The annual growth rate is I in the following equation: $1(1 + I)10 = $2. We can find I in the equation above as follows: Using a financial calculator input N = 10, PV = -1, PMT = 0, FV = 2, and I/YR = ? Solving for I/YR you obtain 7.18%. Viewed another way, if earnings had grown at the rate of 10% per year for 10 years, then EPS would have increased from $1.00 to $2.59, found as follows: Using a financial calculator, input N = 10, I/YR = 10, PV = -1, PMT = 0, and FV = ?. Solving for FV you obtain $2.59.
Eisenhower communications is trying to estimate the first-year net operating cash flow (at year 1) for a proposed project. The financial staff has collected the following information on the project: Sales revenue $10 million Operating costs (excluding depreciation) $ 7 million Depreciation $ 2 million Interest expense $ 2 million The company has a 40 percent tax rate, and its WACC is 10 percent a. What is the project’s operating cash flow for the first year? b. If this project would cannibalize other projects by $1 million of cash flow before taxes per year.
Once the predicted demand is frozen, L.L. Bean uses its historical demand and forecast data to analyze the forecasting errors. The forecast errors are calculated for each individual item and a frequency distribution of these is made, which is further used as a probability distribution for future errors. Thus, if 50% of the errors were within 0.7 and 1.6, the forecast for this year would be adjusted accordingly. Next, each item commitment quantity was calculated using its contribution margin and its total contribution in dollar to the revenue of the company.
Executive Summary Cottrill Inc. had a 1 week trial with Saxton’s pagers but had a major technical issue with them near the end, which has so far been resolved. Whether Saxton’s pagers will have additional problems is unknown. Cottrill Inc. equipment failures can cost the company around $200,000 per hour and on average have problems once a week. Judy want to make the right decision in regards their pager supplier, which could result in a great annual saving for Cottrill Inc., or possible problems which could create a massive loss. Through analysis, it might be safer to stay with Tallant or prolonging a trial period with Saxton to ensure stability.
What information would you request? The quotes drastically differ from BL’s costs, especially for T-69 Follow up with the controller, Mike Carr. Info such as material and direct labor costs could be helpful. Is the cost savings sufficient enough to move the business to Mayes? Savings in purchasing cost: Annual demand: 800, 11.89*800 = $9512 per year.
Accounting profits includes costs such as depreciation, interest, and taxes to run a business therefore it should not affect free cash flows. The period of time given for the free cash flows cover year zero through five and reveal the financial benefit of the project. Financial projections for duration of project There is annual working capital requirement of $100,000 to initiate the project. An increase is shown for years one through three. Net working capital will equal 10% of the sales revenue for each year.
Under the most simple form of depreciation, the company might allocate $100 of the cost of the generator to its expenses every year, until the $1000 capital expense has been "used up." Under accelerated depreciation, the company may be allowed to allocate $200 of the cost of the generator for five years. If the company has $200 in profits per year (before consideration of the cost of the generator or any effects of debt or other factors), and the tax rate is 20%: a) Normal depreciation: the company claims $100 in
This study is based on how the portfolio turnover ratio affects the returns of the mutual funds. Portfolio turnover is a valuable tool to analyze the investment strategies of a Fund Manager, fund cost structure and tax exposure. It helps in measuring how actively the Fund manager manages the portfolio investment. The rate of trading activity in a fund’s portfolio is the lesser of purchases or sales of the portfolio securities for a financial year divided by the average value of portfolio securities during the year. If a fund has 100 percent turnover rate that means the fund manager, in theory has sold every single stock position once.
A company sells $10,000 of green widgets to a customer in March, which pays the invoice in April. Under the cash basis, the seller recognizes the sale in April, when the cash is received. Under the accrual basis, the seller recognizes the sale in March, when it issues the invoice. Expense recognition. A company buys $500 of office supplies in May, which it pays for in June.
March 7th 2012 ECS3250 (2011-2012) Coursework Name: Sean Goodwin Student I.D: M00295169 Part 1 Abbey Trading Company is considering a project that is susceptible to risk. An initial investment of £90,000 will be followed by three years each with the following expected cash flows (there is no inflation or tax): | £ | £ | Annual sales (volume of 100,000 units multiplied by estimated sales price of £2) | | 200,000 | Annual costs (volume of 100,000 units multiplied by unit labour, material & other costs respectively) | | | Labour | 100,000 | | Material | 40,000 | | Other | 10,000150,000 | (150,000) | | | 50,000 | The initial investment consists of £70,000 in machines, which have a zero scrap value at the end of the three-year life of the project and £20,000 in additional working capital which is recoverable at the end. The discount rate is 10%. (1) Calculate the NPVof the project and explain what it means The NPV of the project is £54,345, meaning firstly that this project has a positive present value and therefore worth the time to consider further if it is viable. We arrive at this NPV figure by using all the information given above.