Calculate most profitable investment, Financial Management

Assignment Help:

TC  Shipping Ltd has decided to purchase a machine to augment the company's installed capacity to meet the growing demand for its products. There are three machines under consideration of the management. The relevant details including estimated yearly expenditure and sales are given below: All Sales are on cash. Corporate income tax rate is 40%. Interest on Capital may be assumed to be 10%.

Particulars

Machine 1

Machine 2

Machine 3

Initial Investment Required

3,00000

3,00000

3,00000

Estimated Annual Sales

5,00,000

4,00,000

4,50,000

Cost of Production(Estimated):

 

 

 

Direct Materials

40,000

50,000

48,000

Direct Labor

50,000

30,000

36,000

Factory overheads

60,000

50,000

58,000

Administration costs

20,000

50,000

'15,000

Selling and Distribution Costs

10,000

10,000

10,000

The economics life of Machine 1 is 2 years, while it is 3 years for the other two. The scrap values are Rs.40, 000, Rs. 25,000, and Rs.30, 000 respectively. Suggest the most profitable investment based on various project appraisal techniques.

 

 


Related Discussions:- Calculate most profitable investment

General functions of financial management, GENERAL FUNCTIONS Several f...

GENERAL FUNCTIONS Several functions of financial management currently range from planning of funds to distribution of earnings and also are extend beyond.  Some of the well-kn

Players in primary market, PLAYERS IN THE PRIMARY MARKET Some important...

PLAYERS IN THE PRIMARY MARKET Some important players in the primary market are: Merchant Bankers When a company approaches the public for funds, merchant bankers manage

Evaluate income statement and balance statement, This task must be complete...

This task must be completed in order from 1 to 11 as identified in both the Income Statement and the Balance Sheet. In addition, all answers must cite relevant supporting formulas

Method to assess the neurological status, Method to Assess the Neurological...

Method to Assess the Neurological Status: World Health Organization (WHO) define Stroke as interruption of the blood supply to the brain, the effects of a stroke depend on whi

Explain the strategy for product development, Product development A str...

Product development A strategy which tends to increase sales by the development of new services or products to the same market for example an entirely new or improved existing

Explain sunk cost and opportunity cost in npv, In the NPV analysis, sunk co...

In the NPV analysis, sunk cost is not relevant whereas opportunity cost is for project evaluation. Requirements: Explain and justify the above statement about sunk cost and

Effective duration and convexity of callable bonds, The modified dura...

The modified duration is a measure of the sensitivity of a bond's price to interest rate changes; the assumption made here is that the expected cash flow does not

Determine have mergers affected competition, Have mergers affected competit...

Have mergers affected competition? A: Federal Reserve data depict that measured on the local level, where competition occurs; markets have in fact experienced more banking comp

Enhance or maintain its image and reputation, a) Marketing might be vital t...

a) Marketing might be vital to an organisation such as WHSG for several reasons, including: • The need to be a focus for the right kind of students to the school (there are riva

Define the term shareholders, Shareholders Shareholders are usually ass...

Shareholders Shareholders are usually assumed to be interested in wealth maximisation. This though involves consideration of potential return and risk. Where a company is liste

Write Your Message!

Captcha
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