Edit View History Bookmarks Profiles Tab Window Help Mon Nov 13 One.IU | All x x McGraw Hill X McGraw-Hil X Saw McGraw-Hil x M Question 1 - X C chegg.com/ x Introducing x Dashboard x Untitled doc x ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Fnewconnect.... Relaunch to update Send Money, Pay... M Gmail pear twitterr AF TIKI SHOES link! Accounts UABAT OFFICIAL se Study - Part 2 : Folding Mountain Bike Project i Saved Help Save & Exit Submit Check my work EliteMotor, Inc. is a producer of mountain bikes. Its current line of non-folding mountain bikes are selling excellently. However, in order to cope with the foreseeable competition with other similar bikes, EliteMotor spent $5,000,000 to develop a new line of folding mountain bikes (new model development cost). The added convenience of portability of this new streamline 25 speed 26" frame bike model enables users a great ride anywhere, not just on mountain trails. It is easy to install and great for students, office workers, urban oints environments, or any convenient commuting. EliteMotor will adjust the shifting and braking for this bike model and make its disc brakes automatically adaptable. Users can easily asjust the tension of the brake cable of the disc brake if they find the brakes not tight enough or themselves. Its frame is made of high carbon steel, with seat distance between 30 inches and 34 inches from the ground and handle eBook 37 inches also from the ground. The model works well for men and women of height between 5'3"- 6'2" and weight of 220 lb max. The company had also spent a further $1,050,000 to study the marketability of this new line of folding mountain bikes (marketability studying Ask cost). Print EliteMotor is able to produce the new mountain bikes at a variable cost of $100 each. The total fixed costs for the operation are References expected to be $8,000,000 per year. EliteMotor expects to sell 3,100,000 bikes, 4,200,000 bikes, 3,250,000 bikes, 2,150,000 bikes and 900,000 bikes of the new model per year over the next five years respectively. The new bikes will be selling at a price of $130 each. To launch this new line of production, EliteMotor needs to invest $33,000,000 in equipment which will be depreciated on a seven-year MACRS schedule. The value of the used equipment is expected to be worth $6,500,000 as at the end of the 5 year project life. EliteMotor is planning to stop producing the existing mountain bikes entirely in two years. Should EliteMotor not introduce the new folding mountain bikes, sales per year of the existing non-folding mountain bikes will be 2,500,000 bikes and 1,500,000 bikes for the next two years respectively. The existing model can be produced at variable costs of $70 each and total fixed costs of $7,500,000 per year. The existing mountain bikes are selling for $105 each. If EliteMotor produces the new model, sales of existing model will be eroded by 1,500,000 bikes for next year and 1,275,000 bikes for the year after next. In addition, to promote sales of the existing model alongside with the new model, EliteMotor has to reduce the price of the existing model to $90 each. Net working capital for this new folding mountain bike project will be 20 percent of sales and will vary with the occurrence of the cash flows. As such, there will be no initial NWC Irequired. The first change in NWC is expected to occur in vear 1 according to the sales of the vear. FliteMotor is currently in the tax Grav Mc Grav Hill 4) 44 F10 F11 ( F12 - F6 44 II F7 F8 F5C ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Fnewconnect.... GSAO YouTube PSend Money, Pay... M Gmail pear twitterr AF TIKI SHOES link!!!!! @ Accounts UABAT OFFICIAL Case Study - Part 2 : Folding Mountain Bike Project i Saved Help Save & Ex Chec Year t Net Sales =Unit sales of new model for Year t x Price of new model - Reduction in unit sales of existing model for Year t x Current price of existing model 100 - [(Unit sales of existing model for Year t if new model project is not launched - Reduction in unit sales of existing points model if new model project is launched) x (Current price of existing model - Reduced price of existing model)] eBook Year 1 Net Sales Ask 3100000 x $ 130 - 1,500,000 x $ 105 Print References 2,500,000 1,500,000 ) x ($ 105 - $ 90 = $ 230500000 Year 2 Net Sales 4,200,000 x $ 130 1,275,000 x $ 105 1500000 1,275,000 ) x ($ 105 - $ 90 ) = $ 408,750,000 Year 3 Net Sales = $ Mc Graw Hill 13ube Send Money, Pay... M Gmail pear twitterr AF TIKI SHOES link! Accounts UABAT OFFICIAL Case Study - Part 2 : Folding Mountain Bike Project i Saved Help Save & Exit Check m Year 3 Net Sales = $[ Year 4 Net Sales = $ 100 Year 5 Net Sales = $ points Variable Cost Estimation: Use the formula stated below to calculate the variable costs. eBook Year t Variable costs Ask = Unit sales of new model for Year t x Variable cost per unit of new model Print - Reduction in unit sales of existing model for Year t x Variable cost per unit of existing model References Year 1 Variable costs 1x $ * $ Year 2 Variable costs 7x $ * $ =$ Year 3 Variable costs =$[ Year 4 Variable costs =$ Year 5 Variable costs =$ nanvariation Estimation. I lan this farmilla stated halnine to calculate the danvariation sunanene Mc Graw Prey 1 of 1 Next > Hill 13PSend Money, Pay... M Gmail pear twitterr A TIKI SHOES * link! Accounts UABAT OFFICIAL Case Study - Part 2 : Folding Mountain Bike Project i Saved Help Depreciation of Year t = Cost of equipment x MACRS percentage for Year t [For all MACRS percentages in this part, enter as a decimal number with 4 decimal places.] X 100 Depreciation of Year 1 = $ points Depreciation of Year 2 = $ X X Depreciation of Year 3 = $ Depreciation of Year 4 = X eBook Depreciation of Year 5 = X =$ Ask Net Working Capital Estimation: Use the formula stated below to calculate the net working capital Print requirements. References NWC for Year t = NWC Required Percentage x Net sales of Year t [For the NWC required percentage in this part, enter as a decimal number with 2 decimal places.] NWC for Year 1 = NWC for Year 2 = x NWC for Year 3 X NWC for Year 4 = NWC for Year 5 = $ CASH FLOW ESTIMATION: Complete the following table below. Year 1 |Year 2 Year 3 Year 4 |Year 5 Mc Graw Hill 13 ACase Study - CASH FLOW ESTIMATION: Complete the following table below. Year 1 Year 2 Year 3 Year 4 Year 5 Sales $ $ $ $ 100 points VC $ $ $ eBook Fixed costs $ $ $ Ask $ $ $1 Print Dep References $ EBT $ $ to $ Taxes (35%) $ NI tA $ tA + Dep $ $ OCF $ $ $ $ Mc Graw Graw Hill 13 J A 4)))