For the Time Value of Money, can you include specific numbers in the paper such as NPV, perhaps use the loan and interest of the building to find the future value or incorporate the cash flow somehow? Also, add a paragraph about corporate risk in the paper...below is a link.

Here is the link -http://www.investopedia.com/exam-guide/cfa-level-1/corporate-finance/types-of-risk.asp

JointsOrtho Company Income Statement For the Year Ended December 2016 $ Total Sales Cost of Goods Sold Gross Profit (Loss) Operating Expenses Advertisement Depreciation Employee Benefits Program Office Expense Salaries Other Expenses Total Operating Expenses Income Before Interest and Tax Interest Expense Income Before Tax Tax Expense (25%) Net Income (Loss) $ 44,100,000 3,211,200 40,888,800 2,205,000 300000 183,170 2,205,000 220,500 4,410,000 9,523,670 31,365,130 600,000 30,765,130 7691282.5 23,073,848 Cost of Materials: Cost of Direct Labor: Labor Cost of Molding Specialists Labor Cost of Maching Specialists Labor Cost of Cleaning & Maintenance Labor Cost of Shipping and Receiving Cost of Overhead: Labor Cost of Shift Supervisor Lobor Cost of Plant Manager Lobor Cost of administrative/human resources person Depreciaiton on Plant Building and Machienary Total Cost of Production 1000000 561600 332800 135200 353600 124800 72000 31200 600000 1383200 828000 3211200 JointsOrtho Company Cash Flow Statement For the Year Ended December 2016 Cash Flow From Operating Activiites: Sales of good or services Merchandise purchased from suppliers Production labor and overhead Employee payroll Office Expense Salaries Other Expenses Interest Expense Tax payment Net Cash Flow From Operating Activities Cash Flow From Investing Activiites: Purchase of property, plant and equipment Net Cash Flow From Investing Activities Cash Flow From Financing Activiites: Borrowing Net Cash Flow From Financing Activities Total Net Cash Flows Add: Beginning Cash Flow Ending Cash Flow 2016 $ $ 44100000 (1000000) (1611200) (183170) (2205000) (220500) (4410000) (600000) (7691283) 26178848 (9000000) (9000000) 6000000 6000000 23178848 500000 23678848 Assumptions 1) Advertising expense is 5% of total sales. 2) Employee Benefits Program tax (FICA) is 10% of total wages and salaries expense. 3) Office expense is 5% of total sales. 4) Office salaries expense is 0.5% of total sales. 5) Other expense is 10% of total sales. 6) Tax rate is 25%, and tax is paid in the relevent financial year as incurred. 7) All the payments are made in cash, and there is no year end accural balance. 8) Openning cash balance is assumed to $500000. Month Transaction # Repeat? Balance Sheet Cash Flow January 1 Borrow No $6,000,000 for building with 10 year mortgage at 10% annum 2 Pay manager Yes, every monthly salary month of $6,000 per month 3 Pay for Yes, every Increase Outflow building: set month, at asset of up what will the end of building every but be office month decrease space, cash, manufacturi decrease ng space and liabilities warehouse space. Set a depreciation schedule, How much percentage of depreciation per year? Set up cost will be $15,000 for January but it won't repeat every month Income Additional Info Statemen t Add to Outflow Liabilities Outflow Can include FV of investment and NPV in paper Expense Expesnse Straightline depreciation over 10 years; Most nonresidential property has recovery period of about 39 years (so almost 40). Since we're doing depreciation for 10 years, I'm going to assume the salvage value of the building after 10 years will be 75% of $6,000,000 = which is $4,500,000. So depreciation cost for 10 years would be $1,500,000. 1/10 years = 10% depreciation per year. 10% X $1,500,000 = $150,000 per year depreciation. $1,500,000/12 months = $12,500 per month. Nonresidential real property with with 39 years recovery period https://www.irs.gov/pub lications/p946/ch04.ht ml 4 Hire Yes, every managers and month employees; pay fringe benefits of $10 per month for gym membership for 45 employees. Total of $450 per month Outflow Expense 5 Pay employee Yes, every health, life, month and disability premiums, plus FICA, unemploymen t and withholding taxes. Total amount paid for benefits per month for all employees $53,314.29 (calculations is on sheet 3) Outflow Expense According to BLS, wages and salaries make up 70% of total