Reference no: EM131332132
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.
|
Expect triple-net market rents
: What expected cash flow (NOI) forecast should you put in year 2010 of your pro-forma for this space, if you expect triple-net market rents on new leases in 2010 to be $21.67/SF?
|
|
What is expected year-end dividend
: A stock with a required rate of return of 10 percent sells for $30 per share. The stocks dividend is expected to grow at a constant rate of 7 percent per year. What is the expected year-end dividend , D1 on the stock?
|
|
Write a research paper about demographic transition model
: Write a research paper about the demographic transition model and global food production and distribution for a growing human population to meet global food security goals. You must use APA format for the paper and documentation.Include the follow..
|
|
Present value of all expected future dividends
: The cash flows associated with common stock are more difficult to estimate than those related to bonds because stock has a residual claim against the company versus a contractual obligation for a bond. The price of a stock is the present value of all..
|
|
Calculate the npv of the new project
: 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.
|
|
Financing an investment through loan
: Financing an investment through a loan can be a financially sound decision if:
|
|
Evaluate how effective leadership in this area promotes
: In a 3 page paper, evaluate how effective leadership in this area promotes the greater good. Make sure to support your thesis with examples from the readings, your research, and personal observations
|
|
Compute the equilibria in mixed strategies
: Compute the equilibria in mixed strategies and the maxmin strategies in mixed strategies of the two players. Did you find the same strategies in both cases?
|
|
Record the entry to eliminate the intercompany interest
: Record the entry to eliminate the effects of the intercompany ownership in Able bonds for 20X6. Record the entry to eliminate the intercompany interest receivables/payables for 20X6.
|