Award 100 00 points Sunshine Travel, Inc is a producer of upright suitcases Its current line of upright suitcases are selling excellently However, cope with the foreseeable competition from other similar products ST spent $6.000.000 to develop a new line of smart uprig suitcases (new model development cost) that enable users to track easily the location of their suitcases using an app on the phones. The smart suitcase model has a built-in global tracker which applies the state-of-the-art micro-electronics and grour cellular telephone technologies to track and report its location In addition, its digital self scale weighs itself automatically on with contents The sensors in the side studs of the suitcase v on the user's cell phone for his/her review so as to avoid unnecessary overweight charges by the airlines whe shell is made of polycarbonate that will certainly provide extra strength and durability to protect the contents inside it. Its fine and lightweight handle make the suitcase super easy to use by travelers. The suitcase's TSA friendly locks provide convenie multidirectional 360 degree dual wheels enable its user to move the suitcase more smoothly and in a more stable way at the ime The company had also spent a further $1.200,000 to study the marketability of this new line of smart upright suitcases marketability studying cost). ST is able to produce the smart upright suitcases at a variable cost of $70 each. The total fixed costs for the operation are e e $9.000 000 per year. ST expects to sell 3,400,000 suitcases, 4.200,000 suitcases, 3.000.000 suitcases 2.200,000 suitca 1.200.000 suitcases of the new model per year over the next five years respectively. The new smart upright suitcases will be e price of $140 each. To launch this new line of production ST needs to invest $32,000,000 in equipment which will be depr seven-year MACRS schedule The value of the used equipment is expected to be worth $4.000.000 as at the end of the 5 project life ST is planning to stop producing the existing suitcase model entirely in two years Should ST not introduce the smart upright sales per year of the existing model will be 1,600,000 suitcases and 1.250.000 suitcases for the next two years respectively existing model can be produced at variable costs of $60 each and total fixed costs of $7.500 000 per year The existing suitc selling for $110 each. If ST produces the smart upright model sales of existing model will be eroded by 960 000 suitcases fo and 1,062,500 suitcases for the year after next. In addition to promote sales of the existing model alongside with the smart upright model ST has to reduce the price of the existing model to $80 each. Net working capital for the smart upright suitcas will be 15 percent of sales and will vary with the occurrence of the cash flows As such, there will be no initial NWC required change in NWC is expected to occur in year 1 according to the sales of the year ST is currently in the tax bracket of 35 perc equires a 18 percent returns on all of its projects. The firm also requires a payback of 3 years for all projects You have just been hired by ST as a financial consultant to advise them on this smart upright suitcase project You are exper provide answers to the following questions to their management by their next meeting which is scheduled sometime next mc What is/are the sunk cost(s) for this smart upright suitcase project? Briefly explain You have to tell what sunk cost is and the he total sunk cost(s) In addition, you have to advise ST on how to handle such cost(s), What are the cash flows of the project for each year? What is the payback period of the project? What is the Pl (profitability index) of the project? What is the IRR (internal rate of return) of the project? What is the NPV (net present value) of the project? Should the project be accepted based on Payback, PIIRR and NPV? Briefly explain consultant golpe Part 2 (Calculation) Capital Budgeting Analysis Before working on the calculations below. please study well the Example Case Study for Chapter 10: Rainbow's New Premium Truck Camper and its solution (already posted as the module contents for Week Thirteen Week of April 6]) on Canvas. van het Name need to be the same as The following steps will walk you through on how you should do your calculations for this case study You follow the instructions and provide your responses accordingly. Please enter ALL the dollar amounts (including cash flows) below in whole numbers. Estimation of sunk costs Provide below the amounts of the sunk costs you identified from the case description above **1st surk cost: 6000000 " being new model development cost 2nd sunk cost $ 1200000 being marketability studying cost Total sunk costs = $_ 7200000 Net Sales Estimation Use the formula stated below to calculate the net sales. Yeart Net Sales = Unit sales of new model for Year 1 x Price of new model - Reduction in unit sales of existing model for Yeart x Current price of existing model -|(Unit sales of existing model for Yeart if new model project is not launched - Reduction in unit sales of existing model i new model project is launched) * (Current price of existing model-Reduced price of existing model)] Year 1 Net Sales 960000 110 = - = $ 3400000 $ 1560000 - 351200000 140 - 560000)*($ $ 110- 80) 110 Year 2 Net Sales = 4200000 $ - 1250000 = $ 455500000 Year 3 Net Sales = $ 140- 1 062500) 1062500 ($ $ 110 - $ 80) Year 4 Net Sales = $ Year 5 Net Sales = $ Variable Cost Estimation: Use the formula stated below to calculate the variable costs. Yeart Variable costs = Unit sales of new model for Yeart * Variable cost per unit of new model - Reduction in unit sales of existing model for Yeart x Variable cost per unit of existing model Year 1 Variable costs $ - Year 2 Variable costs XS =$1 Year 3 Variable costs $ Year 4 Variable costs =$ Year 5 Variable costs =$ Depreciation Estimation: Use the formula stated below to calculate the depreciation expenses. Depreciation of Yeart - Cost of equipment MACRS percentage for Yeart [For all MACRS percentages in this part, enter as a decimal number with 4 decimal places.] Depreciation of Year 1 = $ 4250200 15023178 WN- 8174832 2587555 1334973 (Do not round your calculations. Round your answers below to the number of decimal places specified) Evaluation Method Payback PI Profitability Index) RR (Internal Rate of Return) NPV (Net Present Value) years (2 decimal places) 12 decimal places) 2012 decimal places) whole number with no decimal place (Enter "999" for Payback if the project will not payback. The "999" you provided does not mean that the project takes 999 years to payback. It is just that you tell the system that the project will not payback.) RE GY