308.3 original assignmnet question

Project Description:

company a has developed a newly patented product—a corner fan with two blades that will fully circulate air in an l-shaped room. to bring the product to market, company a will need to purchase a new production machine at a cost of $360,000. the new machine will be depreciated using the double declining balance method using a six-year life for three years, and then the method will be changed to straight line for the remaining three years


expected weekly sales volume: 200 units

selling price: $86

incremental direct material costs per unit: $42

incremental direct labor cost per unit: $16

incremental manufacturing overhead allocation per unit: $12.50

incremental annual selling and administration expenses: $60,000

cost of capital: 15%

corporate marginal tax rate: 25%


company a expects a salvage value of $30,000 for this machine at the end of six years. an additional $40,000 in working capital will be required to support the operation of the machine due to the additional raw material inventory needed.


task:

a. using the attached “new investment analysis template” and the information provided in the given, calculate the following:

1. payback period

2. net present value (npv)

3. internal rate of return (irr)

4. profitability index (using npv in the calculation)
Skills Required:
Project Stats:

Price Type: Negotiable

Expired
Total Proposals: 1
1 Current viewersl
10 Total views
Project posted by:

Proposals

Proposals Reputation Price offered