company now wants to analyze the proposal using the discounted cash flow methods. The water treatment system costs $$52,800,$ has a eight$-$year life, and has no residual value. The estimated net cash Requirement $5.$ Wingitt, Inc. has just asked RK Taylor to supply the company with $100,000$ cans of tennis balls at a special order price of $$1\mathrm{.}30$ per can. Wingitt wants RK Taylor to package the tennis

balls under the Wingitt label $($RK Taylor will imprint the Wingitt logo on each tennis ball and can$).$ RK Taylor will have to spend $$25,000$ to change the packaging machinery. Assuming the original volume

and costs, should RK Taylor accept this special order? $($Assume RK Taylor will incur variable selling costs as well as variable manufacturing costs related to this order.$)$

First, calculate the income or loss on the special order. $($Use parentheses or a minus sign for a loss.$)$

Less:

Contribution margin from special order

Less:

Operating income or loss provided by special order

RK Taylor

accept the special order because it will

operating income. Requirement $3.$ If RK Taylor cannot change its fixed costs, what is the target variable cost per can of tennis balls? $($Enter the per unit cost to the nearest cent.$)$

Less:

Target total variable costs

Divided by the

Target vari

inflows from environmental cleanup savings are $$11,000$ per year over its life. The company's required rate of return is $16\%.$

$($Click the icon to view Present Value of $$1$ table.$)($Click the icon to view Present Value of Ordinary Annuity of $$1$ table.$)$

Read the requirements.

Requirement $1.$ Compute the water treatment system's NPV$.($Enter any factor amounts to three decimal places,

X$.$XXX$.$ Use parentheses or a minus sign for a negative NPV$.)$

Requirement $2.$ Find the water treatment system's IRR $($exact percentage is not required$).$

The IRR $($internal rate of return$)$ is between

Requirement $3.$ Should Vigor $-$ pro buy the water treatment system? Why or why not?

Vigor $-$ pro

buy the water treatment system. It has a

NPV$,$ and its IRR

the company's required rate of return.SnowDream operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. Investors would like to earn a $10\%$ return on investment on the company's

$$260,900,000$ of assets. The company primarily incurs fixed costs to groom the runs and operate the lifts. SnowDream projects fixed costs to be $$30,000,000$ for the ski season. The resort serves about

$710,000$ skiers and snowboarders each season. Variable costs are about $$9$ per guest. Currently, the resort has such a favorable reputation among skiers and snowboarders that it has some control over

the lift ticket prices.

Read the requirements.

Requirement $1.$ Would SnowDream emphasize target pricing or cost$-$plus pricing? Why?

SnowDream should emphasize a

approach to pricing because it has been able to differentiate its ski resort from others in the area. Because of its good reputation, managers will have

control over pricing. Of course, they still need to consider whether the

price is within the range customers are willing to pay.

Requirement $2.$ If other resorts in the area charge $$85$ per day, what price should SnowDream charge?

Complete the following table to calculate the price SnowDream should charge per lift ticket.

Plus:

$.$

Plus:

Divided by:

$.$

Price per lift ticket

Given SnowDream's favorable reputation, theyfrom now. Continue this process for a total of five years. Round to three decimal places.

$($Click the icon to view Present Value of $$1$ table.$)$

Read the requirements.

Requirement $1.$ What is the total present value of the cash flows received over the five$-$year period?

Calculate the total present value of $$1$ received each year. $($Round to three decimal places,

X$.$XXX$.)$

Present Value

One year from now

Two years from now

Three years from now

Four years from now

Five years from now

Total present value

Requirement $2.$ Could you characterize this stream of cash flows as an annuity? Why or why not?

The stream of cash flows an annuity because it is a stream of cash payments made at time intervals.

Requirement $3.$ Use the Present Value of Ordinary Annuity of $$1$ table to determine the present value of the same stream of cash flows. Compare your results to your answer to Requirement $1.($Round to

three decimal places,

X$.$XXX$.)$

$($Click the icon to view Present Value of Ordinary Annuity of $$1$ table.$)$

The present value of an annuity of $$1$ received each year for five years, at $12\%$ per year is