Question
MNC international has following sales for the year mentioned in Sheet 1. The sales price per unit is also given. Considering the market competition, the
MNC international has following sales for the year mentioned in Sheet 1. The sales price per unit is also given. Considering the market competition, the sale price would drop after 4th year by given percentage. Its observed that the project has 20% of yearly sales as NWC with beginning NWC as 15% of 1st years sales. The variable cost per unit is given as a percentage of sales per unit. The total fixed costs are equivalent to depreciation, administrative expense and utilities expense mentioned as a given percentage. It found that the amount of equipment needed for production is equivalent to the 60% of the total sales amount for all the years. The production equipment will be worth 20% of its actual cost at the end of 8 years. As the relevant tax is 33.5%. Suggest if we should proceed with the project?
2-Refer the straight-line depreciation method for yearly depreciation process ?
\begin{tabular}{|l|r|r|} \hline Year & Unit Sales & \\ \hline & 1 & 34716 \\ \hline & 2 & 35397 \\ \hline 3 & 34611 \\ \hline & 4 & 35502 \\ \hline & 5 & 35845 \\ \hline & 6 & 35620 \\ \hline Sales price & 7 & 34859 \\ \hline & 8 & 35454 \\ \hline Drop Percentage & & \\ \hline & & \\ \hline Variable Price & & 8 \\ \hline & & \\ \hline & & 0.15 \\ \hline Administrative Expense & & \\ \hline Utilities Expense & & 4.1 \\ \hline \end{tabular} \begin{tabular}{|l|r|r|} \hline Year & Unit Sales & \\ \hline & 1 & 34716 \\ \hline & 2 & 35397 \\ \hline 3 & 34611 \\ \hline & 4 & 35502 \\ \hline & 5 & 35845 \\ \hline & 6 & 35620 \\ \hline Sales price & 7 & 34859 \\ \hline & 8 & 35454 \\ \hline Drop Percentage & & \\ \hline & & \\ \hline Variable Price & & 8 \\ \hline & & \\ \hline & & 0.15 \\ \hline Administrative Expense & & \\ \hline Utilities Expense & & 4.1 \\ \hline \end{tabular}
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