Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please help 10 Whether to continue purchase brushes to be distributed or to begin manufacturing them internally? 11 How big an investment can you make

please help

image text in transcribed

image text in transcribed

10 Whether to continue purchase brushes to be distributed or to begin manufacturing them internally? 11 How big an investment can you make for insourcing to be attractive? 12 How should vou finance the investment. Strategic Considerations \& KPis 4 Investment size, valuation, sensitivity analysis, what-if capabilities, Excel Data Table, cost structure, capital structure Youare Executive Vice President of Operations of a company that produces and distributes household goods. Your company manufactures some of its products and purchases and resells other products. Your company has been distributing brushes purchased from a third-party and you are analyzing the economics of insourcing (manufacturing internally) the supply. These are the facts that you need to incorporate into a model: Your company has been spending $200,000 annually to purchase brushes. This expense will cease if supply of brushes is insourced. You estimate that manufacturing inhouse will cost $100,000 in labor and $10,000 in overhead. A significant investment in equipment will be required and the investment will be straight-line depreciated over a 5 year useful life (no residual value). Additional work needs to be done to firm up an estimate but you believe the equipment will cost between $200,000 and $350,000. The Treasurer of your company needs to decide how the investment would be financed and has asked you to analyze the sensitivity of the return to financing options. At the end of the previous year, 2021, your company had $200,000 in Cash, zero debt, and $100,000 in Equity on its Balance Sheet. For the purpose of developing the model, you have selected some initial values for the two independent variables. The Treasurer of your company needs to decide how the investment would be financed and has asked you to analyze the sensitivity of the return to financing options. At the end of the previous year, 2021, your company had $200,000 in Cash, zero debt, and $100,000 in Equity on its Balance Sheet. For the purpose of developing the model, you have selected some initial values for the two independent variables. You are responsible for developing a model that analyzes the potentia investment, providing valuations of alternate strategies and a sensitivity analysis of the results. The following model should include only the incremental impact on the Income statement, Balance Sheet and Cash Flow statement. Please enter formula in the yellow boxes below to develop the model. 10 Whether to continue purchase brushes to be distributed or to begin manufacturing them internally? 11 How big an investment can you make for insourcing to be attractive? 12 How should vou finance the investment. Strategic Considerations \& KPis 4 Investment size, valuation, sensitivity analysis, what-if capabilities, Excel Data Table, cost structure, capital structure Youare Executive Vice President of Operations of a company that produces and distributes household goods. Your company manufactures some of its products and purchases and resells other products. Your company has been distributing brushes purchased from a third-party and you are analyzing the economics of insourcing (manufacturing internally) the supply. These are the facts that you need to incorporate into a model: Your company has been spending $200,000 annually to purchase brushes. This expense will cease if supply of brushes is insourced. You estimate that manufacturing inhouse will cost $100,000 in labor and $10,000 in overhead. A significant investment in equipment will be required and the investment will be straight-line depreciated over a 5 year useful life (no residual value). Additional work needs to be done to firm up an estimate but you believe the equipment will cost between $200,000 and $350,000. The Treasurer of your company needs to decide how the investment would be financed and has asked you to analyze the sensitivity of the return to financing options. At the end of the previous year, 2021, your company had $200,000 in Cash, zero debt, and $100,000 in Equity on its Balance Sheet. For the purpose of developing the model, you have selected some initial values for the two independent variables. The Treasurer of your company needs to decide how the investment would be financed and has asked you to analyze the sensitivity of the return to financing options. At the end of the previous year, 2021, your company had $200,000 in Cash, zero debt, and $100,000 in Equity on its Balance Sheet. For the purpose of developing the model, you have selected some initial values for the two independent variables. You are responsible for developing a model that analyzes the potentia investment, providing valuations of alternate strategies and a sensitivity analysis of the results. The following model should include only the incremental impact on the Income statement, Balance Sheet and Cash Flow statement. Please enter formula in the yellow boxes below to develop the model

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

The Auditor Quo Vadis

Authors: Mervyn King, Linda De Beer

1st Edition

1138496774, 978-1138496774

More Books

Students also viewed these Accounting questions

Question

what are some examples of IT platform ecosystems

Answered: 1 week ago