Reference no: EM133022183
Question - RET Inc. currently has two products, low and high priced stoves. RET Inc. has decided to sell a new line of medium-priced stoves. Sales revenues for the new line of stoves are estimated at $2,000 a year. Variable costs are 80% of sales. The project is expected to last 10 years. Also, non-variable costs are $300 per year. The company has spent $200 in research and a marketing study that determined the company will have synergy gains/sales of $300 a year from sales of its existing high-priced stoves. The production variable cost of these sales is $200 a year.
The plant and equipment required for producing the new line of stoves costs $1,500 and will be depreciated down to zero over 30 years using straight-line depreciation. It is expected that the plant and equipment can be sold (salvage value) for $800 at the end of 10 years. The new stoves will also require today an increase in net working capital of $100 that will be returned at the end of the project.
The tax rate is 20 percent and the cost of capital is 10%.
Required -
1. What is the initial outlay (IO) for this project?
2. What is the annual Earnings before Interests, and Taxes (EBIT) for this project?
3. What is the annual net operating profits after taxes (NOPAT) for this project?
4. What is the annual incremental net cash flow (operating cash flow: OCF) for this project?
5. What is the remaining book value for the plant at equipment at the end of the project?
6. What is the cash flow due to tax on salvage value for this project?
7. What is the project's cash flow for year 10 for this project?
8. Is the Net Present Value (NPV) for this project positive or negative?
How is present value determined
: How is present value determined when an established exchange price is not determinable and a note has no ready market? What is the resulting interest rate often
|
Determine the wildhorse diluted earnings per share
: At the time of issuance, liability component was recorded at $738,000. Wildhorse's tax rate is 30%. Determine the Wildhorse's 2020 diluted earnings per share
|
What adjusting entry or entries to estimate sales discounts
: Netherland Corporation has the following unadjusted balances: Accounts Receivable, $83,000 (debit), What adjusting entry or entries to estimate sales discounts
|
What is this week average cost per cup
: The variable cost per cup of coffee is $0.17 per cup. This week, the company served 4,000 cups of coffee. What is this week's average cost per cup
|
What is the initial outlay for this project
: Sales revenues for the new line of stoves are estimated at $2,000 a year. What is the initial outlay for this project
|
Determine the rate of interest for week two
: The loan called for a floating rate that was 28 basis points ?(0.28 ?percent) over an index based on LIBOR. Determine the rate of interest for week two
|
How much was the cash balance immediately
: Rus received P112,000 in the settlement of his P400,000 capital balance. How much was the cash balance immediately before the non-cash assets were sold
|
What was the materials price variance
: The actual production of the product in April was 870 units. While the production had been budgeted for 850 units. What was the materials price variance
|
What is the present value of CD
: Question - What is the present value of CD with 4% annual interest that matures in 1 year with a value of $3000
|