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- Part B: QI Proposal Quantum International (QI) would manufacture, sell and distribute the valves. QI has a long history of success in manufacturing high performance valves. However, Piscataway does not expect them to be as successful in marketing as FPS resulting in lower payments from customers as shown below. In the QI proposal, Piscataway would only have operating cash outflows related to administrative expenses as shown below. Year Cash In-Flow (Payments from Customers) Total Cash Outflow Explain your choice. 1 $3,255 $315 Piscataway would make a payment to QI of QI would receive an annual fee of These payments are not included in the Total Cash Flow above. (i) What required rate of return should Pisctataway use to evaluate the QI proposal? (iii) Should Piscataway choose FPS or QI? 2 $6,610 $580 15% (ii) What would be Piscataway's net operating cash flow if they choose QI? 3 $11,005 $935 $10,000 in Year 0 60% of payments to customers to compensate them for manufacturing and…Question 1 You recently went to work for Ndejiku Company, a supplier of auto repair parts used in the after-market with products from Daimler, Chrysler, Ford, and other automakers. Your boss, the chief financial officer (CFO), has just handed you the estimated cash flows for two proposed projects. Project X involves adding a new item to the firm’s ignition system line. Project Y involves an add-on to an existing line, and its cash flows would decrease over time. Both projects have 4-year lives. Here are the projects’ net cash flows (in thousands of kwachas): Year 0 1 2 3 4 Project X -110,000 10,000 60,000 80,000 90,000 Project Y -110,000 90,000 60,000 30,000 10,000 If Ndejiku’s cost of capital is 10%. Advise whether one or both of the projects should be accepted using: Payback period method if Projects are mutually exclusive Projects are Independent of each other Net Present Value (NPV) if projects are independent of each otherThe calculation for assessing the value of a firm's new logistics information system is below. Which of the answers will result in the highest cash flow increase to the company, making it worth the investment. Cash Flow Increase = Invoice Value x (Cost of Capital/365) x Difference in Days in the Order-to-Cash Cycle Group of answer choices If the investment causes a dramatic increasing in the order to cash cycle days If the investment causes a dramatic decreasing the order to cash cycle days If the firm borrows money to make the investment (debt financing) at a very low cost If the investment allows sales to remain stable
- Financial Projection CALMS Ice Cream Delight The current business plan is indicated to require a budget of approximately $70,000 to manage the operational and functional activities of CALMS Ice Cream Delight. The prominent sources of finances are bank loans and the involvement of potential investors. As a bank loan is a suitable alternative for newly established businesses, CALMS Ice Cream Delight intends to obtain one to handle continuing financial activity as this provides numerous benefits, such as inferior interest rates and venture capital which will enable the business to initiate sufficiently. . In addition, the CALMS Ice Cream Delight will also incorporate potential investors privately to mitigate the associated risk factors and gain funding regardless of the concerns related to enterprise success or failure. The business is determined to acquire both types of finances, having the proportion of 50% for each. The start-up summary is prepared for business which is placed in an…Frozen Food Products Cost of Capital Case Assignment This case is due at the beginning of the next class period Please create 2 copies of your answers, one copy to turn in, and one copy to keep for yourself 1 Calculate the unlevered beta (bU) for each of the comparable firms that are in the same industry as Frozen Foods Products 2 Calculate the industry median unlevered beta 3 Estimate the industry discount rate (rU) using the unlevered beta 4 Calculate the operating cash flows, incences Mc Graw Hill ! 1 Arnold Vimka is a venture capitalist facing two alternative investment opportunities. He intends to invest $1 million in a start-up firm. He is nervous, however, about future economic volatility. He asks you to analyze the following financial data for the past year's operations of the two firms he is considering and give him some business advice. Q Variable cost per unit (a) Sales revenue (8,400 units × $31.00) Variable cost (8,400 units x a) Contribution margin Fixed cost Net income Required Required B Company Name Operating leverage 7 2 Required a. Use the contribution margin approach to compute the operating leverage for each firm. b. If the economy expands in coming years, Larson and Benson will both enjoy a 10 percent per year increase in sales, assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. (Note: Since the number of units increases, both revenue and variable cost will…
- MINICASE Planning for Growth at S&S Air periods when Mark and Todd were unable to draw salaries. To After Chris completed the ratio analysis for S&S Air (see Chapter 3), Mark and Todd approached him about planning this end, they would like Chris to prepare a financial plan for for next year's sales. The company had historically used little planning for investment needs. As a result, the company ex- perienced some challenging times because of cash flow prob- lems. The lack of planning resulted in missed sales, as well as the next year so the company can begin to address any outside investment requirements. The income statement and balance sheet are shown here: SAS AIR, INC. 2014 Income Statement Sales $40,259,230 Cost of goods sold 29,336,446 Other expenses 5,105,100 1,804,220 $ 4,013,464 Depreciation EBIT 630,520 $ 3,382,944 1,353,178 $ 2,029,766 Interest Taxable income Taxes (40%) Net income Dividends $ 610,000 Add to retained earnings 1,419,766 S&S AIR, INC. 2014 Balance Sheet Assets…[EXCEL] Investment cash flows: Keswick Supply Company wants to set up a division that provides copy and fax services to businesses. Customers will be given 20 days to pay for such services. The annual revenue of the division is estimated to be $25,000. Assuming that the customers take the full 20 days to pay, what is the incremental cash flow associated with accounts receivable? Please use excel.Problem 2 A company that manufactures many types of plastic products, used packaging and wrapping. If the company's cash flow (in thousand) for one of its product divisions is as shown below. Determine (a) the number of possible I values and (b) all rate of return values between 0% and 100%. Year 0 1 2 3 4 5 6 NCF, $ -30 -2 -6 9 +21 +30 +18 +40
- You begin a new job at Cabrera Medical Supplies. The company is considering a new accounting system, with an initial investment of about half a million dollars for new software and hardware. You are excited for the opportunity to apply your managerial accounting skills regarding screening and preference methods to decide on the best system for the company. Your boss is a little old-school, and when you mention some of the things you learned in managerial accounting, he says. Discounted cash flow methods are not the only way to approach this. I have more of a gut reaction approach that blows most managers out of the water when they become absorbed by discounted cash flow methods (DCF). How would you react and what would you discuss with your boss?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 £30,000.00Computing breakeven sales and sales needed to earn a target profit graphing CVP relationships, performing sensitivity analysis Diversified Investor Group is opening an office in Boise, Idaho, Fixed monthly costs are office rent ($8,000) depreciation on office furniture ($1,700) utilities ($2,400) special telephone lines ($1,500), a connection with an online brokerage service ($2,500), and the salary of a financial planner ($11,900) Variable costs include payments to the financial planner (9% of revenue, advertising (11% of revenue), supplies and postage (4% of revenue), and usage fees for the telephone lines and computerized brokerage service (6% of revenue). Requirements Use the contribution margin ratio approach to compute Diversified’s breakeven revenue in dollars lf the average trade leads to $800 in revenue for Diversified, how many trades must be made to break even? Use the equation approach to compute the dollar revenues needed to earn 2 monthly target profit of $11,200. Graph…