A pilot plant for a new product launch can be leased for 6,000 per month for 4 months. Electrical work at the site will cost 8,000. Shipping at the end of the 4 months will cost $1,000. A technician will cost 4,200 in month 4 to decommission the site.
At an interest rate of 6% per year compounded monthly, what is the present worth of the project? Round to the nearest whole number.
A pilot plant for a new product launch can be leased for 6,000 per month for 4 months. Electrical work at the site will cost 8,000. Shipping at the end of the 4 months will cost $1,000. A technician will cost 4,200 in month 4 to decommission the site.
At an interest rate of 6% per year compounded monthly, what is the present worth of the project? Round to the nearest whole number.
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Related questions
Birch Company normally produces and sells 46,000 units of RG-6each month. RG-6 is a small electrical relay used as a componentpart in the automotive industry. The selling price is $25 per unit,variable costs are $17 per unit, fixed manufacturing overhead coststotal $170,000 per month, and fixed selling costs total $38,000 permonth.
Employment-contract strikes in the companies that purchase thebulk of the RG-6 units have caused Birch Companyâs sales totemporarily drop to only 11,000 units per month. Birch Companyestimates that the strikes will last for two months, after whichtime sales of RG-6 should return to normal. Due to the current lowlevel of sales, Birch Company is thinking about closing down itsown plant during the strike, which would reduce its fixedmanufacturing overhead costs by $40,000 per month and its fixedselling costs by 9%. Start-up costs at the end of the shutdownperiod would total $14,000. Because Birch Company uses LeanProduction methods, no inventories are on hand.
Required:
1a. Assuming that the strikes continue for two months, what isthe impact on income by closing the plant?
1b. Would you recommend that Birch Company close its ownplant?
Yes | |
No |
2. At what level of sales (in units) for the two-month periodshould Birch Company be indifferent between closing the plant orkeeping it open? (Hint: This is a type of break-even analysis,except that the fixed cost portion of your break-even computationshould include only those fixed costs that are relevant [i.e.,avoidable] over the two-month period.) (Round your finalanswer to the nearest whole number.)
82.
The Pan American Bottling Co. is considering the purchase of anew machine that would increase the speed of bottling and savemoney. The net cost of this machine is $57,000. The annual cashflows have the following projections. Use Appendix B and Appendix Dfor an approximate answer but calculate your final answer using theformula and financial calculator methods.
Year | Cash Flow | ||
1 | $ | 21,000 | |
2 | 24,000 | ||
3 | 28,000 | ||
4 | 14,000 | ||
5 | 9,000 | ||
a. If the cost of capital is 11 percent, what isthe net present value of selecting a new machine? (Do notround intermediate calculations and round your final answer to 2decimal places.)
b. What is the internal rate of return?(Do not round intermediate calculations. Enter your answeras a percent rounded to 2 decimal places.)
28. |
The Bradley Corporation produces a product with the followingcosts as of July 1, 20X1:
Material | $1per unit |
Labor | 3 per unit |
Overhead | 2 per unit |
Beginning inventory at these costs on July 1 was 3,050 units.From July 1 to December 1, 20X1, Bradley produced 12,100 units.These units had a material cost of $2, labor of $4, and overhead of$2 per unit. Bradley uses LIFO inventory accounting.
a. Assuming that Bradley sold 13,200 unitsduring the last six months of the year at $13 each, what is itsgross profit?
b. What is the value of ending inventory?
30.
The Denver Corporation has forecast the following sales for thefirst seven months of the year:
January | $ | 22,000 | May | $ | 22,000 |
February | 24,000 | June | 28,000 | ||
March | 26,000 | July | 30,000 | ||
April | 32,000 | ||||
Monthly material purchases are set equal to 25 percent offorecast sales for the next month. Of the total material costs, 35percent are paid in the month of purchase and 65 percent in thefollowing month. Labor costs will run $5,200 per month, and fixedoverhead is $8,000 per month. Interest payments on the debt will be$4,200 for both March and June. Finally, the Denver salesforce willreceive a 1.50 percent commission on total sales for the first sixmonths of the year, to be paid on June 30.
Prepare a monthly summary of cash payments for the six-month periodfrom January through June. (Note: Compute prior December purchasesto help get total material payments for January.)