Answer each question individually, answer all parts of each question. There are a total of 7 questions.

Homework: Chapter 10 Homework Save Score: 0 of 1 pt 1 of 8 (0 complete) HW Score: 0%, 0 of 8 pt P10-1 (similar to) Question Help Erosion costs. Fat Tire Bicycle Company currently sells 37,000 bicycles per year. The current bike is a standard balloon-tire bike selling for $120, with a production and shipping cost of $40. The company is thinking of introducing an off-road bike with a projected selling price of $370 and a production and shipping cost of $275. The projected annual sales for the off-road bike are 17,000. The company will lose sales in fat-tire bikes of 8,000 units per year if it introduces the new bike, however. What is the erosion cost from the new bike? Should Fat Tire start producing the off-road bike? What is the erosion cost from the new bike? (Round to the nearest dollar.) Enter your answer in the answer box and then click Check Answer. part remaining Clear All Check AnswerHomework: Chapter 10 Homework Save Score: 0 of 1 pt 2 of 8 (0 complete) HW Score: 0%, 0 of 8 pt P10-2 (similar to) iQuestion Help Erosion costs. Heavenly Cookie Company reports the following annual sales and costs for its current product line: Click on this icon to download the data from this table Chocolate Snicker- Peanut Lemon Cream- Chip doodle Butter Drop Filled Volume 254,000 201,000 145,000 81,000 92,000 Price $0.50 60.49 50.53 $0.48 $0.56 Cost 50.20 $0.18 50.17 $0.25 50.32 Heavenly is thinking of adding Mississippi Mud brownies to the product line. The ultra-rich brownies would sell for $0.96 a piece and cost $0.80 to produce. The forecasted brownie volume is 222,000 per year. Introduction of brownies, however, will reduce cookie sales by 195,000, with the following drops in sales per cookie: 112,000 in chocolate chip, 40,000 in snickerdoodle, 25,000 in peanut butter, 9,000 in lemon drop, and 9,000 in cream-filled. What is the erosion cost of introducing the brownies? What is the net change in annual margin if Mississippi Mud brownies are added to the product line? What is the erosion cost of introducing the brownies? $(Round to the nearest dollar.) Enter your answer in the answer box and then click Check Answer. 2 parts remaining Clear All Check AnswerHomework: Chapter 10 Homework Save Score: 0 of 1 pt 4 of 8 (1 complete) HW Score: 12.5%, 1 of 8 pts P10-5 (similar to) Question Help Working capital cash flow. Cool Water, Inc. sells bottled water. The firm keeps in inventory plastic bottles at 10% of the monthly projected sales. These plastic bottles cost $0.005 each. The monthly sales for the first four months of the coming year are as follows: January: 2,000,000 February: 2,000,000 March: 2,900,000 April: 3,200,000 What is the monthly increase or decrease in cash flow for inventory given that an increase is a use of cash and a decrease is a source of cash? Note: Enter a decrease as a negative number. What is the change in working capital for January? 6(Round to the nearest dollar.) Enter your answer in the answer box and then click Check Answer. (? 2 parts remaining Clear All Check AnswerHomework: Chapter 10 Homework Save Score: 0 of 1 pt 5 of 8 (1 complete) HW Score: 12.5%, 1 of 8 pt P10-8 (similar to) Question Help Depreciation expense. Richardses' Tree Farm, Inc. has just purchased a new aerial tree trimmer for $85,000. Calculate the depreciation schedule using a seven-year life (for the property class category of a single-purpose agricultural and horticultural structure from Table 10.3) for both straight-line depreciation and MACRS, [ ] . Use the half-year convention for both methods. Compare the depreciation schedules before and after taxes using a 40% tax rate. What do you notice about the difference between these two methods? Using a seven-year life, straight-line depreciation, and the half-year convention for the first and last years, what is the annual depreciation of the trimmer? $(Round to the nearest dollar.) i Data Table - X MACRS Fixed Annual Expense Percentages by Recovery Class Click on this icon to download the data from this table Year 3-Year 5-Year 7-Year 10-Year 1 33.33% CO OGIAWN 20.00% 14.29% 44.45% 10.00% 32.009% 24.49% 18.00% 14.81% 19.20% 17.49% 14.40% 7.41% 11.52% 12.49% 11.52% 11.52% 8.93% 9.22% 5.76% 8.93% 7.37% 8.93% 6.55% 4.45% 6.55% 6.55% 10 6.55% 11 3.28% Enter your answer in the answer box and then click Check Answer. ? 