Reference no: EM132487328
Point 1: Vent Ltd is considering buying a new machine in order to produce a new product in order to produce a new product. The machine will cost $2,800,000 and is expected to last for 3 years at which time it will have an estimated scrap value of $1,000,000.
Point 2: They expect to produce 100,000 units p.a. of the new product which will be sold for $20 per unit in the first year.
Production costs per unit (at current prices) are as follows:
Materials $8
Labour $7
Point 3: Materials are expected to inflate at 8% p.a. and labour is expected to inflate at 5% p.a.
Point 4: Fixed overheads of the company currently amount to $1,000,000. The management accountant has decided that 20% of these should be absorbed into new product.
Point 5: The company expects to be able to increase the selling price of the product by 7% p.a.
Point 6: An additional $200,000 of working capital will be required at the start of the project.
Point 7: Capital allowances: 25% reducing balance.
Point 8: Tax: 25%, 1 year in arrears.
Point 9: Cost of capital: 10%.
Required
Question 1: Determine the NPV of the project and advise as to whether or not it should be accepted.
|
CMP73001 Cybersecurity Management Assignment
: CMP73001 Cybersecurity Management Assignment help and solution, Southern Cross University - assessment writing service
|
|
How much can Mary deduct
: During 2016, her share of the business loss is $140,000. In 2017, her share of the business loss is $100,000. How much can Mary deduct in 2016 and 2017
|
|
Calculate the net cash flow for each of the year in question
: Calculate the net cash flow for each of the years in question. In addition a further $20,000 working capital will be required at the start of the project.
|
|
How much of the payments will be included in taxable income
: how much of the payments will be included in Patrick's taxable income for 2017 if he chooses to take $1,300 monthly over his life and the life of his wife
|
|
Determine the NPV of the project
: Determine the NPV of the project and advise as to whether or not it should be accepted. Vent Ltd is considering buying a new machine in order to produce
|
|
How you might address the factors in your future classroom
: Based on the National Reading Panel, there are five components of reading instruction that when properly taught, provide the greatest chance of success.
|
|
What is georgia maximum cost recovery
: Georgia purchased an asset for her business, What is Georgia's maximum cost recovery for 2018 if the asset is computer equipment (5-year recovery class)?
|
|
What was the plane fair value at the end
: Why did the company record an impairment loss on the plane? Explain how the company determined the amount of the impairment loss.
|
|
How you would adapt the directed reading activity
: Describe how you would adapt the directed reading activity, the directed reading-thinking activity, and literature-based reading and whole language to support.
|