1 Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his division's return on investment (ROI), which has been above 24% each of the last three years. Casey is considering a capital budgeting project that would require a $5,050,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Company's discount rate is 20%. The project would provide net operating income each year for five years as follows: 5 points $ 4,700,000 2,120,000 2,580,000 X 01:34:06 Sales Variable expenses Contribution margin Fixed expenses : Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses Net operating income $ 830,000 1,010,000 1,840,000 740,000 Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What is the project's net present value? 2. What is the project's internal rate of return? 3. What is the project's simple rate of return? 4-a. Would the company want Casey to pursue this investment opportunity? 4-b. Would Casey be inclined to pursue this investment opportunity? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req 4A Reg 4B What is the project's net present value? (Round your final answer to the nearest whole dollar amount.) Net present value 2 DataSpan, Inc., automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustment problems have been encountered, including problems relating to performance measurement. After much study, the company has decided to use the performance measures below, and it has gathered data relating to these measures for the first four months of operations. 5 points 1 2 ? ? ? 888 2830 Throughput time (days) Delivery cycle time (days) Manufacturing cycle efficiency (MCE) Percentage of on-time deliveries Total sales (units) Month 2 3 2 ? 2 ? ? ? 83% 808 2709 2570 2 ? ? 8 01:34:49 77% 2473 Management has asked for your help in computing throughput time, delivery cycle time, and MCE. The following average times have been logged over the last four months: Move time per unit Process time per unit Wait time per order before start of production Queue time per unit Inspection time per unit Average per Month (in days) 1 2 3 4 0.9 0.6 0.7 0.7 3.8 3.6 18.0 19.7 22.0 23.8 4.5 5.1 5.8 6.6 0.8 1.0 1.0 0.8 Required: 1-a. Compute the throughput time for each month. 1-b. Compute the delivery cycle time for each month. 1-c. Compute the manufacturing cycle efficiency (MCE) for each month. 2. Evaluate the company's performance over the last four months. 3-a. Refer to the move time, process time, and so forth, given for month 4. Assume that in month 5 the move time, process time, and so forth, are the same as in month 4, except that through the use of Lean Production the company is able to completely eliminate the queue time during production. Compute the new throughput time and MCE. 3-b. Refer to the move time, process time, and so forth, given for month 4. Assume in month 6 that the move time, process time, and so forth, are again the same as in month 4, except that the company is able to completely eliminate both the queue time during production and the inspection time. Compute the new throughput time and MCE. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 1-a. Compute the throughput time for each month. 1-b. Compute the delivery cycle time for each month. Mc Graw Hill 1 1 Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his division's return on investment (ROI), which has been above 24% each of the last three years. Casey is considering a capital budgeting project that would require a $5,050,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Company's discount rate is 20%. The project would provide net operating income each year for five years as follows: 5 points $ 4,700,000 2,120,000 2,580,000 X 01:34:06 Sales Variable expenses Contribution margin Fixed expenses : Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses Net operating income $ 830,000 1,010,000 1,840,000 740,000 Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What is the project's net present value? 2. What is the project's internal rate of return? 3. What is the project's simple rate of return? 4-a. Would the company want Casey to pursue this investment opportunity? 4-b. Would Casey be inclined to pursue this investment opportunity? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req 4A Reg 4B What is the project's net present value? (Round your final answer to the nearest whole dollar amount.) Net present value 2 DataSpan, Inc., automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustment problems have been encountered, including problems relating to performance measurement. After much study, the company has decided to use the performance measures below, and it has gathered data relating to these measures for the first four months of operations. 5 points 1 2 ? ? ? 888 2830 Throughput time (days) Delivery cycle time (days) Manufacturing cycle efficiency (MCE) Percentage of on-time deliveries Total sales (units) Month 2 3 2 ? 2 ? ? ? 83% 808 2709 2570 2 ? ? 8 01:34:49 77% 2473 Management has asked for your help in computing throughput time, delivery cycle time, and MCE. The following average times have been logged over the last four months: Move time per unit Process time per unit Wait time per order before start of production Queue time per unit Inspection time per unit Average per Month (in days) 1 2 3 4 0.9 0.6 0.7 0.7 3.8 3.6 18.0 19.7 22.0 23.8 4.5 5.1 5.8 6.6 0.8 1.0 1.0 0.8 Required: 1-a. Compute the throughput time for each month. 1-b. Compute the delivery cycle time for each month. 1-c. Compute the manufacturing cycle efficiency (MCE) for each month. 2. Evaluate the company's performance over the last four months. 3-a. Refer to the move time, process time, and so forth, given for month 4. Assume that in month 5 the move time, process time, and so forth, are the same as in month 4, except that through the use of Lean Production the company is able to completely eliminate the queue time during production. Compute the new throughput time and MCE. 3-b. Refer to the move time, process time, and so forth, given for month 4. Assume in month 6 that the move time, process time, and so forth, are again the same as in month 4, except that the company is able to completely eliminate both the queue time during production and the inspection time. Compute the new throughput time and MCE. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 1-a. Compute the throughput time for each month. 1-b. Compute the delivery cycle time for each month. 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