TC  Shipping Ltd has decided to purchase a machine to augment the company's installed capacity to meet the growing demand for its products. There are three machines under consideration of the management. The relevant details including estimated yearly expenditure and sales are given below: All Sales are on cash. Corporate income tax rate is 40%. Interest on Capital may be assumed to be 10%.

Particulars	Machine 1	Machine 2	Machine 3
Initial Investment Required	3,00000	3,00000	3,00000
Estimated Annual Sales	5,00,000	4,00,000	4,50,000
Cost of Production(Estimated):
Direct Materials	40,000	50,000	48,000
Direct Labor	50,000	30,000	36,000
Factory overheads	60,000	50,000	58,000
Administration costs	20,000	50,000	'15,000
Selling and Distribution Costs	10,000	10,000	10,000

The economics life of Machine 1 is 2 years, while it is 3 years for the other two. The scrap values are Rs.40, 000, Rs. 25,000, and Rs.30, 000 respectively. Suggest the most profitable investment based on various project appraisal techniques.

 

 

Posted Date: 3/9/2013 2:30:05 AM | Location : United States

Ask an Expert

Related Discussions:- Calculate most profitable investment, Assignment Help, Ask Question on Calculate most profitable investment, Get Answer, Expert's Help, Calculate most profitable investment Discussions

Write discussion on Calculate most profitable investment
Your posts are moderated

Write your message here..

Related Questions

Determine the financial requirements of the business, Q. Determine the fina... Q. Determine the financial requirements of the business ? Decisive the Financial Needs: - The initial task of the financial management is to estimate and determine the financia

Define when u.s. dollar weakens in foreign exchange market, What does it me... What does it mean when the U.S. dollar weakens in the foreign exchange market? While the U.S. dollar weakens in the foreign exchange market one U.S. dollar buys smaller amount un

Describe the dividend yield method, Q. Describe the Dividend Yield Method? ... Q. Describe the Dividend Yield Method? Dividend Yield Method: - This process is based on the assumption that when an investor invests in the equity shares of a company he expec

Revenue bonds, Revenue bonds are the securities issued for financing ... Revenue bonds are the securities issued for financing an entity for general      public-purpose. The securities issued for entity financing are backed up with the

No title, discuss the steps in the controlling process discuss the steps in the controlling process

What is purchasing power risk, Q. What is Purchasing Power Risk? Variat... Q. What is Purchasing Power Risk? Variations in the returns are caused also by the loss of purchasing power of currency. Inflation is the reason behind the loss of purchasing p

Explain capital in a money market or capital market, Question 1: (a) Ad... Question 1: (a) Advise a risk averse individual whether to invest his capital in a money market or capital market. Justify your answer. (b) Explain five types of Money marke

Show the marketing issues, a) Cultural exports are the commercial transfer ... a) Cultural exports are the commercial transfer of values and ideas from one country to another. Canned crab meat is a popular local fragility in Thailand and Viya Crab Products Co

Legal obligations of corporation is the cost of equity zero, If dividends p... If dividends paid to common stockholders are not legal obligations of a corporation, is the cost of equity zero? Explain your answer. Even though common stockholders don't have

Share holder value maximizations , Question based on Share Holder Value Max... Question based on Share Holder Value Maximizations ? Hatsun Agro Product limited (HAPL) over the last Five years has shown a steady growth in its sales revenue and profits. The