Net initial investment outlay is $302,040. (Cost of new system + Installation) + (Proceeds from old equipment + Tax on proceeds + Removal cost) = Total cost + NCF (old) = 303,000 +-960 2. Tax depreciation savings = (36% tax rate) x (depreciation of each year) Depreciation for each year based on MACRS 5-year (Wikipedia) 3. Incremental cash flows = (Deprn. Tax savings + A.T. cost savings) each year [pic]2.
2) The sales budget calculates how much the company will spend to produce the required number of units. The president should do further consideration in terms of capital and labor costs. Does company have an adequate capital to produce the required number of units? And if the answer is no, they should look for other alternatives such as borrowing and others. 3) The sales budget is to estimate the profitability.
If each trailer contains 20 outrigger components, that means 800 outrigger components are manufactured a year at a cost of $120,080. This is compared to $86,560 if Mayes manufactured the components (See Table 1). That is a savings of $33,520 (a savings of 28%). However, the extra lead-time and an increase in inventory carrying costs would negate some of the
Running head: INDIVIDUAL TEXT PROBLEMS WEEK 3 Individual Text Problems Week 3 University of Phoenix Individual Text Problems Week 3 P4-23 A. Interest Rate 11% Number of Periods 30 Annuity Payment 20,000 (20,000/.11)X(1-1/(1+.11)^30)=173,875.85 B. 173,875.85X(1+.09)^20=31,024.82 C. Higher compounding interest rates will generate more money, meaning less would be needed today to get the same output tomorrow. P4-32 End of year Budget PV Factor @8% PV 1 $ 5,000 0.9259 4629.63 2 4,000 0.8573 3429.36 3 6,000 0.7938 4762.99 4 10,000 0.7350 7350.30 5 3,000 0.6806 2041.75
FI 515 Course Project a) The net cost of the spectrometer would include the original cost of the equipment, the modification costs and the increase in working capital due to having the equipment. Therefore, the net cost would be the $70,000 base costs, plus the $15,000 in modification costs and the $4,000 in capital, which equals $89,000. b) To find the operating cash flows for the three years, we have to find the cost savings after taxes and add the tax of depreciation. To find the cost savings, we have to take the $25,000 that is expected to be saved and reduce it based on a tax of 40%, or $25,000(1-.4), which equals $15,000. The tax on depreciation requires several steps to calculate.
Look at your pricing policy and make changes appropriately. You should compare your own hire prices to those of your competitors, check can you afford a rise in your prices without losing custom? You can use the trading, profit & loss forecast to monitor your spending throughout the year. Keep an eye on your monthly expenses to ensure they do not creep up higher than what you are expecting, as this will affect your overall profit at the end of the year. Use the figures in both forecasts to make appropriate decisions to ensure the survival and success of your
I would start off small and increase each month. The sooner I start saving, the more time my money will grow. Retirement is so expensive. 2. List two examples of goods you have purchased in the past or may purchase in the future.
They first compute the likely forecasts through formulas and statistics, then they talk about it and arrange according to managers’ feelings. They finally use historical forecast errors to correct forecasts, assuming there should be approximately the same level of error on the same category of items from one year to another. 2. What item costs and revenues are relevant to the decision of how many units of that item to stock? Cost of overage, cost of underage, mean and standard deviation of sales are useful to compute the optimal service level.
If Ajax were to select any project outside A, C, G, and B – such as project D (the next best project after B) – that project would generate a marginal rate of return (16 %) which is less than the marginal cost of funds required for financing, in this instance, 18 %. Therefore, the ideal capital budget is to invest in projects A, C, G, B, for a total of $875 million. Question 4 The Demand for MICHTEC’s products is related to the state of the economy. If the economy is expanding next year (an above-normal growth in GNP), the company expects sales to be $90 million. If there is a recession next year (a decline in GNP), sales are expected to be $85 million.
A 6% increase in Electricity costs. 1. A 2.5% increase in material cost When the material costs increases, the affect will occur on the master budget. The 2.5 % increase on the material cost means we will be paying more; as a result the profit will be less, unless we increase the selling price, reduction of employees (redundancy), to cover the change. Here below are show the calculation of the change: Material cost is 50355.15 2.5% of 50355.15 = 50355.15x 2.5 = 1258.87 100 The new material cost is = 50355.15 + 1258.87 =