, but could be sold for $ 53 comma 000 now. If you use it in the project, it will be worthless at the end of the project. You will buy new equipment valued at $ 27 comma 000 and use the 5-year MACRS schedule to depreciate it. It will be worthless at the end of the project. Your current production manager earns $ 79 comma 000 per year. Since she is busy with ongoing projects, you are planning to hire an assistant at $ 42 comma 000 per year to help with the expansion. You will have to immediately increase your inventory from $ 20 comma 000 to $ 30 comma 000. It will return to $ 20…
- 1.-DO IT IN EXCEL, AND SHOW THE FORMULAS If the company purchases factory equipment, its $719,000 cost will be financed with a five-year 18.4% interest loan that requires equal annual payments including principal and interest. The bank charges a 0.75% commission. The equipment will be depreciated with a useful life of 5 years. The company will pay $12,000 per year for maintenance services. The company plans to keep the machine even after its recovery period.What is the total amount paid to the bank? A) 1'160,034.00 B) None of the above C) 719,000.00 D) $938,672.81 (Choose one option)Wrangler Western has some of its jeans stone-washed under a contract with an independent contractor, Almos Garment Corp. If Almos' operating cost is $38,000 per year for years 1 and 2 and then it increases by 5% per year through year 10, what is the year-zero present worth of the machine operating cost at an interest rate of 14% per year? The present worth of the machine operating cost is determined to be $6. A contractor can buy dump trucks for P800,000.00 each(surplus) or rent them for P1,189 per truck per day. The truck has a salvage value of P100,000 at the end of its useful life of 5 years. Annual cost of maintenance is P20,000.00. If money is worth 14% per annum, determine the number of days per year a truck must be used to warrant the purchase of the truck. A. 200. B. 199 C. 145 D. 102