Reference no: EM131282445

Part-1:

HERR FOODS - OPTI-SCANNER ACQUISITION

Required:

If the case is presented in a more directed format, the following questions may help to lead the discussion.

1. Identify the critical issues Harold faces in purchasing an opti-scanner.

2. Discuss various types of capital budgeting methods available to Harold to help him in his decision. Suggest to Harold what method(s) he should use in making the decision.

3. Evaluate this capital acquisition proposal and recommend a course of action.

4. Identify other areas of concern regarding this acquisition and how they might impact the final decision.

5. Given that Herr Foods, Inc. is a company based on Christian principles, how, if at all, will this corporate culture and philosophy impact the decision process?

6. Which of the inspection methods does Herr Foods, Inc. want to go with and is the method consistent with company policy?

Part -2:

Schultz Quality Furniture

Required:

1. If Schultz Quality Furniture sells all 40,000 chairs, how much will the company make on the chairs?

2. If the company is able to produce and sell 44,000 chairs, how much will the company make on the chairs?

3. What is the marginal cost of making one additional chair?

4. During the off season, a special order for 3,000 chairs has come in from an oversees government agency. However, because of the currency exchange rate, this company is only willing to pay $50.00 per chair, but Schultz will have to pay a shipping and tariff cost of $5 per chair. Should Schultz Quality Furniture accept this order? How much money will the company make or lose on this order?

5. The supplier who provides the special polymer material for the chairs has introduced a proposal to ship the chairs to Schultz fully assembled for $50.00 per chair, which is less than the current manufacturing cost to Schultz of $52.50. All Schultz would have to do is send the chairs out to their customers. Should Schultz accept the offer? How much money will the company make or lose on this offer?

6. The marketing manager believes that the customer base for chairs is pretty strong and that a price increase to $80 per chair would only reduce demand by 2,000 chairs. Should Schultz implement a price increase? If the actual price per chair were increased to $80, how far could the annual demand for chairs decline before Schultz would be indifferent between the $75 price and the $80 price?

7. What nonfinancial issues should be considered before decisions are made regarding the production and sale of these chairs?

Part -3:

BioCom, Inc.: Part 1

Questions

1. Compute the payback period for each project.

2. Compute the discounted payback period for each project using a discount rate of 10%

3. Compute the net present value (NPV) for each project. BioCom uses a discount rate of 9% for projects of average risk.

4. Compute the internal rate of return (IRR) for each project.

5. Compute the modified internal rate of return (MIRR) for each project.

6. Explain to the R&D staff why Bio Com uses the NPV method as its primary project selection criterion.

Textbook

https://financeasim.files.wordpress.com/2014/08/financial-accounting-7th-edition-robert-libbydaniel-short-mcgraw-hill.pdf

Attachment:- Assignment.rar