Reference no: EM131340896
J. Smythe, Inc., manufactures fine furniture. The company is deciding whether to introduce a new mahogany dining room table set. The set will sell for $6,800, including a set of eight chairs. The company feels that sales will be 2,500, 2,650, 3,200, 3,050, and 2,800 sets per year for the next five years, respectively. Variable costs will amount to 47 percent of sales, and fixed costs are $1.87 million per year. The new tables will require inventory amounting to 12 percent of sales, produced and stockpiled in the year prior to sales. It is believed that the addition of the new table will cause a loss of 500 tables per year of the oak tables the company produces. These tables sell for $4,100 and have variable costs of 42 percent of sales. The inventory for this oak table is also 12 percent of sales. The sales of the oak table will continue indefinitely. J. Smythe currently has excess production capacity. If the company buys the necessary equipment today, it will cost $15 million. However, the excess production capacity means the company can produce the new table without buying the new equipment. The company controller has said that the current excess capacity will end in two years with current production. This means that if the company uses the current excess capacity for the new table, it will be forced to spend the $15 million in two years to accommodate the increased sales of its current products. In five years, the new equipment will have a market value of $3.8 million if purchased today, and $6.3 million if purchased in two years. The equipment is depreciated on a seven-year MACRS schedule. The company has a tax rate of 35 percent, and the required return for the project is 9 percent. MACRS schedule
Calculate the NPV of the new project.
|
What is the after-tax cash flow from the sale
: Consider the following values. NOIn+1: $2.8 million. Cap rate: 7.5%. Brokerage commission: 3%. Remaining mortgage balance: $12 million. Remaining book value: $14 million. Total depreciation taken: $4.9 million. Recapture tax (for depreciation take..
|
|
Why is football the most popular sport in america
: WHY IS FOOTBALL THE MOST POPULAR SPORT IN AMERICA? - Presentation will be evaluated on content
|
|
Implement the structure circular queue with array
: Implement the necessary methods for adding, removing the element in succession and retrieving without removing the element in succession. If an operation is invalid, throw an appropriate exception.
|
|
Would you make any provision in these two situations and why
: Boss Ltd specialises in the design and manufacture of an exclusive sports car.- Would you make any provision in these two situations? Why?
|
|
Calculate the npv of the new project
: J. Smythe, Inc., manufactures fine furniture. The company is deciding whether to introduce a new mahogany dining room table set. The set will sell for $6,800, including a set of eight chairs. The company feels that sales will be 2,500, 2,650, 3,20..
|
|
Explain how your plan would support the teaching approach
: Outline a specific plan for addressing the discipline or guidance scenario. Explain how your plan would support the teaching approach/setting. Describe how you will create an effective partnership with parents to address the discipline or guidance sc..
|
|
Implement the data structure deque
: Create a DynamicStack class to implement dynamically a stack (like a linked list, where each element knows its previous element and the stack knows its last element). Add methods for all commonly used operations like Push(), Pop(), Peek(), Clear()..
|
|
Calculate the deferred tax provision
: Calculate the deferred tax provision which is required at 31 December 2004 and the charge for income taxes to the income statement for 2004.
|
|
Nominal net cash flow
: However, because of the competition from the plastic alternatives, it sees no scope for increasing the price per unit from its current level of $42. Based on these forecasts, the nominal net cash flow, four years from now, is forecast to be closes..
|