Reference no: EM133024790
Question - Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two new products for a five-year period. His annual pay raises are determined by his division's return on investment (ROI), which has exceeded 22% each of the last three years. He has computed the cost and revenue estimates for each product as follows:
Initial Investment: Product A Product B
Cost of equipment (zero salvage value) $380,000 $575,000
Annual Revenues and Cost:
Sales Revenue $410,000 $490,000
Variable Expenses $186000 $218,000
Depreciation expense $76,000 $115,000
Fixed out-of-pocket operating costs $89,000 69,000
The company's discount rate is 20%.
Use Excel or a financial calculator to solve any time value of money problems.
Required -
1. Calculate the payback period for each product.
2. Calculate the net present value for each product.
3. Calculate the project profitability index for each product.
4. Calculate the simple rate of return for each product.
5a. For each measure, identify whether Product A or Product B is preferred.
5b. Based on the simple rate of return, Lou Barlow would likely:
-Accept Product A
-Accept Product B
-Reject both products
|
How much gain on the settlement of debt is to be recognized
: An original cost of P530,000, and accumulated depreciation of P130,000. How much gain on the settlement of debt is to be recognized by Nike
|
|
Make the journal entries for any impairment loss
: XYZ Ltd calculated a recoverable amount of its company of $1,700,000. Make the journal entries for any impairment loss
|
|
Create a timeline in excel for her current situation
: Create a timeline in Excel for her current situation, as well as the certification program and MBA degree options, using the following assumptions
|
|
Draw capital allocation line for inv
: Draw capital allocation line for Inv-2 (equivalently draw the CML with different lending rate (5%) and borrowing rate (6%))
|
|
Calculate the payback period for each product
: Use Excel or a financial calculator to solve any time value of money problems. Calculate the payback period for each product
|
|
What the total amount of indirect manufacturing cost
: Dake Corporation's relevant range of activity is 3,100 units to 6,500 units. If 3,800 units are produced, what the total amount of indirect manufacturing cost
|
|
Calculate diluted earnings per share
: Question - On December 31, 2021, Culver Co. had 178,500 common shares outstanding. Calculate diluted earnings per share
|
|
What would the amount be as of december
: What would the amount be as of December 31, 2023 for any Deferred Tax Asset / Liability to be recorded on the balance sheet for ABC
|
|
What will the cash flows for this project be
: You will be replacing 5 fully- 15 depreciated vans, which you think you can sell for $3,100 a piece, What will the cash flows for this project be
|