Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I only need help with the NPV. The answer is not 8,9585657or 59. Please do not suggest those answers as I have had two other

I only need help with the NPV. The answer is not 8,9585657or 59. Please do not suggest those answers as I have had two other people answer this wrong.

image text in transcribed

Toying With Nature wants to take advantage of children's fascination with dinosaurs by adding several scalemodel dinosaurs to its existing product line. Annual sales of the dinosaurs are estimated at 80,000 units at a price of $6 per unit. Variable manufacturing costs are estimated at $2.50 per unit, incremental fixed manufacturing costs (excluding depreciation) at $48,000 annually, and additional selling and general expenses related to the dinosaurs at $53,000 annually. To manufacture the dinosaurs, the company must invest $350,000 in design molds and special equipment. Since toy fads wane in popularity rather quickly, Toying With Nature anticipates the special equipment will have a threeyear service life with only a $20,000 salvage value. Depreciation will be computed on a straight-line basis. All revenue and expenses other than depreciation will be received or paid in cash. The company's combined federal and state income tax rate is 40 percent. Required: a. Prepare a schedule showing the estimated increase in annual net income from the planned manufacture and sale of dinosaur toys. b. Compute the annual net cash flows expected from this project. c. Compute the following. Assume discounted at an annual rate of 15 percent. Use Exhibits 26-3 and 26-4 where necessary. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Compute the following. Assume discounted at an annual rate of 15 percent. Use Exhibits 26-3 and 26-4 where neces (Round your "PV factors" to 3 decimal places, payback period and the return on average investment answers to 1 decir place. Round net present value to the nearest whole dollar amount.) Toying With Nature wants to take advantage of children's fascination with dinosaurs by adding several scalemodel dinosaurs to its existing product line. Annual sales of the dinosaurs are estimated at 80,000 units at a price of $6 per unit. Variable manufacturing costs are estimated at $2.50 per unit, incremental fixed manufacturing costs (excluding depreciation) at $48,000 annually, and additional selling and general expenses related to the dinosaurs at $53,000 annually. To manufacture the dinosaurs, the company must invest $350,000 in design molds and special equipment. Since toy fads wane in popularity rather quickly, Toying With Nature anticipates the special equipment will have a threeyear service life with only a $20,000 salvage value. Depreciation will be computed on a straight-line basis. All revenue and expenses other than depreciation will be received or paid in cash. The company's combined federal and state income tax rate is 40 percent. Required: a. Prepare a schedule showing the estimated increase in annual net income from the planned manufacture and sale of dinosaur toys. b. Compute the annual net cash flows expected from this project. c. Compute the following. Assume discounted at an annual rate of 15 percent. Use Exhibits 26-3 and 26-4 where necessary. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Compute the following. Assume discounted at an annual rate of 15 percent. Use Exhibits 26-3 and 26-4 where neces (Round your "PV factors" to 3 decimal places, payback period and the return on average investment answers to 1 decir place. Round net present value to the nearest whole dollar amount.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

4-6 Is there a digital divide? If so, why does it matter?

Answered: 1 week ago