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Question 6 ( 1 point ) Gavin Mills has an existing facility that it paid 2 6 , 0 0 0 , 0 0 0
Question point Gavin Mills has an existing facility that it paid for years ago. It has choices for this facility now: sell it outright for today, lease it for the next years to a supplier, then sell it at the end of the last year of the lease for or use it to produce flax seed for years, then sell it at the end of the last year of production for but it will have to be upgraded today for use at a cost of M not paid under the lease option If it is used by Gavin to produce flax seed it can be sold for $ a bushel with a contribution margin ratio how much the firm keeps after variable costs of production of To operate the plant, Gavin will incur $ per year of fixed costs, regardless of production levels not applicable to the lease Gavin forecasts that it will sell the following bushels in each of the next years: The lease terms would be $ per year plus a $ per year reduction in costs for the supplies Gavin buys from the leasee. Please use a WACC of How much would the salvage value sale price at the end of the lease have to be to change the decision? Please consider changes in $ increments ie to M and enter your response in millions with no units and ONE decimal place: $ would be
Question point
Gavin Mills has an existing facility that it paid for years ago. It has
choices for this facility now: sell it outright for today, lease it for the next
years to a supplier, then sell it at the end of the last year of the lease for or use it
to produce flax seed for years, then sell it at the end of the last year of production
for but it will have to be upgraded today for use at a cost of M not paid
under the lease option If it is used by Gavin to produce flax seed it can be sold for
$ a bushel with a contribution margin ratio how much the firm keeps after
variable costs of production of To operate the plant, Gavin will incur $
per year of fixed costs, regardless of production levels not applicable to the lease
Gavin forecasts that it will sell the following bushels in each of the next years:
The lease terms would be $ per year plus a
$ per year reduction in costs for the supplies Gavin buys from the leasee.
Please use a WACC of
How much would the salvage value sale price at the end of the lease have to be to
change the decision? Please consider changes in $ increments ie to
M and enter your response in millions with no units and ONE decimal place:
$ would be
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