Award 100 00 points Sunshine Travel, Inc is a producer of upright suitcases Its current line of upright suitcases are selling excellently However, cope with the foreseeable competition from other similar products ST spent $6.000.000 to develop a new line of smart uprig suitcases (new model development cost) that enable users to track easily the location of their suitcases using an app on the phones. The smart suitcase model has a built-in global tracker which applies the state-of-the-art micro-electronics and grour cellular telephone technologies to track and report its location In addition, its digital self scale weighs itself automatically on with contents The sensors in the side studs of the suitcase v on the user's cell phone for his/her review so as to avoid unnecessary overweight charges by the airlines whe shell is made of polycarbonate that will certainly provide extra strength and durability to protect the contents inside it. Its fine and lightweight handle make the suitcase super easy to use by travelers. The suitcase's TSA friendly locks provide convenie multidirectional 360 degree dual wheels enable its user to move the suitcase more smoothly and in a more stable way at the ime The company had also spent a further $1.200,000 to study the marketability of this new line of smart upright suitcases marketability studying cost). ST is able to produce the smart upright suitcases at a variable cost of $70 each. The total fixed costs for the operation are e e $9.000 000 per year. ST expects to sell 3,400,000 suitcases, 4.200,000 suitcases, 3.000.000 suitcases 2.200,000 suitca 1.200.000 suitcases of the new model per year over the next five years respectively. The new smart upright suitcases will be e price of $140 each. To launch this new line of production ST needs to invest $32,000,000 in equipment which will be depr seven-year MACRS schedule The value of the used equipment is expected to be worth $4.000.000 as at the end of the 5 project life ST is planning to stop producing the existing suitcase model entirely in two years Should ST not introduce the smart upright sales per year of the existing model will be 1,600,000 suitcases and 1.250.000 suitcases for the next two years respectively existing model can be produced at variable costs of $60 each and total fixed costs of $7.500 000 per year The existing suitc selling for $110 each. If ST produces the smart upright model sales of existing model will be eroded by 960 000 suitcases fo and 1,062,500 suitcases for the year after next. In addition to promote sales of the existing model alongside with the smart upright model ST has to reduce the price of the existing model to $80 each. Net working capital for the smart upright suitcas will be 15 percent of sales and will vary with the occurrence of the cash flows As such, there will be no initial NWC required change in NWC is expected to occur in year 1 according to the sales of the year ST is currently in the tax bracket of 35 perc equires a 18 percent returns on all of its projects. The firm also requires a payback of 3 years for all projects You have just been hired by ST as a financial consultant to advise them on this smart upright suitcase project You are exper provide answers to the following questions to their management by their next meeting which is scheduled sometime next mc What is/are the sunk cost(s) for this smart upright suitcase project? Briefly explain You have to tell what sunk cost is and the he total sunk cost(s) In addition, you have to advise ST on how to handle such cost(s), What are the cash flows of the project for each year? What is the payback period of the project? What is the Pl (profitability index) of the project? What is the IRR (internal rate of return) of the project? What is the NPV (net present value) of the project? Should the project be accepted based on Payback, PIIRR and NPV? Briefly explain consultant golpe Part 2 (Calculation) Capital Budgeting Analysis Before working on the calculations below. please study well the Example Case Study for Chapter 10: Rainbow's New Premium Truck Camper and its solution (already posted as the module contents for Week Thirteen Week of April 6]) on Canvas. van het Name need to be the same as The following steps will walk you through on how you should do your calculations for this case study You follow the instructions and provide your responses accordingly. Please enter ALL the dollar amounts (including cash flows) below in whole numbers. Estimation of sunk costs Provide below the amounts of the sunk costs you identified from the case description above **1st surk cost: 6000000 " being new model development cost 2nd sunk cost $ 1200000 being marketability studying cost Total sunk costs = $_ 7200000 Net Sales Estimation Use the formula stated below to calculate the net sales. Yeart Net Sales = Unit sales of new model for Year 1 x Price of new model - Reduction in unit sales of existing model for Yeart x Current price of existing model -|(Unit sales of existing model for Yeart if new model project is not launched - Reduction in unit sales of existing model i new model project is launched) * (Current price of existing model-Reduced price of existing model)] Year 1 Net Sales 960000 110 = - = $ 3400000 $ 1560000 - 351200000 140 - 560000)*($ $ 110- 80) 110 Year 2 Net Sales = 4200000 $ - 1250000 = $ 455500000 Year 3 Net Sales = $ 140- 1 062500) 1062500 ($ $ 110 - $ 80) Year 4 Net Sales = $ Year 5 Net Sales = $ Variable Cost Estimation: Use the formula stated below to calculate the variable costs. Yeart Variable costs = Unit sales of new model for Yeart * Variable cost per unit of new model - Reduction in unit sales of existing model for Yeart x Variable cost per unit of existing model Year 1 Variable costs $ - Year 2 Variable costs XS =$1 Year 3 Variable costs $ Year 4 Variable costs =$ Year 5 Variable costs =$ Depreciation Estimation: Use the formula stated below to calculate the depreciation expenses. Depreciation of Yeart - Cost of equipment MACRS percentage for Yeart [For all MACRS percentages in this part, enter as a decimal number with 4 decimal places.] Depreciation of Year 1 = $ 4250200 15023178 WN- 8174832 2587555 1334973 (Do not round your calculations. Round your answers below to the number of decimal places specified) Evaluation Method Payback PI Profitability Index) RR (Internal Rate of Return) NPV (Net Present Value) years (2 decimal places) 12 decimal places) 2012 decimal places) whole number with no decimal place (Enter "999" for Payback if the project will not payback. The "999" you provided does not mean that the project takes 999 years to payback. It is just that you tell the system that the project will not payback.) RE GY