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- Shonda & Shonda is a company that does land surveys and engineering consulting. They have an opportunity to purchase new computer equipment that will allow them to render their drawings and surveys much more quickly. The new equipment will cost them an additional $1.200 per month, but they will be able to increase their sales by 10% per year. Their current annual cost and break-even figures are as follows: A. What will be the impact on the break-even point if Shonda & Shonda purchases the new computer? B. What will be the impact on net operating income if Shonda & Shonda purchases the new computer? C. What would be your recommendation to Shonda & Shonda regarding this purchase?Billy Bob's Crab & Oyster Shack wants to reduce the cost of labour by replacing some labour with machines. If Billy Bob's were to purchase a machine to shuck the oysters, it can save $50,000 a year for 10 years. The new machine will cost $650,000 and it will be worth $50,000 at the end of the 10 year period. The firm believes it will need $10,000 in spare parts inventory (increase in NWC), which it can sell for the $5,000 at the end of the project. The machine has a 20% CCA rate and the firm has a 15% tax rate. If they want a 20% return on their investment what is the NPV? Round your answer to the nearest dollar, no dollar sign, no commas, put negative sign if needed.. Yummy Candy Company is considering purchasing a second chocolate dipping machine in order to expand their business. The information Yummy has accumulated regarding the new machine is: Cost of the machine $80,000 Increased annual contribution margin $15,000 Life of the machine 10 years Required rate of return 6% Yummy estimates they will be able to produce more candy using the second machine and thus increase their annual contribution margin. They also estimate there will be a small disposal value of the machine but the cost of removal will offset that value. Ignore income tax issues in your answers. Assume all cash flows occur at year-end except for initial investment amounts. Q. Calculate the Payback period for the new machine
- . Yummy Candy Company is considering purchasing a second chocolate dipping machine in order to expand their business. The information Yummy has accumulated regarding the new machine is: Cost of the machine $80,000 Increased annual contribution margin $15,000 Life of the machine 10 years Required rate of return 6% Yummy estimates they will be able to produce more candy using the second machine and thus increase their annual contribution margin. They also estimate there will be a small disposal value of the machine but the cost of removal will offset that value. Ignore income tax issues in your answers. Assume all cash flows occur at year-end except for initial investment amounts. Q.Accrual accounting rate of return based on the net initial investment (assume straight-line depreciation). Yummy Candy Company is considering purchasing a second chocolate dipping machine in order to expand their business. The information Yummy has accumulated regarding the new machine is: Cost of the machine $80,000 Increased annual contribution margin $15,000 Life of the machine 10 years Required rate of return 6% Yummy estimates they will be able to produce more candy using the second machine and thus increase their annual contribution margin. They also estimate there will be a small disposal value of the machine but the cost of removal will offset that value. Ignore income tax issues in your answers. Assume all cash flows occur at year-end except for initial investment amounts. Q. Calculate the Internal rate of return (using the interpolation method) for the new machine. Yummy Candy Company is considering purchasing a second chocolate dipping machine in order to expand their business. The information Yummy has accumulated regarding the new machine is: Cost of the machine $80,000 Increased annual contribution margin $15,000 Life of the machine 10 years Required rate of return 6% Yummy estimates they will be able to produce more candy using the second machine and thus increase their annual contribution margin. They also estimate there will be a small disposal value of the machine but the cost of removal will offset that value. Ignore income tax issues in your answers. Assume all cash flows occur at year-end except for initial investment amounts. Q. Calculate the Net present value for the new machine
- . Yummy Candy Company is considering purchasing a second chocolate dipping machine in order to expand their business. The information Yummy has accumulated regarding the new machine is: Cost of the machine $80,000 Increased annual contribution margin $15,000 Life of the machine 10 years Required rate of return 6% Yummy estimates they will be able to produce more candy using the second machine and thus increase their annual contribution margin. They also estimate there will be a small disposal value of the machine but the cost of removal will offset that value. Ignore income tax issues in your answers. Assume all cash flows occur at year-end except for initial investment amounts. Q. Calculate the Discounted payback period for the new machineA recently retired professor, Melinda Marketing, plans to establish the Hot-Air FanCompany and manufacture circulating fans. She estimates the fixed cost of operations tobe $357,500 annually. The variable cost of producing the fans is forecasted to be $85 perunit.a. How many fans must be sold to break even if the fans are priced at $150?b. If Hot-Air sells 6,000 fans, what will be the EBIT?c. If Hot-Air sells 6,000 fans and has interest expense of $8,125, what is Hot-Air’stimes-interest-earned? Hot-Air does not have any nonoperating expenses.d. If the fans are priced at $150, what is Hot-Air’s breakeven sales?A small company that manufactures vibration isolation platforms is trying to decide whether it should replace the current assembly system (D), which is rather labor intensive, now or 1 year from now with a system that is more automated (C). Some components of the current system can be sold immediately for $9000, but they will be worthless hereafter. The operating cost of the existing system is $192,000 per year. System C will cost $320,000 with a $50,000 salvage value after 4 years. Its operating cost will be $68,000 per year. If you are told to do a replacement analysis using an interest rate of 10% per year, which system do you recommend?
- ABC company sells its products for $16 per item. The fixed cost of the company are 240000 per year and the variable cost per item is $8. The management has been offered an opportunity to move into a smaller facility, which would lower the fixed cost to 200000 however, the variable cost per item would actually increase to $9 at this new facility management had come to your advice. Please calculate the brake even units required for both of the above scenarios. Give these 2 numbers to management. Then give your recommendations to the management team. As to whether they should move to the new facility or not.PT Tamaro has a plastic manufacturing machine. To increase its production capacity, PT Tamaro plans to buy a new machine at a price of 2,400 dollars and an installation of 100 dollars. This machine has an economic life of 5 years with no residual value. projected with this new machine can increase the level of sales to 2000 dollars per year. operational costs that must be borne by the company are the HPP of 40% of sales and $600 in overhead costs including $300 in depreciation costs. The current tax rate is 20% and the desired rate of return is 20%. Make an analysis whether PT Tamaro's plan to purchase this machine is feasible to implement. Use Discounted Payback Period and Net Present Value?Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.10. The machine will increase fixed costs by $11,500 per year. The information they will use to consider these changes is shown here. A. What will the impact be on the break-even point if Flanders purchases the new machinery? Round per unit cost answers to two decimal places. Current New Machine Units Sold 218,000 fill in the blank 1 Sales Price Per Unit $2.15 $fill in the blank 2 Variable Cost Per Unit $1.75 $fill in the blank 3 Contribution Margin Per Unit $0.40 $fill in the blank 4 Fixed Costs $56,000 $fill in the blank 5 Break-Even (in units) 140,000 fill in the blank 6 Break-Even (in dollars) $301,000 $fill in the blank 7 B. What will the impact be on net operating income if Flanders purchases the new machinery? Current New Machine Sales $468,700 $fill in the blank 8 Variable Costs 381,500 fill in the blank 9 Contribution Margin…
