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Heck manufacturing company is thinking of launching a new product. The company expects to sell$950,000 of the new product in the first year and $1,500,000 the second and third year and $2,000,000 per year thereafter. Direct costs including labor and materials will be 40% of sales. Indirect incremental costs are estimated at $110,000 a year. The project requires a new plant that will cost a total of $2,000,000, which will be a depreciated straight line over the next 5 years. The firm's marginal tax rate is 35%, and its cost of capital is 10%. To receive full credit on this assignment, please show all work, including formulae and calculations used to arrive at financial values. Assignment GuidelinesUsing the information in the assignment description: Prepare a statement showing the incremental cash flows for this project over an 8-year period.
Calculate the payback period (P/B) and the net present value (NPV) for the project.
Answer the following questions based on your P/B and NPV calculations: Do you think the project should be accepted? Why? Assume the company has a P/B (payback) policy of not accepting projects with life of over 4.5 years. If the project required additional $1,000,000 investment in land and building, how would this affect your decision? Explain.
General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product manufactured at the Arizona site-Determine the amount of impairment loss
Discuss the inherent audit risk with the use of account receivable confirmation letters and how this risk can be minimized by the auditing firm.
The following information is available for the governmental funds of Tom Village. Prepare the governmental funds balance sheet for Tom Village
Record the acquisition of the coal reserves and the depletion expense for years 1 and 2 in a financial statementsmodel like the preceding one.
If a company sells goods that cost $70,000 for $82,000, the firm will: A. reduce Finished-Goods Inventory by $70,000. B. reduce Finished-Goods Inventory by $82,000.
An important element of evaluating leases is determining whether substantially all of the risk and rewards of ownership are transferred in the lease. How os "Substantially all" defined in the authoritative literature?
X Ltd manufactures and sells one product. You are presented with the following information for the preparation of the annual operating budget for the period ending 31 December 2016:
Budd, the purchasing agent of Lake Hardware Wholesalers, has a relative who owns a retail hardware store. Budd arranged for hardware to be delivered by manufacturers to the retail store on a COD basis, thereby enabling his relative to buy at Lake'..
a virtual company just hired you. your salary your reputation and your grade are all dependent on the job you do.a.
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midwestern sod company produces two products fescue grass and bermuda grass.fescue grass bermuda grassselling price per
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