In order to produce a new product, a firm must lease equipment at a cost of $185,000 per year. The managers feel that they can sell 67,000 units per year at a price of $92. What is the highest variable cost that will allow the firm to at least break even on this project? (Round your answer to 2 decimal places.)
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In order to produce a new product, a firm must lease equipment at a cost of $185,000 per year. The managers feel that they can sell 67,000 units per year at a price of $92. What is the highest variable cost that will allow the firm to at least break even on this project? (Round your answer to 2 decimal places.)
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- Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.1.A manager has determined that a potential new product can be sold at a price of 10.00 each. The cost to produce the product is 5.00, but the equipment necessary for production must be leased for 25,000 per year. What is the break-even point? 2.In order to produce a new product, a firm must lease equipment at a cost of 100,000 per year. The managers feel that they can sell 50,000 units per year at a price of 75. What is the highest variable cost that will allow the firm to at least break even on this project? Variable CostA manager has determined that a potential new product can be sold at a price of $50 each. The cost to produce the product is $35, but the equipment necessary for production must be leased for $100,000 per year. What is the break-even point? (Round your answer to the nearest whole number.)
- 1. A manager has determined that a potential new product can be sold at a price of $25 each. The cost to produce the product is $17.5, but the equipment necessary for production must be leased for $75,000 per year. What is the break-even point? 2. In order to produce a new product, a firm must lease equipment at a cost of $175,000 per year. The managers feel that they can sell 65,000 units per year at a price of $90. What is the highest variable cost that will allow the firm to at least break even on this project? (Round your answer to 2 decimal places.)Suppose we think we can sell 89405 boxes per year at a price of $9 per box. It costs us about $5.6 per box. The life time of this project is three-year life. We require a 15 percent return on new products. Fixed costs will run $24226 per year. Further, we will need to invest a total of $105000 in manufacturing equipment which will be depreciated using straight line method. Furthermore, the cost of removing the equipment will roughly equal its actual value in three years, so it will be essentially worthless on a market value basis as well. Finally, the project will require an initial $10000 investment in net working capital, and the tax rate is 36 percent. - Calculate the CFFA, use Excel in your solutionThe technique for calculating a bid price can be extended to many other types of problems. Answer the following questions using the same technique as setting a bid price; that is, set the project NPV to zero and solve for the variable in question. Martin Enterprises needs someone to supply it with 159,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've decided to bid on the contract. It will cost $1,990,000 to install the equipment necessary to start production; you'll depreciate this cost straight-line to zero over the project's life. You estimate that, in five years, this equipment can be salvaged for $169,000. Your fixed production costs will be $284,000 per year, and your variable production costs should be $11.30 per carton. You also need an initial investment in net working capital of $149,000. The tax rate is 24 percent and you require a return of 13 percent on your investment. Assume that the price per carton is $17.90.…
- Consider the following: A factory can produce 150,000 units of a good/year at a cost of $100/unit may produce the good for 2 years Retail price is initially $500/unit, but will either increase or decrease by $100 during year 1, and then subsequently increase or decrease by $200 during year 2. Each year, the increase or decrease is equally likely Fixed costs of running the factory are $50M per year if the factory is implemented (not including rent) Rent is $10M, whether or not the factory is set-up We will assume risk neutrality and a 10% cost of capital For simplicity, we will assume that there is no initial (year 0) cashflow associated with the factory The production technology of the factory allows for flexible starting (but not stopping). This means that in year 1, the factory may be operated or not. If the factory is operational in year 1, it will also be operational in year 2. If the factory is not operational in year 1, then it may either be operated or not in year 2. What is…The technique for calculating a bid price can be extended to many other types of problems. Answer the following questions using the same technique as setting a bid price; that is, set the project NPV to zero and solve for the variable in question. Martin Enterprises needs someone to supply it with 154,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've decided to bid on the contract. It will cost $1,940,000 to install the equipment necessary to start production; you'll depreciate this cost straight-line to zero over the project's life. You estimate that, in five years, this equipment can be salvaged for $164,000. Your fixed production costs will be $279,000 per year, and your variable production costs should be $10.80 per carton. You also need an initial investment in net working capital of $144,000. The tax rate is 24 percent and you require a return of 13 percent on your investment. Assume that the price per carton is $17.40.…The technique for calculating a bid price can be extended to many other types of problems. Answer the following questions using the same technique as setting a bid price; that is, set the project NPV to zero and solve for the variable in question. Martin Enterprises needs someone to supply it with 142,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've decided to bid on the contract. It will cost $1,820,000 to install the equipment necessary to start production; you'll depreciate this cost straight-line to zero over the project's life. You estimate that, in five years, this equipment can be salvaged for $152,000. Your fixed production costs will be $267,000 per year, and your variable production costs should be $9.60 per carton. You also need an initial investment in net working capital of $132,000. The tax rate is 22 percent and you require a return of 12 percent on your investment. Assume that the price per carton is $16.20.…
- Modern Artifacts can produce keepsakes that will be sold for $76 each. Non-depreciated fixed costs are $940 per year and variable costs are $48 per unit. a. If the project requires an initial investment of $2,940 and is expected to last for 8 years and the firm pays no taxes, what are the accounting and NPV break-even levels of sales? The initial investment will be depreciated straight-line over 8 years to a final value of zero, and the discount rate is 14%. (Round your answers to the nearest whole dollar.) NPV break-even sales level is ?A sales engineer claims that his pump is economically justifiable. He says that for a cost of P250,000.00, it will havea market value of P30,000 at the end of 10 years. If the increased productivity attributable to this project would beP38,804 per year, is he lying? Take MARR = 10%A company is considering a project which would involve purchasing amachine for $20,000 which will have no value at the end of the project.It will be used to produce a product which will have sales of 600 unitsper year for 4 years. The sales price per unit will be $50, the variablecosts per unit $20 and the incremental fixed costs of the project will be$10,000 per annum. These are all expressed in real terms and will besubject to inflation.Sales will inflate at 5% per annum, variable costs at 6% per annumand fixed costs at 7% per annum.The cost of capital is 15%Required:-Calculate NPV of the project