Therefore, CUTCO must consider strategic options that will lead to substantial growth. Limitation of Retail Expansion CUTCO’s current annual revenue is $260 million, which means it needs to generate an additional $740 million in annual revenues to reach its long-term goal. Each store, based on estimates from the pilot stores, is capable of achieving revenues up to $300,000. As CUTCO increases its prices by 5% every two years, its revenue would grow to $380,000. In order for CUTCO to make up the difference of $740 million in missing revenue, it would need to open 2,000 stores in the U.S. With an initial expenditure of $150,000 per store, this venture would cost the company $300 million.
40 miles * 16.5¢/mile=$6.60 per trip * 3 trips/wk=$19.80/wk * 52wks/yr=$1029.60 per year in tax deductible transportation costs. 52. On April 1, 2010, Paul sold a house to Amy. The property tax on the house, which is based on a calendar year, was due September 1, 2010. Amy paid the full amount of property tax of $2,500.
We will put down $3000 each and the rest will be donations from friends and family. Our fixed assets are for continuing use, which is, office space, airline discounts and other fixed assets like office equipments and accessories and utility bills like electricity. Our variable costs will change because of the different activities of the business dealing with labor and advertising. Below we have our cash flow projection for the next five years. We estimated how many customers we need to breakeven each year.
Would you enter this market? An electronic calculator manufacturer is considering automating their plant. Current sales are about 600,000 calculators/year, and they are increasing by about 5%/year. The calculators sell (to retailers) for $ 10/unit. Automation would take variable cost/unit from the current $ 7/unit to $ 2/unit.
One of the items was sold during the year. Required: Based on this information, how much product cost would be allocated to cost of goods sold and ending inventory, assuming use of: a. LIFO b. FIFO c. Weighted average (total cost/total number) | |Cost of goods sold |Ending inventory | |LIFO |700 |800 | |FIFO |800 |700 | |Weighted Average |750 |750 | Problem 2. Teague Company purchased a new machine on January 1, 2012, at a cost of $150,000. The machine is expected to have an eight-year life and a $15,000 salvage value. The machine is expected to produce 675,000 finished products during its eight-year life.
Accounts Payable Home depot reported its January 31, 2010 accounts payable at $4,863,000 and on January 30, 2011 the same was reported the following fiscal year at $4,717,000. There is a loss of ($-146,000) which possibly indicates the repayment of construction loans, now that Home Depot now operates over 2,000 retail locations with 1,976 in the USA, 179 stores in Canada, 85 stores in Mexico and 8 stores in China. (Home Depot, 2011). Total Current Liabilities The total current liabilities for the home depot organization in January 31, 2010 was reported at $10,363,000 and the same was reported the following fiscal year on in January 30, 2011 at $10,122,000, once again there is a decrease from 2010 to 2011. Two Largest Current Liabilities
Fixed expenses are $424,000 per month. The marketing manager believes that a $7,000 increase in the monthly advertising budget would result in a 100 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change? A. Increase of $8,000 B.
With this new development, if we assume that the previous 4,796,000 shares of common stock that were originally issued in March of 1993 are now also worth $1 per share, this gives a total of $4,796,000. The total valuation of the company will then be $800,000 + $4,796,000 = $5,596,000. This is the value that we believe to represent the valuation of Neverfail as of November 1994. After round 1 of VC investment: Due to the deal with the Pacific Ridge, Neverfail share prices were going for $1.50 per share The Company was valued at $9 million as of December 1994 according to the case study. Initial value of Pacific ridge investment (December 1995) is: 666,667 * $1.50 + 133,333 * $0.3 = $1,040,000.4 (initial investment, exhibit 7).
Phuket Beach Hotel Case 10:Phuket Beach Hotel VALUING MUTUALLY EXCLUSIVE CAPITAL PROJECTS Case Overview Planet Karaoke Pub Project Lives Monthly rental (5% increment for 3rd and 4th year) 4 years 170, 000 (THB) 770, 000 to 1, 000, 000 (THB) 55, 000 (THB) Up front renovation cost (Depreciated over the life of project - straight line method with zero salvage value) Overhead expenses Repair and maintenance cost 10, 000 (THB) / year Case Overview Beach Karaoke Pub Project Lives Up front investment (Equaled depreciation) 6 years 800, 000 to 1,200 000 (THB) 900, 000 (THB) 4, 672, 000 (THB) Other investment (Equipment and chairs) (Depreciated over the life of project - straight line method with zero salvage value) Estimated total sales (1st year) (5% average growth per annum) Operating costs: Food and beverage costs Salaries Other operating costs 25% of sales 16% of sales 22% of sales Repair and maintenance cost 10, 000 (THB) / year Case Overview Beach Karaoke Pub Capital structure (75% equity & 25% debt) Debt – loan from Siam Commercial Bank – interest rate 10% Hotel owners’ cost of equity - 12% Corporate tax rate – 30% Future profits – discounted 5% Risk factor – 25% Conservatism- risk factor (consideration due to the negative factor for pub) Question 1 Assess the economic benefits associated with each of the capital projects. What is the initial outlay? What are the incremental cash flows over the life of the project? What is an appropriate discount rate to use for discounting the cash flows of the projects? Initial Outlay Planet Karaoke Pub To invest THB 770,000 or THB1,000,000?
Capital expenditure of $155,000 was incurred during last 2 years. Increase in invested capital reduced both IGR and SGR. As sales growth rate was higher than IGR and SGR, firm had to rely on trade credits and trade notes, besides internal accruals and bank notes to finance its cash outflows. Projections for 1996 are based on information provided and other assumptions described in excel sheets viz. all trade notes will be fully paid and trade credit of 10 days is for additional purchases made from April 1, 1996.