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Please help me with these questions! Id love to see an excel sheet for answers. Question One Question Two A bicycle manufacturer is launching a
Please help me with these questions! Id love to see an excel sheet for answers.
Question One Question Two A bicycle manufacturer is launching a new line where he expects to sell 300,000 units a year at $100 per unit. His cost per unit to manufacture is $50. The necessary machinery to build the bicycle is $17,000,000 and will be depreciated over 5 years. At the end of 5 years, the machinery can be scrapped for $350,000. The manager estimates the operations would require $500,000 of NWC (inventory and other working capital) upfront. Marketing and other operating expenses are expected at $10 million per year. The tax rate is 35% and the cost of capital is 10%. Should the company produce the bicycle? Summer Tyme, Inc. is considering a new 3-year technology project that requires an initial fixed asset investment of $3.9 mil. The asset will be depreciated SL to zero over its 3-year useful life. The project is estimated to generate $2.65 mil in annual sales, with COGS of $1.03 mil. This expansion will result in a reduction of operating expenses of $0.25 mil per year. In addition, an initial investment of $0.30 mil in NWC will need to be made. Required return = 14% and the tax rate = 33%. Calculate payback period, NPV & IRR. Is this an acceptable opportunity? If the equipment could be sold for $0.3143 million (meaning $314,300). Would you accept the project? 0 1 2 3 4 5 Time Sales Time 0 1 2. 3 SalesStep by Step Solution
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