Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Matheson Electronics' Canadian Branch will help introduce into Canada the just developed new electronic device which, when mounted on an automobile, will tell the driver how many miles the automobile is getting per gallon of gasoline. The device can be mounted on any model of automobile in a few minutes time for negligible cost.The company is anxious to begin production and distribution of the new device. To this end, marketing and cost studies have been made to determine probable costs and market potential. These studies have provided the following information:a. New equipment would have to be acquired in order to produce the device. The equipment would cost $365,000 and have a 12-year useful life. After 12 years, the equipment would have a salvage value of about $25,000.b. Sales in units over the next 12 years are projected to be as follows:Year Sales in units1 ......................... 10,0002 ....................... 16,0003 ......................... 19,0004-12 .................... 22,000c. Production and sales of the device would require working capital of $82,000 in order to finance accounts receivable, inventories and day-to-day cash needs. This working capital would be released at the end of the project's life.d. The devices would sell for $35 each; variable costs of production, administration & sales would be $15 per unit.e. Fixed costs for salaries, maintenance, property taxes, insurance and MACRS 7-year depreciation on the equipment would total $135,000 per year. (Depreciation is based on original cost times the MACRS depreciation %'s per year, using the ½ year convention: Yr1=14.29%; Yr2=24.49%; Yr3=17.49%; Yr4=12.49%; Yr5=8.93%; Yr6=8.92%; Yr7=8.93% and Yr8=4.46%.) No depreciation would be taken after year 8.f. In order to gain rapid entry into the market, the company would have to advertise heavily. The advertising program would be:Years 1-2 ................................ $ 125,000 per yearYear 3 ................................ 110,000 per yearYears 4-12 ............................. 80.000 per yearg. Matheson Electronics' Board of Directors has specified that all new product lines must promise a return of at least 14% (percent) in order to be acceptable (& must be acceptable in Canada as well).h. The average income tax rate to use in this analysis is 40%Required (label each answer prominently):1. Compute the net cash inflow (cash receipts less yearly cash operating expenses) anticipated from the sale of the device for each of the 12 years.2. Using the data from 1. above and other data in the problem, determine the NPV (net present value) of the proposed investment.3. Compute the IRR (internal rate of return) use interpolation.Based on the decision criteria available, should the project be accepted? Why or why not?
A bicycle plant runs two assembly lines, A and B. 96.9% of line A's products pass instruction, while only 93.8% of line B's products pass inspection. 70% of the factory's bikes com
What are the major arguments for absorption costing?
Lapsol limited manufacture electrical appliances for the export market. The management of the company are considering investing in one of two possible capital expenditure projects.
The project (using the tools and techniques given in Chapters 3, 8, 10, 11, and 12 of the textbook) and its subsequent report are based on the complete economic analysis of a compa
The Pacific Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on the basis of direct labor cost. Its predetermined overhead rate was based
Explain the respective roles of the Securities and Exchange Commission (SEC) and the Internal Revenue Service (IRS) in the setting of accounting standards?
Storage and Issue of Material A number of questions are relevant in this control of materials throughout storage and question of materials. These are as: a) Stock control r
traditional budgeting systems are incremental in nature and tend to focus on cost centres..explain the weakness of the incremental budgeting system and explain ways of adressing th
Slick Corporation is a small producer of synthetic motor oil. During May, the company produced 5,000 cases of lubricant. Each case contains twelve quarts of synthetic oil. To achie
Mandy Building Contractors Ltd signed a fixed-price contract to build a bridge for Nelly Ltd for $110 million on 1 July 2012. Contract costs are estimated as follows:
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd