Manufacture of a wide range of consumer products

Assignment Help Financial Management
Reference no: EM13727127

A Carlyle chemical is evaluating a new chemical compound used in the manufacture of a wide range of consumer products. The firm is concerned that inflation in the cost of raw materials will have an adverse effect on the projects cash flow. Specifically, the firm expects the cost per unit (which is currently $0.85) will rise at a rate of 14% annual rate over the next three years. The per-unit selling price is currently $0.99 and this price is expected to rise at a meagre 1% annual rate over the next three years. If Carlyle expects to sell 6.5, 6.8, and 8 million units for the next three years, respectively, what is your estimate of the gross profits to the firm? Based on these estimates, what recommendation would you offer the firm’s management with regard to this product?

The gross profit or loss for year 1 is?

year 2?

 

year 3?

Reference no: EM13727127

Questions Cloud

Considering the acquisition of a chain of cemeteries : Templeton extended care facilities is considering the acquisition of a chain of cemeteries for $400 million since the primary asset of this business is real estate Templeton’s management has determined that they will be able to borrow the majority of..
Describe the basic characteristics of currency hedging tools : Describe the basic characteristics of currency hedging tools: forwards, futures, swaps, options and more complex options (caps, floors, collars), as well as “natural hedges” on a corporation’s balance sheet.
Discuss the method of determining the fair value for forward : International business activities are inherently more attractive to large companies in mature markets than to small high growth US companies. True or false. Why or why not. Discuss the method of determining the “fair value” for forward, futures and o..
Manufacture of a wide range of consumer products : A Carlyle chemical is evaluating a new chemical compound used in the manufacture of a wide range of consumer products. The firm is concerned that inflation in the cost of raw materials will have an adverse effect on the projects cash flow. Specifical..
Social media manager for a vendor management consultancy : Question: What is the problem? What are the main events? Question: Who are the participants and the decision makers influencing the outcome?
How does a company product influence the process : How does a company's product influence the process of going international? How (if at all) does technology, such as the Internet, affect the process of going international?
What are some examples of hazard control methods : What are some examples of hazard control methods that are recommended in hazard prevention and reduction techniques. Do you feel that some of these methods are more important to use than others. Which do you believe reduces the possibility of a fu..
Type i and type ii virtualizations : Compare and contrast at least two (2) similarities and two (2) differences between Type I and Type II virtualizations. Using your comparison, choose either a Type I or Type II virtualization and determine a specific networking scenario in which yo..

Reviews

Write a Review

 

Financial Management Questions & Answers

  What is the initial investment outlay

What are the two projects net present values assuming the cost of capital is 5%?  What is the initial investment outlay?

  What is the future value-compounded semi-annually

What is the future value of $2,600 in 19 years assuming an interest rate of 7.9 percent compounded semi-annually? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

  What is the current price of bond

Black Water Corp. just issued zero-coupon bonds with a par value of $1,000. THe bond has a maturity of 25 years and a yield to maturity of 8.29 percent, compounded semi-annually. What is the current price of bond?

  Nowc and dcf analysis

Calculate the required investment in NOWC for the three years of the project.  Use these estimates of NOWC to calculate the Cash Flow from NOWC.

  What is the operating leverage effect and what causes it

What is the operating leverage effect and what causes it?  What are the potential benefits and negative consequences of high operating leverage?

  What is the difference between pro forma financial statement

What is the difference between pro forma financial statements and a cash budget?  Explain why pro forma financial statements are not used to forecast cash needs.

  Calculate the beta and then find the required return

Mikkelson Corporation's stock had a required return of 11.75% last year, when the risk-free rate was 5.50% and the market risk premium was 4.75%. Then an increase in investor risk aversion caused the market risk premium to rise by 2%. The risk-free r..

  Importance of a balanced capital structure and the problems

The importance of a balanced capital structure and the problems which are associated with high levels of gearing.

  Prepare a statement showing the incremental cash flows

Prepare a statement showing the incremental cash flows for this project over an 8-year period and calculate the payback period (P/B) and the net present value (NPV) for the project.

  Asset-amount invested-assets expected return-assets beta

Based on the allocation of dollars among the 3 assets and their expected returns, what is your portfolio's expected return? Based on the allocation of dollars among the 3 assets and their betas, what is your portfolio’s beta (NOTE: Portfolio beta is ..

  What is the magnitude of your arbitrage profit

You are given the following information: at t = 0, the price of a 10?year zero coupon bond with FV = $10,000 is $7,000; the price of a 3?year zero coupon bond with FV = $5,000 is $4,300; f3,12 = 6%. A bank is offering the following product: What is t..

  Adjustable mortgage loan tied to the one-year treasury rate

Assume the following for a fully amortizing adjustable mortgage loan tied to the one-year Treasury rate, with 1 year adjustment intervals: Loan amount: 150,000; annual rate cap: 2%; life-of-loan-cap: 5%;

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!

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