Reference no: EM132622864
Conch Republic Electronics
Conch Republic Electronics is a mid sized electronics manufacturer located in Key West, Florida. The company president is Shelley Couts, who inherited the company. When it was founded over 70 years ago, the company originally repaired radios and other household appliances. Over the years, the company expanded into manufacturing and is now a reputable manufacturer of various electronic items. Jay McCanless, a recent MBA graduate, has been hired by the company's finance department.
One of the major revenue-producing items manufactured by Conch Republic is a personal digital assistant (PDA). Conch Republic currently has one PDA model on the market, and sales have been excellent. The PDA is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffett music. However, as with any electronic item, technology changes rapidly, and the current PDA has limited features in comparison with newer models. Conch Republic developed a prototype for a new PDA that has all the features of the existing PDA but adds new features such as cell phone capability. The company has performed a marketing study to determine the expected sales figures for the new PDA.
Conch Republic can manufacture the new PDA for $200 each in variable costs. Fixed costs for the operation are estimated to run $4.5 million per year. The estimated sales volume is 70,000, 80,000, 100,000, 85,000, and 75,000 per each year for the next five years, respectively. The unit price of the new PDA will be $340. The necessary equipment can be purchased for $16.5 million and will be depreciated on a 5 year straight-line schedule.
Net working capital investment for the PDAs will be $6,000,000 the first year of operations. Of course NWC will be recovered at the projects end. Conch Republic has a 35 percent corporate tax rate and a 12 percent required return.
Shelly has asked Jay to make report that answers the following questions:
- What is the IRR of the project?
- What is the NPV of the project, based on the required rate of return of 12%?
What is the npv of the decision to purchase a new machine
: A firm is considering an investment in a new machine with a price of $17.5 million to replace its existing machine. The current machine has a book value of $7.2
|
Evaluate how much will he have at the end of the year
: Balancing amount required to give you a total of $10,000. How long will it take to reach you target of $10,000 and what will be the amount of your last deposit?
|
Calculate the npv of project-market top investors
: Market Top Investors, Inc., is considering the purchase of a $465,000 computer with an economic life of six years. The computer will be fully depreciated over s
|
Identifying themes and patterns
: Qualitative data analysis can be quite complex and time-consuming. Whether the research design is descriptive or uses a specific qualitative methodology.
|
What is the irr of the project-conch republic electronics
: Conch Republic Electronics is a mid sized electronics manufacturer located in Key West, Florida. The company president is Shelley Couts, who inherited the compa
|
Which statements is not true in relation to other matter
: Which statements is not true in relation to other matter paragraphs? An 'other matter' paragraph may include confidential information.
|
Identify the levels of measurement of each variable
: A nurse has decided to research the following PICOT question: "Adult clients who are admitted to the cardiac unit with congestive heart failure are more likely.
|
What is the cost of buying a protective put
: The following information is given about options on the stock of a certain company:
|
Various types of financial instruments
: There are various types of financial instruments, some of these include, T-bills, T-bonds, corporate bonds, stocks and stock options. If you were constructing a
|