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O Lost Revenue Proforma Income Stutement Should only We are considering the production of a new laser cat toy. This toy is will enabled and can be activated and controlled using a smartphone by the cat's owners while they are away from home. The development and market research costs have been $500.000 to date. As you know, we currently sell two types of hand-held laser toys. We expect sales to decrease by $1.8 million per year if we introduce the new toy. The incremental drop in salos is expected to be constant, NOT increasing, even after accounting for inflation. Because of the decrease in sales, our networking capital required for the current toys will decrease by $180.000 immediately and variable costs will decrease by $600,000 each year. C 2 VC-SANA65 The project is expected to last 3 years. The various departments have estimated the following numbers: New Equipment Requirements create MACR Shedule Initial cost is $5 million, depreciated using 5-year MACRS Annual pre-tax operating cost is $500.000 with an expected inflation rate of 2% per year Useful life is 3 years, at which time all equipment will be sold for an estimated $2.500.000 -S M -line Plant Requirements We will need to expand our current plant at a cost of $3 million. This expansion cost will be depreciated straight-line over 20 years. Sales The unit price per toy in year 1 follows a normal distribution with a mean $16.50 And a standard deviation of $1.25 ndard Riverve- Cove The price is expected to increase at an inflation rate of 1.5% per after year 1 . Unit sales in year one depend on pnce in your one in the following way 16.30 + If unit price $16.25 we expect to sell 2.5 million units $16 25eunit price $16.75 we expect to sell on units If unit price >$16.75 we expect to sell 1.5 million units 576.50 Unit sales increase by 5% per year Costs Fixed costs, in addition to the operating cost of the machine will be $750,000 per year with an expected inflation rate of 1% per year Vanable costs also follow a normal distribution with a mean of $12 er box in year 1 with a standard deviation of $1.15 per box Van traight line Year I price 3 ylars. non Toretto,015) In the SOUUUUU Bdul yuar. only - Year! price Tags 3 years. VU The project is expected to last 3 years. The various departments have estimated the following numbers: New Equipment Requirements -Create MACR Shedule Profurnis Initial cost is $5 million, depreciated using 5-year MACRS Income Annual pre-tax operating cost is $500,000 with an expected inflation rate of 2% per year Stutenent m artline Useful life is 3 years, at which time all equipment will be sold for an estimated $2.500.000 - S Plant Requirements Should We will need to expand our current plant at a cost of $3 milion. This expansion cost will be depreciated straight-line over 20 years. Sales The unit price per toy in year 1 follows a normal distribution with a mean $16.50 And a standard D.LAVE deviation of $1.25 The price is expected to increase at an inflation rate of 1.5% per year after year 1_ - now Unit soles in year one depend on price in year one in the following way o f unit price $16.75 we expect to sell 1.5 million units 576.50 Unit sales increase by 5% per year Costs Fixed costs, in addition to the operating cost of the machine will be $750,000 per year with an expected inflation rate of 1% per year Vanable costs also follow a normal distribution with a mean of $12 er box in year 1 with a standard deviation of $1.15 per box Van traight line Year I price 3 ylars. non Toretto,015) In the SOUUUUU Bdul yuar. only - Year! price Tags 3 years. VU The project is expected to last 3 years. The various departments have estimated the following numbers: New Equipment Requirements -Create MACR Shedule Profurnis Initial cost is $5 million, depreciated using 5-year MACRS Income Annual pre-tax operating cost is $500,000 with an expected inflation rate of 2% per year Stutenent m artline Useful life is 3 years, at which time all equipment will be sold for an estimated $2.500.000 - S Plant Requirements Should We will need to expand our current plant at a cost of $3 milion. This expansion cost will be depreciated straight-line over 20 years. Sales The unit price per toy in year 1 follows a normal distribution with a mean $16.50 And a standard D.LAVE deviation of $1.25 The price is expected to increase at an inflation rate of 1.5% per year after year 1_ - now Unit soles in year one depend on price in year one in the following way o f unit price