compensation while benefits such as paid leave, supplemental pay, health insurance benefits, retirement and savings, and other legally required benefits make up 30% of total compensation. I did the math on the third sheet http://www.bls.govew s.release/ecec.nr0.htm 6 Order $3,000,000 worth of machinery/eq uipment for manufacturing . Pay down. Increase Outflow - Expense receivable investing s of activities equipmen $1,500,00 t, increase 0 liabitily with half being account payable 7 Receive machines and pay remaining amount due Turn Outflow - Expense receivable investing to assets, activities increase the other liability $1,500,00 decrease 0 account payable 8 Hire Yes, every employees - month Expense 1st month's salary/wages (can be found on sheet "Transaction 5") EXCLUDE MANAGER WAGE, set up machinery depreciation, set up standing costs 9 Place order for raw materials at a cost of $1,000,000 which will include Machining, Casting, Grinding, Polishing, and metal injection molding materials (will be ordered every 3 months) 10 Outflow Yes, every Increase Outflow 3 months receivable (Jan, , increase April, July, account Oct) payable Expense Straightline depreciation; standing costs mean fixed costs - so depreciation over the years and monthly wages; Depreciation will also be set for 10 years, I'm assumng salvage value will be $500,000. With straightline, depreciation cost would be $2,500,000/10 years $250,000 per year; $20,833.33 per month; will be recorded in transaction 12 Expense Yes, every Increase 3 months asset, (Jan, decrease April, July, receivable Oct) Receive 3 mon 11 Start up prodution, pay workers for the month same as Transaction #8, so maybe skip? 12 Book Yes, every manufact depreciation month uring (for machine overhead and is equipment?) included and other in Work in manufacturing Progress overhead and costs for the Finished month; Goods property taxes Inventory $6,000,000 worth is . 666% which is $39,960 per year https://smarta sset.com/taxe s/delawareproperty-taxcalculator#DR WtQPKLqt Major coporation can pay up to $500,000 per year on insurance and lability, so I'm assuming we're paying about $240,000 per year ($20,000 per month) since it's a manufacturing Finish increase cost of manufacturing inventorie good 2,000 hips s, sold? and move decrease them into cost of finished goods good inventory solds Cost of Goods Sold 14 Pay for the 3 month supply of raw materials received in Transaction 10 Expense 16 Take an order for 1,200 hip replacements 13 Yes, every Decrease Outflow 3 months payable, (Jan, increase April, July, liabilities Oct) Reduce current inventory of 2,000 hips manufacturing overhead includes depreciation on machine, people who clean the manufacturing area, and people who perform maintenance on equipment, Insurance and property taxes on the manufacturing equipment and facilities. 17 Ship and invoice customer for 1,200 hip replacement s Decrease inventory, increase account receivable 18 Receive payment for 1,200 hip replacements (1,200 X $36,750 = $44,100,000) Decrease Inflow account receivable , increase cash New 3 Sales tax Yes, every (.126% of month goods solds per month of gross receipts - total receipt for goods sold) - this is for all businesses in DE. we're technically not a corporation in DE so we're not subject to the 8.7% federal taxable income. http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf Outflow Income Expense New 5 Hire truck Yes, every driver with month Class A CDL driver for East Cost and pay $20/hour for 30 hours a week (they might not need to drive all the New 6 Buy a commercial truck for $45,000 http://www.co mmercialtruckt rader.com/ New 7 Total Yes, every expense/cost month for the truck $15,000 per month ($180,000 per year which includes maintenance, gas, insurance, etc.) http://www.driv ebigtrucks.co m/truckingnews/the-realoperatingcost-of-acommercialtruck/ Outflow Expense Increase Outflow Asset, Increase Liabilities Expense Outflow Expense New 8 February Telephone, Yes, every payable Outflow utlities bill month http://www $20,000 for .investope January, dia.com/e https://www.ei xama.gov/electricit guide/cfay/sales_reven levelue_price/pdf/t 1/financial able5_c.pdf statement s/balancesheetcompone ntsliabilities.a sp Expense 2 Pay manager Yes, every monthly salary month of $6,000 per month Expense 3 Depreciation Yes, every Depreciati Outflow on Loss of building month Expesnse 4 Hire Yes, every managers and month employees; pay fringe benefits of $10 per month for gym membership for 45 employees. Total of $450 per month Expense Outflow Outflow 5 Pay employee Yes, every health, life, month and disability premiums, plus FICA, unemploymen t and withholding taxes. Total amount paid for benefits per month for all employees $53,314.29 (calculations is on sheet 3) Outflow Expense 8 Hire Yes, every Depreciait Outflow employees - month on Loss Expense 1st month's salary/wages (can be found on sheet "Transaction 5") EXCLUDE MANAGER WAGE, set up machinery depreciation, set up standing costs - pay wages Expense 12 Book Yes, every depreciation month and other manufacturing overhead costs for the month 16-18 Manufacture and month's supply of hip replacements - create 1,500 hips, sold 1,000 hips New 3 Sales tax Yes, every (.126% of month goods solds per month of gross receipts - total receipt for goods sold) - this is for all businesses in DE. we're technically not a corporation in DE so we're not subject to the 8.7% federal taxable income. http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf Outflow Expense New 5 Hire truck Yes, every driver with month Class A CDL driver for East Cost and pay $20/hour for 25 hours a week (they might not need to drive all the time) Outflow Expense March New 7 Total Yes, every expense/cost month for the truck $15,000 per month ($180,000 per year which includes maintenance, gas, insurance, etc.) http://www.driv ebigtrucks.co m/truckingnews/the-realoperatingcost-of-acommercialtruck/ Outflow Expense New 8 Telephone, utlities bill $15,000 Yes, every payable Outflow month http://www .investope dia.com/e xamguide/cfalevel1/financial statement s/balancesheetcompone ntsliabilities.a sp Expense 2 Pay manager Yes, every monthly salary month of $6,000 per month Outflow 3 Depreciation Yes, every Depreciati Outflow on Loss of building month Expense Expesnse 4 Hire Yes, every managers and month employees; pay fringe benefits of $10 per month for gym membership for 45 employees. Total of $450 per month Outflow Expense 5 Pay employee Yes, every health, life, month and disability premiums, plus FICA, unemploymen t and withholding taxes. Total amount paid for benefits per month for all employees $53,314.29 (calculations is on sheet 3) Outflow Expense 8 Hire Yes, every Depreciait Outflow employees - month on Loss Expense 1st month's salary/wages (can be found on sheet "Transaction 5") EXCLUDE MANAGER WAGE, set up machinery depreciation, set up standing costs - pay wages Expense 12 Book Yes, every depreciation month and other manufacturing overhead costs for the month 16-18 Manufacture and month's supply of hip replacements - create 1,700hips, sold 1,100 hips New 1 Advertising Yes, every and quarter promotions 2% of revenue (since we said 8% per year) Outflow Expense New 3 Sales tax Yes, every (.126% of month goods solds per month of gross receipts - total receipt for goods sold) - this is for all businesses in DE. we're technically not a corporation in DE so we're not subject to the 8.7% federal taxable income. http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf Outflow Expense New 5 Hire truck Yes, every driver with month Class A CDL driver for East Cost and pay $20/hour for 30 hours a week (they might not need to drive all the time) Outflow Expense New 7 Total Yes, every expense/cost month for the truck $15,000 per month ($180,000 per year which includes maintenance, gas, insurance, etc.) http://www.driv ebigtrucks.co m/truckingnews/the-realoperatingcost-of-acommercialtruck/ Outflow Expense New 8 Telephone, utlities bill $17,000 Yes, every payable Outflow month http://www .investope dia.com/e xamguide/cfalevel1/financial statement s/balancesheetcompone ntsliabilities.a sp Expense April 2 Pay manager Yes, every monthly salary month of $6,000 per month Outflow Expense 3 Depreciation Yes, every Depreciati Outflow on Loss of building month Expesnse 4 Hire Yes, every managers and month employees; pay fringe benefits of $10 per month for gym membership for 45 employees. Total of $450 per month Outflow Expense 5 Pay employee Yes, every health, life, month and disability premiums, plus FICA, unemploymen t and withholding taxes. Total amount paid for benefits per month for all employees $53,314.29 (calculations is on sheet 3) Outflow Expense 8 Hire Yes, every Depreciait Outflow employees - month on Loss Expense 1st month's salary/wages (can be found on sheet "Transaction 5") EXCLUDE MANAGER WAGE, set up machinery depreciation, set up standing costs - pay wages Expense 9 Place order for raw materials at a cost of $1,000,000 which will include Machining, Casting, Grinding, Polishing, and metal injection molding materials (will be ordered every 3 months) Expense 10 Yes, every Increase Outflow 3 months receivable (Jan, , increase April, July, account Oct) payable Yes, every Increase 3 months asset, (Jan, decrease April, July, receivable Oct) Receive 3 mon 12 Book Yes, every depreciation month and other manufacturing overhead costs for the month 14 Pay for the 3 month supply of raw materials received in Transaction 10 Yes, every Decrease Outflow 3 months payable, (Jan, increase April, July, liabilities Oct) Expense 16-18 Manufacture and month's supply of hip replacements - create 2,000 hips, sold 1,200 hips New 3 Sales tax Yes, every (.126% of month goods solds per month of gross receipts - total receipt for goods sold) - this is for all businesses in DE. we're technically not a corporation in DE so we're not subject to the 8.7% federal taxable income. http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf Outflow Expense New 5 Hire truck Yes, every driver with month Class A CDL driver for East Cost and pay $20/hour for 30 hours a week (they might not need to drive all the time) Outflow Expense May & June New 7 Total Yes, every expense/cost month for the truck $15,000 per month ($180,000 per year which includes maintenance, gas, insurance, etc.) http://www.driv ebigtrucks.co m/truckingnews/the-realoperatingcost-of-acommercialtruck/ Outflow Expense New 8 Telephone, utlities bill $20,000 Yes, every payable Outflow month http://www .investope dia.com/e xamguide/cfalevel1/financial statement s/balancesheetcompone ntsliabilities.a sp Expense 2 Pay manager Yes, every monthly salary month of $6,000 per month Outflow 3 Depreciation Yes, every Depreciati Outflow on Loss of building month Expense Expesnse 4 Hire Yes, every managers and month employees; pay fringe benefits of $10 per month for gym membership for 45 employees. Total of $450 per month Outflow Expense 5 Pay employee Yes, every health, life, month and disability premiums, plus FICA, unemploymen t and withholding taxes. Total amount paid for benefits per month for all employees $53,314.29 (calculations is on sheet 3) Outflow Expense 8 Hire Yes, every Depreciait Outflow employees - month on Loss Expense 1st month's salary/wages (can be found on sheet "Transaction 5") EXCLUDE MANAGER WAGE, set up machinery depreciation, set up standing costs - pay wages Expense 12 Book Yes, every depreciation month and other manufacturing overhead costs for the month 16-18 Manufacture and month's supply of hip replacements - For May create 1,200 hips, sold 1,000 hips; For June create 1,500 hips, sold 800 (vacation time, people go through less surgery) New 1 Advertising Yes, every and quarter promotions 2% of revenue (since we said 8% per year) Outflow Expense New 3 Sales tax Yes, every (.126% of month goods solds per month of gross receipts - total receipt for goods sold) - this is for all businesses in DE. we're technically not a corporation in DE so we're not subject to the 8.7% federal taxable income. http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf Outflow Expense New 5 Hire truck Yes, every driver with month Class A CDL driver for East Cost and pay $20/hour for 25 hours a week FOR MAY. and 20 hours FOR JUNE Outflow Expense July New 7 Total Yes, every expense/cost month for the truck $15,000 per month ($180,000 per year which includes maintenance, gas, insurance, etc.) http://www.driv ebigtrucks.co m/truckingnews/the-realoperatingcost-of-acommercialtruck/ Outflow Expense New 8 Telephone, Yes, every payable Outflow utlities bill month http://www $12,000 FOR .investope MAY and dia.com/e $15,000 FOR xamJUNE guide/cfalevel1/financial statement s/balancesheetcompone ntsliabilities.a sp Expense 2 Pay manager Yes, every monthly salary month of $6,000 per month Expense 3 Depreciation Yes, every Depreciati Outflow on Loss of building month Outflow Expesnse 4 Hire Yes, every managers and month employees; pay fringe benefits of $10 per month for gym membership for 45 employees. Total of $450 per month Outflow Expense 5 Pay employee Yes, every health, life, month and disability premiums, plus FICA, unemploymen t and withholding taxes. Total amount paid for benefits per month for all employees $53,314.29 (calculations is on sheet 3) Outflow Expense 8 Hire Yes, every Depreciait Outflow employees - month on Loss Expense 1st month's salary/wages (can be found on sheet "Transaction 5") EXCLUDE MANAGER WAGE, set up machinery depreciation, set up standing costs - pay wages Expense 9 Place order for raw materials at a cost of $1,000,000 which will include Machining, Casting, Grinding, Polishing, and metal injection molding materials (will be ordered every 3 months) 10 Yes, every Increase Outflow 3 months receivable (Jan, , increase April, July, account Oct) payable Expense Yes, every Increase 3 months asset, (Jan, decrease April, July, receivable Oct) Receive 3 mon 12 Book Yes, every depreciation month and other manufacturing overhead costs for the month 14 Pay for the 3 month supply of raw materials received in Transaction 10 16-18 Manufacture and month's supply of hip replacements - create 1,000 hips, sold 800 hips Yes, every Decrease Outflow 3 months payable, (Jan, increase April, July, liabilities Oct) Expense New 3 Sales tax Yes, every (.126% of month goods solds per month of gross receipts - total receipt for goods sold) - this is for all businesses in DE. we're technically not a corporation in DE so we're not subject to the 8.7% federal taxable income. http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf Outflow Expense New 5 Hire truck Yes, every driver with month Class A CDL driver for East Cost and pay $20/hour for 25 hours a week Outflow Expense August & Septembe r New 7 Total Yes, every expense/cost month for the truck $15,000 per month ($180,000 per year which includes maintenance, gas, insurance, etc.) http://www.driv ebigtrucks.co m/truckingnews/the-realoperatingcost-of-acommercialtruck/ Outflow Expense New 8 Telephone, utlities bill $12,000 Yes, every payable Outflow month http://www .investope dia.com/e xamguide/cfalevel1/financial statement s/balancesheetcompone ntsliabilities.a sp Expense 2 Pay manager Yes, every monthly salary month of $6,000 per month Outflow 3 Depreciation Yes, every Depreciati Outflow on Loss of building month Expense Expesnse 4 Hire Yes, every managers and month employees; pay fringe benefits of $10 per month for gym membership for 45 employees. Total of $450 per month Outflow Expense 5 Pay employee Yes, every health, life, month and disability premiums, plus FICA, unemploymen t and withholding taxes. Total amount paid for benefits per month for all employees $53,314.29 (calculations is on sheet 3) Outflow Expense 8 Hire Yes, every Depreciait Outflow employees - month on Loss Expense 1st month's salary/wages (can be found on sheet "Transaction 5") EXCLUDE MANAGER WAGE, set up machinery depreciation, set up standing costs - pay wages Expense 12 Book Yes, every depreciation month and other manufacturing overhead costs for the month 16-18 Manufacture and month's supply of hip replacements - For August create 1,000 hips, sold 800 hips; For September create 1,200 hips, sold 1,000 New 1 Advertising Yes, every and quarter promotions 2% of revenue (since we said 8% per year) Outflow Expense New 3 Sales tax Yes, every (.126% of month goods solds per month of gross receipts - total receipt for goods sold) - this is for all businesses in DE. we're technically not a corporation in DE so we're not subject to the 8.7% federal taxable income. http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf Outflow Expense New 5 Hire truck Yes, every driver with month Class A CDL driver for East Cost and pay $20/hour for 20 fours a week FOR AUGUST and 25 hours FOR SEPTEMBER Outflow Expense New 7 Total Yes, every expense/cost month for the truck $15,000 per month ($180,000 per year which includes maintenance, gas, insurance, etc.) http://www.driv ebigtrucks.co m/truckingnews/the-realoperatingcost-of-acommercialtruck/ Outflow Expense New 8 Telephone, Yes, every payable Outflow utlities bill month http://www $12,000 FOR .investope AUGUST and dia.com/e $14,000 FOR xamSEPTEMBER guide/cfalevel1/financial statement s/balancesheetcompone ntsliabilities.a sp Expense October 2 Pay manager Yes, every monthly salary month of $6,000 per month Outflow Expense 3 Depreciation Yes, every Depreciati Outflow on Loss of building month Expesnse 4 Hire Yes, every managers and month employees; pay fringe benefits of $10 per month for gym membership for 45 employees. Total of $450 per month Outflow Expense 5 Pay employee Yes, every health, life, month and disability premiums, plus FICA, unemploymen t and withholding taxes. Total amount paid for benefits per month for all employees $53,314.29 (calculations is on sheet 3) Outflow Expense 8 Hire Yes, every Depreciait Outflow employees - month on Loss Expense 1st month's salary/wages (can be found on sheet "Transaction 5") EXCLUDE MANAGER WAGE, set up machinery depreciation, set up standing costs - pay wages Expense 9 Place order for raw materials at a cost of $1,000,000 which will include Machining, Casting, Grinding, Polishing, and metal injection molding materials (will be ordered every 3 months) Expense 10 Yes, every Increase Outflow 3 months receivable (Jan, , increase April, July, account Oct) payable Yes, every Increase 3 months asset, (Jan, decrease April, July, receivable Oct) Receive 3 mon 12 Book Yes, every depreciation month and other manufacturing overhead costs for the month 14 Pay for the 3 month supply of raw materials received in Transaction 10 Yes, every Decrease Outflow 3 months payable, (Jan, increase April, July, liabilities Oct) Expense 16-18 Manufacture and month's supply of hip replacements - create 2,000 hips, sold 1,200 hips New 3 Sales tax Yes, every (.126% of month goods solds per month of gross receipts - total receipt for goods sold) - this is for all businesses in DE. we're technically not a corporation in DE so we're not subject to the 8.7% federal taxable income. http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf Outflow Expense New 5 Hire truck Yes, every driver with month Class A CDL driver for East Cost and pay $20/hour for 30 hours a week (they might not need to drive all the time) Outflow Expense November & December New 7 Total Yes, every expense/cost month for the truck $15,000 per month ($180,000 per year which includes maintenance, gas, insurance, etc.) http://www.driv ebigtrucks.co m/truckingnews/the-realoperatingcost-of-acommercialtruck/ Outflow Expense New 8 Telephone, utlities bill $20,000 Yes, every payable Outflow month http://www .investope dia.com/e xamguide/cfalevel1/financial statement s/balancesheetcompone ntsliabilities.a sp Expense 2 Pay manager Yes, every monthly salary month of $6,000 per month Outflow 3 Depreciation Yes, every Depreciati Outflow on Loss of building month Expense Expesnse 4 Hire Yes, every managers and month employees; pay fringe benefits of $10 per month for gym membership for 45 employees. Total of $450 per month Outflow Expense 5 Pay employee Yes, every health, life, month and disability premiums, plus FICA, unemploymen t and withholding taxes. Total amount paid for benefits per month for all employees $53,314.29 (calculations is on sheet 3) Outflow Expense 8 Hire Yes, every Depreciait Outflow employees - month on Loss Expense 1st month's salary/wages (can be found on sheet "Transaction 5") EXCLUDE MANAGER WAGE, set up machinery depreciation, set up standing costs - pay wages Expense 12 Book Yes, every depreciation month and other manufacturing overhead costs for the month 16-18 Manufacture and month's supply of hip replacements - For November create 1,500 hips, sold 1,200 hips; For December - create 1,100 hips, sold 1,000 New 1 Advertising Yes, every and quarter promotions 2% of revenue (since we said 8% per year) Outflow Expense New 2 Unanticiapted costs 10% of total projected costs per year Outflow Expense New 4 annual license fee of $75 http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf New 3 Sales tax Yes, every (.126% of month goods solds per month of gross receipts - total receipt for goods sold) - this is for all businesses in DE. we're technically not a corporation in DE so we're not subject to the 8.7% federal taxable income. http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf Outflow Expense New 5 Hire truck Yes, every driver with month Class A CDL driver for East Cost and pay $20/hour for 30 hours a week FOR NOVEMBER and 25 hours FOR DECEMBER Outflow Expense New 7 Total Yes, every expense/cost month for the truck $15,000 per month ($180,000 per year which includes maintenance, gas, insurance, etc.) http://www.driv ebigtrucks.co m/truckingnews/the-realoperatingcost-of-acommercialtruck/ Outflow Expense New 8 Telephone, Yes, every payable Outflow utlities bill month http://www $15,000 FOR .investope NOVEMBER dia.com/e and $14,000 xamFOR guide/cfaDECEMBER level1/financial statement s/balancesheetcompone ntsliabilities.a sp Expense n/a * Under the straight-line method of depreciation, recognize depreciation expense evenly over the estimated useful life of an asset. The straight-line calculation steps are: Determine the initial cost of the asset that has been recognized as a fixed asset. Subtract the estimated salvage value of the asset from the amount at which it is recorded on the books. Determine the estimated useful life of the asset. It is easiest to use a standard useful life for each class of assets. Divide the estimated useful life (in years) into 1 to arrive at the straight-line depreciation rate. Multiply the depreciation rate by the asset cost (less salvage value). Straight Line Depreciation Example Pensive Corporation purchases the Procrastinator Deluxe machine for $60,000. It has an estimated salvage value of $10,000 and a useful life of five years. Pensive calculates the annual straightline depreciation for the machine as: Purchase cost of $60,000 - estimated salvage value of $10,000 = Depreciable asset cost of $50,000 1 / 5-year useful life = 20% depreciation rate per year 20% depreciation rate x $50,000 depreciable asset cost = $10,000 annual depreciation wages and salaries (70%) total compensation benefits (30%) of total comp o 15 of the workers will be paid at the rate of $18/hour for 40 hours per week (molding specialists) = $10,800 per week OR $43,200 per month $61,714.29 $18,514.29 o 10 of the workers will be paid at the rate of $16/hour for 40 hours per week (machining specialists) = $6,400 per week OR $25,600 per month $36,571.43 $10,971.43 o 5 of the workers will be paid at the rate of $13/hour for 40 hours per week (cleaning and maintenance) = $2,600 per week OR $10,400 per month $14,857.14 $4,457.14 o 10 of the workers will be paid at the rate of $17/hour for 40 hours per week (shipping and receiving) = $6,800 per week OR $27, 200 per month $38,857.14 $11,657.14 o 3 shift supervisors will be paid at the rate of $20/hour for 40 hours per week = $2,400 per week OR $9,600 per month $13,714.29 $4,114.29 o 1 plant manager will be paid a salary of $6,000 per month $8,571.43 $2,571.43 o1 administrative /human resources person at the rate of $15/hour for 40 hours per week = $600 per week OR $2,400 per month $3,428.57 $1,028.57 $177,714.29 Total per Month $124,400.00 $53,314.29 Project Evaluation The evaluation of project should be made in terms of its underlying risk and return. The return from a project should be adequate in consideration of the risk undertaken for the project. Full Hip Replacements plant project of JointsOrtho should also be appraised based on the relevant risk and reward from the project. A project spans a long-time period usually many years. The return forms the project comes throughout the years. Thus, in the case of evaluating a project the cash flows-inflows or outflows are expected to be incurred in the future should be taken into consideration in the present time. Time value of money is a useful concept that helps in the evaluation of the future expected cash flows in the present time. The cash flows of the Full Hip Replacements plant project of JointsOrtho are expected to incur in the future expected a life of the project. For properly evaluation of the project under Net Present Value (NPV) and Internal Rate of Return (IRR) methodology, these cash flows should be turned in terms of the current value base don't eh application of time value of money (TVM). Three Project Risk Three project risk of the Full Hip Replacements plant project of JointsOrtho are resources risk, scheduling risk, and technology risk. Resources Risk People and capital are the main resource base of a project [Tut141]. The existence of unskilled labor, and insufficiency of capital results in the hampering of the performance of the project task [Vis151]. Due to lack of available skilled & competent manpower, and funds the Full Hip Replacements plant activities can be interrupted, and stopped down. Key employees and workers of the project may switch in the future. Also, in the crisis movement of funds external borrowing or capital injection by the owners may not be available. The resources risk associated with the project will be purely a standalone risk as it is a project specific risk, not other players will be affected by the company specific failure. Scheduling Risk Full Hip Replacements plant activities may not be properly carried out due to not proper scheduling. The unexpected delay may occur due to an external vendor, natural factors, and errors in estimation and delays in the acquisition of parts. Project work is performed through a series of tasks. An unexpected delay in a task cause to hamper and delay of the task in the next stage or operation [Har141]. Delay in the operational activities in the plant may cause to the inability of the JointsOrtho to react to the market demand on time, and loss of competitive position in the market. The scheduling risk associated with the project will be purely a standalone risk as it is project specific risk, not other players will be affected by the company specific inefficiency. Technology Risk Full Hip Replacements plant project has high exposure to technology risk. Due to change in the production technology of the project, the product solution offered by the project may not be feasible longer. Also, Full Hip Replacements plant activities highly technology oriented. Any kind of software & hardware defects can interrupt the operation of the plant. The technology risk associated with the project will be purely a market risk as it is a project specific risk as all other players will be affected by the industry-wide event. Fixed and Variable Cost Analysis of the Project Operating leverage measures the impact of operating earnings on the involvement of fixed expenditure on the operating cost structure of a company. The higher the involvement of fixed expenditure on the operating cost structure of a company, the greater the operating leverage of the company. Higher operating leverage implies higher business risk and higher volatility in the operating earnings for the given change in sales. Also, higher operating leverage implies higher units of required sales to reach the break-even sales point. Financial leverage measures the impact of earnings on the involvement of debt on the capital structure of a company. The higher the involvement of debt on the capital structure of the company, the greater the financial leverage of the company. Higher financial leverage implies higher financial risk and higher volatility in the net earnings for the given change in operating income. For Full Hip Replacements plant project, operating leverage is very high. The majority portion of the operating cost of the project. The project requires a huge investment in the fixed equipment and machinery. The depreciation of this expenditure along with the other fixed overhead expenditure associated with the prediction will be treated as the annual fixed cost of the project. On the other hand, the weekly labor cost, and materials cost are treated as the variable cost of the project. As compared to variable expenditure, the involvement of the fixed expenditure in the operating cost structure of the company. Thus, the JointsOrtho project is said to have a high business risk. Also, the equipment's and plant of the purchase of the project with the debt funding (mortgage). Thus, the involvement on the debt in the capital structure of the project is higher than that of the equity fund. Thus, the JointsOrtho project is said to have high financial risk also. References Kerzner, H. (2014). Project Management: A Systems Approach to Planning, Scheduling, and Controlling. New York: Jones Wiley and Sons. Tutorial Point. (2014). Retrieved December 09, 2016, from Project Risk Categories: https://www.tutorialspoint.com/management_concepts/project_risk_categories.htm Viswanathan, B. (2015, November 19). P-M: Project Management. Retrieved December 09, 2016, from Understanding the 4 Types of Risks Involved in Project Management: https://project-management.com/understanding-the-4-types-of-risks-involved-in-projectmanagement/