10 Print parts Done remaining Check AnswerHomework: Chapter 10 Homework Save Score: 0 of 1 pt 6 of 8 (1 complete) HW Score: 12.5%, 1 of 8p P10-10 (similar to) Question Help Cost recovery. Richardses' Tree Farm, Inc. purchased a new aerial tree trimmer for $87,000. It is classified in the property class category of a single-purpose agricultural and horticultural structure. Then the company sold the tree trimmer after four years of service. If a seven-year life and MACRS, FF , was used for the depreciation schedule, what is the after-tax cash flow from the sale of the trimmer (use a 35% tax rate) if a. the sales price was $35,000? b. the sales price was $27, 178.80? C. the sales price was $22,000? Data Table - X a. If the sales price is $35,000, what is the after-tax cash flow? (Round to the nearest cent.) MACRS Fixed Annual Expense Percentages by Recovery Class Click on this icon @ to download the data from this table Year 3-Year 5-Year 7-Year 10-Year 1 83.33% 20.00% 14.29% 10.00% 44.45% 32.00% 24.49% 18.00% 14.81% 19.20% 17.49% 14.40% 7.41% 11.52% 12.49% 11.52% 11.52% 8.93% 9.22% 5.76% 8.93% 7.37% 8.93% 6.55% 4.45% 6.55% 10 6.55% 11 6.55% 3.28% Enter your answer in the answer box and then click Check Answer. Print Done ? 2 parts remaining Clear All Check AnswerHomework: Chapter 10 Homework Save Score: 0 of 1 pt 7 of 8 (1 complete) HW Score: 12.5%, 1 of 8 pt P10-18 (similar to) Question Help NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 31,000, with an annual growth rate of 4.00% over the next ten years. The sales price per unit will start at $44.00 and will grow at 2.00% per year. The production costs are expected to be 55% of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of $2,500,000. It will be depreciated using MACRS, [ ] , and has a seven-year MACRS life classification. Fixed costs will be $350,000 per year. Miglietti Restaurants has a tax rate of 38%. What is the operating cash flow for this project over these ten years? Find the NPV of the project for Miglietti Restaurants if the manufacturing equipment can be sold for $140,000 at the end of the ten-year project and the cost of capital for this project is 9%. What is the operating cash flow for this project in year 1? $(Round to the nearest dollar.) i Data Table - MACRS Fixed Annual Expense Percentages by Recovery Class Click on this icon @ to download the data from this table Year 3-Year 5-Year 7-Year 10-Year 1 33.33% 20.00% 14.29% 10.00% 44.45% 32.00% 24.49% 18.00% 14.81% 19.20% 17.49% 14.40% 7.41% 11.52% 12.49% 11.52% 11.52% 8.93% 9.22% 5.76% 8.93% 7.37% 8.93% 6.55% 4.45% 6.55% 6.55% 6.55% 3.28% Enter your answer in the answer box and then click Check Answer. Print Done ? 11 parts remaining Check AnswerHomework: Chapter 10 Homework Save Score: 0 of 1 pt 8 of 8 (1 complete) HW Score: 12.5%, 1 of 8 p P10-20 (similar to) Question Help Project cash flow and NPV. The managers of Classic Autos Incorporated plan to manufacture classic Thunderbirds (1957 replicas). The necessary foundry equipment will cost a total of $4,200,000 and will be depreciated using a five-year MACRS life, . The sales manager has an estimate for the sale of the classic Thunderbirds. The annual sales volume will be as follows: Year one: 230 Year four. 350 Year two: 300 Year five: 320 Year three: 340 If the sales price is $26,000 per car, variable costs are $17,000 per car, and fixed costs are $1,100,000 annually, what is the annual operating cash flow if the tax rate is 30%? The equipment is sold for salvage for $500,000 at the end of year five. Net working capital increases by $500,000 at the beginning of the project (year 0) and is reduced back to its original level in the final year. Find the internal rate of return for the project using the incremental cash flows. First, what is the annual operating cash flow of the project for year 1? i Data Table - X (Round to the nearest dollar.) MACRS Fixed Annual Expense Percentages by Recovery Class Click on this icon to download the data from this table Year 3-Year 5-Year 7-Year 10-Year 33.33% 20.00% 14.29% 10.00% 44.45% 32.00% 24.49% 18.00% 14.81% 19.20% 17.49% 14.40% 7.41% 11.52% 12.49% 11.52% 11.52% 8.93% 9.22% 5.76% 8.93% 7.37% 8.93% 6.559 4.45% 6.55% Enter your answer in the answer box and then click Check Answer. 6.55% 6.55% ? 11 3.28% 12 parts remaining Check