Companies likely face in manufacturing products

Assignment Help Financial Management
Reference no: EM131347591

For years it has been cheaper to manyfacture many products overseas than in the United States. Labor is still less expensive overseas than in the U.S., but the cost difference has been decreasing.

Late in 2012, Apple anounced it would be building some Mac computers in the United States for the first time in about 10 years. It will be investing $100 million in 2013 in these new U.S. manufacturing facilities.

In 2013 Google's Motorola announced that it would be assembling its Moto X smart phone in Forth Worth, Texas, making it the first smartphone assembled in the United States. Also, in 2013 Lenovo opened a new ThinkPad manufacturing facility in North Carolina. For these companies, it is likely that the capitalbudgeting proposals for the U.S manufacturing sites did not meet the company's standard capital budgeting criteria. Yet the companies are still opting to manufacture some products in the United State, where it is, for the time being, more expensive than other locations.

Questions:

1. Why did Apple make an announcment in 2012 about its manufacturing operations upcoming in 2013?

2. What qualitative factors would likely have been considered when Apple, Google, and Lenovo made their decisions to invest in U.S. manufacturing facilities? In other words, why would Apple, Google and Lenovo decide to manufacture products in the United States when all of these companies have well-established facilities and supply chains in China.

3. What chalenges will these companies likely face in manufacturing products in U.S plants?

4. What stakeholders are impacted either positively or negatively, from the decision to manufacture in the United States? How are these stakeholders impacted?

5. What ethical issues potentially arise from not producing in the lowest cost location?

Reference no: EM131347591

Questions Cloud

Initial cost associated with this project : Klingman’s LTD. is considering replacing one of its production machines with a new piece of equipment. The existing equipment was purchased 5 years ago for $70,000. At that time it was estimated to have a useful life of 10 years. The firm’s marginal ..
Economy to function properly is efficiency in the markets : We learn in finance that what allows our economy to function properly is "efficiency" in the markets. The use of financial intermediaries allows capital to flow from savers to borrowers. The savers receive interest on their investments and the borrow..
What is the additional year-three cash flow : The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,040,000, and it would cost another $22,500 to install it. What is the Year-0 net cash flow? What are the net operating cash flow..
When paying a bill with pre and post- tax dollars : Determine the amount of money you have left when paying a bill with pre- and post- tax dollars. Your earnings are $50,000, the bill is $6,000 and your tax rate is 20%. Determine the amount of money you have left when paying a bill with pre- and post-..
Companies likely face in manufacturing products : For years it has been cheaper to manyfacture many products overseas than in the United States. Labor is still less expensive overseas than in the U.S., but the cost difference has been decreasing. Why did Apple make an announcment in 2012 about its m..
Deduct against business income : A calendar-year corporation incurs $32,000 of start-up costs. If the corporation begins business on October 1, 2016, what is the maximum amount of the $32,000 of start-up costs that it can deduct against business income in 2016?
Compute the economic break even : The management Dior Corp. is planning to invest in a machine which has a four-year life. The initial investment of the project is $8,000, the annual addition to working capital is equal to $4,000. The fixed cost would be $4,000. Compute the economic ..
Local construction company had operating revenues : Last year a local construction company had operating revenues of $1,240,000, operating costs of $520,000 and a CCA of $98,000 based upon existing assets. The beginning of that same year the company bought essential new equipment for $130,000. This eq..
What are the break-even levels of ebit for each plan : Haskell Corp. is comparing two different capital structures. Plan I would result in 12,000 shares of stock and $100,000 in debt. Plan II would result in 7,200 shares of stock and $160,000 in debt. Assuming that the corporate tax rate is 40 percent, w..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Netscrape communications does not currently pay dividend

Netscrape Communications does not currently pay a dividend. You expect the company to begin paying a $2.6 per share dividend in 15 years, and you expect dividends to grow perpetually at 3.6 percent per year thereafter. If the discount rate is 13 perc..

  Discuss the differences between eurocurrency eurobonds

Discuss the differences between Eurocurrency, Eurobonds, and Eurocredits.

  Take bet on the yield spread between two bonds

Assume that you wish to take a bet on the yield spread between two bonds: a 10-year corporate bond rated BB and a 10-year Treasury bond. Assume that you believe the economy is going to get much worse in the future, and you wish to make your bet based..

  What price to sell them that product

If you are renewing a contract with a company where inflation is expected to occur, would you increase or decrease the products sold there? You expect payments with their currency. How would you determine when to get paid and at what price to sell th..

  What is the aftertax salvage value

A 5-year project requires the initial purchase of a $345,000 machine. This machine has a 6-year life and will be depreciated straight-line to zero. At the end of the project, the equipment can be sold for $79,000. The tax rate is 35 percent. What is ..

  What is meant by the term sales mix

What is meant by the term sales mix? What assumption is usually made concerning sales mix in CVP analysis?

  Two different bonds currently outstanding

The Morgan Corporation has two different bonds currently outstanding. Bond M has a face value of $30,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $1,400 every six months over the subsequent eight years, a..

  What is your expected rate of return on this portfolio

As an investor, you saw an opportunity to invest in a new security with expected rate of return of 20%. Wanting to invest more than you had, you sold another security short with an expected rate of return of 6%. The total amount you sold short was $2..

  Calculate the future value of this ordinary annuity

James Smith has a 10-year ordinary annuity that pays $1,500 every 6 months and has an annual percentage rate (APR) of 7.5%. Calculate the future value of this ordinary annuity. Assuming this was an annuity due, calculate the future value of this annu..

  Calculate the firms net income

Garden Pro Corporation has sales of 4,279,540; income tax of $509,967; the selling, general, and admin expenses of $284,673; depreciation of $340,470; cost of goods sold of $,619,760; and interest expense of $180,429. Calculate the firm’s net income.

  Modified accelerated cost recovery system

The following facts are presented on an opportunity to invest in Machine A: Cost of equipment is $200,000. The machine has an expected 4-year useful life; it will be depreciated according to the 3-year Modified Accelerated Cost Recovery System (MACRS..

  Annual effective rate of interest

If Gertrude have 10,000 now. What would Gertrude have in the bank at the end of three years if the annual effective rate of interest were 0.112998 + .09 for each of the three years?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd