User Account

All Pages

Advise the company whether the machinery should be purchased

Assignment Help Financial Accounting
Reference no: EM131894678

XYZ Ltd. provides you the following information :

1.Purchase Price of New Machinery$1,000,000

2.Installation Expenses $150,000

3.Workers' Training Expenses incurred to put the asset to use $ 50,000

4.Subsidy from Govt. 60% of Purchase price

5.Working Capital $ 300,000

6.Useful Life of the machine 5 years

7.Book Salvage Value 10 % of purchase price

8.Cash Salvage Value $ 120,000

9.Method of Depreciation Straight line

10.Tax Rate 30%

11.Cost of Capital 10%

12.Sales Units: 1st yr 100,000 units, 2nd yr 200,000 units, 3rd yr 300,000 units, 4th yr 400,000 units, 5th yr 500,000 units.

13.Initial selling price per unit of $ 10 will continue for first 2 years and $ 9 thereafter. Variable cost is 40% of initial selling price. Annual fixed cost other than depreciation is $ 200,000 which will increase to $ 3,00,000 after 3rd year.

Required: Advise the company whether the machinery should be purchased or not on the basis of the Net Present Value

Reference no: EM131894678

Questions Cloud

Why did this conflict escalate to physical violence : Why did this conflict escalate to physical violence? What assumptions does your answer reveal?
What amount of income from this loan should money report : The repayments yield an effective interest rate of 11% at a present value of $200,000 and 12.4% at a present value of $194,000. What amount of income from
Describe the three concepts of classroom management : Please describe the three concepts of classroom management, engagement, and motivation in reference to education.
What would be the advantages of having a large mtu : The MTUs range from 296 to 65,535. What would be the advantages of having a large MTU? What would be the advantages of having a small MTU?
Advise the company whether the machinery should be purchased : Advise the company whether the machinery should be purchased or not on the basis of the Net Present Value
Provide a definition of plagiarism : Provide a definition of "plagiarism", and a statement why academic integrity is important.
Discuss the roles and responsibilities associated with role : Tourism is one of the biggest industries in the world. Conduct some research on the tourism career opportunities in New York City. Pick the career opportunity.
Why you think that packets in need both addresses and labels : Why do you think that the packets in need both addresses and labels? Which service creates less delay if the message is small?
How does just-in-time purchasing approach help : As part of material management, how does Just-In-Time (JIT) purchasing approach help in comparison to traditional purchasing?

Reviews

Write a Review

Financial Accounting Questions & Answers

  Required for each unit produced

Two pounds of material A are required for each unit produced. The company has a policy of maintaining a stock of material A on hand at the end of each quarter equal to 40% of the next quarter's production needs for material A. A total of 59,200 pound..

  What is the optimal mix

Cranky company produces two types of gears: X and Y. The unit contribution margins are $25 and $10 respectively. They can sell all they can produce. Each gear must be notched by a special machine. How many of each should be made (what is the optimal ..

  Cost of manufacturing does not include

Cost of manufacturing does not include:

  What is expected level of profit

What level of sales dollars is needed for a monthly profit of $59,340? For the month of July, the marina anticipates sales of $1,010,000. What is the expected level of profit?

  Discuss the advantages of immediately revising the standards

Discuss the advantages of immediately revising the standards and of retaining the current standards and expanding the analysis of variances.

  Owner income and expense estimates

1. Given the following owner's income and expense estimates for an apartment property, formulate a reconstructed operating statement.

  Calculate the annual growth in operating and total revenue

Calculate the annual growth in Revenue (Operating Revenue and Total Revenue) and the EBITDA margin for DMP for each year between 2010 and 2014.

  Impact of transaction on the other financial statements

where would the acquisition of a new building, valued at $250,000appear on the Statement of Cash Flows if the consideration paid tothe seller was made entirely by transferring title of TreasuryStock to them?

  Model business corporation act

Under the Model Business Corporation Act, a shareholder may ask a court to dissolve a corporation and An individual who joins an existing partnership has no liability for partnership debts that arose prior to his joining the partnership.

  Perform an affiniting analysis

OPERATAION MANAGEMENT, For the project you have selected for this class, do the following: Perform an Affiniting analysis, Do a Relationship Matrix for the Headers of the Affinity, Develop a tree diagram or a cause-effect diagram

  What was the actual cost per pound of material

You have recently accepted a position with Vitex, Inc., the manufacturer of a popular consumer product. During your first week on the job, the vice president has been favorably impressed with your work. How many units were produced last period? How m..

  What is jd basis in his clampett inc stock

J.D. was allocated $10,000 of ordinary income from Clampett, Inc. and no separately stated items. What is J.D.'s basis in his Clampett, Inc. stock after all transactions in 2011?

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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