Question
Using the sample spreadsheet provided to you, reference the business example described on page 5 of the handout for Class 11 and please provide answers
Using the sample spreadsheet provided to you, reference the business example described on page 5 of the handout for Class 11 and please provide answers to the following questions. (Assume all parts of this question are to be evaluated independently of each other.)
a. What is the After-Tax Income for Year 2 if you can sell 10,000 more units, by dropping the price to $45 per unit?
b. What is the After-Tax Income for Year 3 if you can sell 15,000 more units, by spending more $20,000 more on advertising?
c. What is the After-Tax Income for Year 2 if you can redesign your product to lower the cost per unit by two more dollars?
d. What happens to your 3 year projections, if the government corporate Tax Rate is dropped by 10%, starting in Year 2?
e. What happens to the P&L in Year 1, if your design/test labs use $5,000 more in electricity than planned?
Using the same reference information in Question 2 above, please answer the following for the business:
a. What is the After-Tax Income if, in year 2, you have a factory equipment failure and the manufacturing line is down for 4 weeks out of 50? (Assume the repairs will cost you $10,000.)
b. What happens to your Margin % and After Tax profit in Year 3, if a new competitor comes into the market and begins selling at $29.99, starting in May of that year?
NewCo P&L ear 1 Year 2 Year 3 Chart Title ASP Unit Cost Units Sold Unit Growth Rate 39.99 15.00$12.00 $8.00 50,000 49.99 $ $250000 25,000 257.14% 100.00% Revenu Variable Cost Margin $ Margin % 419,9301,249,750 1,999,500 $ 105,000300,000400,000 314,930 949,750 1,599,500 $2000,000 75.0% 760% 80.0% Fixed Costs Sales 150,000 150,000150,000 Marketing S 25,00025,00025,000 $1,50000 Research & Development $200,000S 200,000$ 200,000 Administrative75,00075,000$ 75,000 Total Fixed Costs 450,000450,000450,000 $1000000 Net Income (135,070) 499,750 1,149,500 $174,913402,325 Taxes After Tax Income $500 000 Tax Rate 35% 35% 35% Year 1 Year 2 Year 3 Revneue $419,930$ 1,249,750 $ 1.999,500 COGS 105,000 300,000400,000 FC 450,000450,000450,000 750 1,149,500 s- Yeat 2 ear 3 Profit (135,00) 4 499,7 $600,000)
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