+1-415-670-9189
info@expertsmind.com
Analysis of the investment
Course:- Financial Management
Reference No.:- EM13224




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Financial Management

It is analysed projected financial data and assessed its value to making a physical expansion decision. As you have heard in the media presentation from CFO Mary Scott, Anthony's Orchard is faced with another type of expansion decision. CEO Bob Frost is eager to expand the product line to include apple juice.

Of course, a decision to expand a product line has very many variables. In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice). You also will investigate the value of a number of financial measurements. Ultimately, you will develop a recommendation for the company, and this analysis will help you to support that recommendation.

To prepare for this Individual Assignment:

Review the Anthony's Orchard case study in the unit resources.

Consider the following:

The company, according to Anthony's Orchard Strategic Plan, is hoping to purchase an apple press in order to start a new line of prepared apple products-apple juice.

The company estimates this new product offering will generate an additional $95,000 net income per year and estimated cash flows of $90,000 per year. The cost of the apple press will be $950,000 and this expenditure, as shown in the budgeted cash flow statement, is expected to take place in the fourth quarter of 2012.

The apple press is expected to have a seven-year life and no salvage value.

The company's revenue goal for 2015 is $25 million.

The company requires a 10% return on investment for new capital investments and the company uses a cost of capital of 8%.

Assume a minimum 12% gross margin on revenue.

Answer the following:

Do you think the company's revenue goal of $25 million by 2015 is realistic?

Explain how purchase of the apple press might affect the company's revenue goals. Based on this information, explain whether Anthony's Orchard should invest in the apple press. Support your response with relevant information provided in the case study, the previous year's financials for 2010, the current year's financials for 2011 and the budgeted year's financials for 2012.

Draft budgeted financial statements from 2012 to 2015 under both options that provide a realistic assessment of expected revenues and costs, and explain how you have arrived at these budgeted figures.

Case study:- case_study_for_03_ind part.doc




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
Treasury bills are currently paying 9 percent and the inflation rate is 2.90 percent. What is the approximate real rate of interest? (Round your answer to 2 decimal places. (e
Management is considering the purchase of a new machine with a purchase price of $900,000. If purchased employees will complete a series of training sessions that are expected
Jackson Electric Company has borrowed $27,850 from its bank at an annual rate of 8.5 percent. The company plans to repay the loan in eight equal installments. What is the annu
Assume a market index represents the common factor and all stocks in the economy have a beta of 1. Firm-specific returns all have a standard deviation of 39%. Suppose an analy
Carolina Fastener, Inc., makes a patented marine bulkhead latch that wholesales for $6.12. Each latch has variable operating costs of $3.42. Fixed operating costs are $49,600
What are the basic arguments for increasing capital requirements at large commercial banks? In what ways will depositors, stockholders, and society in general benefit? How mig
The market value of the equity of Ginger, Inc., is $670,000. The balance sheet shows $42,400 in cash and $216,200 in debt, while the income statement has EBIT of $99,200 and a
Preparing a cash budget is important because: Select one: A. It provides an early warning system with respect to future shortages of cash B. It provides a standard against whi