Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Swindler Ltd has completed a feasibility study costing $14,780 to determine if there is any benefit in purchasing a new asset. The machine will cost

Swindler Ltd has completed a feasibility study costing $14,780 to determine if there is any benefit in purchasing a new asset. The machine will cost $287,397 and an additional $21,613 will need to spent to have the machine in operational state. Before the machine can be used staff must be trained at a further cost of $7,533.

The project is expected to last for 5 years and the Taxation Office has confirmed this. At the end of the project the machine will be fully depreciated.

Initial advertising costs are expected to $37,187 and additional stock of $5,358 will be needed. Wages will change from $89,622 to $69,844 and Fixed Costs will remain at $63,696.

The new machine is expected to produce sales of $1,911,296 in the first year and will grow by 14% each year of the project. Material costs will be 26% of sales in each year.

You are required to calculate the net cash flow (round to the nearest dollar and DO NOT include $ sign) that would appear in Year 0 of a Capital Budget.

Assume the Australian Company tax Rate applies.

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

Auditing A Practical Approach

Authors: Robyn Moroney, Fiona Campbell, Jane Hamilton

3rd Edition

0730364577, 978-0730364573

More Books

Students also viewed these Accounting questions

Question

Define and contrast control limits and design specification limits.

Answered: 1 week ago

Question

7. Define cultural space.

Answered: 1 week ago

Question

8. Describe how cultural spaces are formed.

Answered: 1 week ago