A company is introducing a product that can sell at: 10 DOP per unit, it is...
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A company is introducing a product that can sell at: 10 DOP per unit, it is estimated that the volume of sales to be made is 200,000 units the first year and for the following years an increase of 5% compared to the sales of the previous year, this during the useful life of the project, which is 4 years. The company has two investment alternatives. 1st. Project A, and 2nd. Project B. The cost distribution is as follows: Variable costs from A: 400,000 to B: 200,000. The fixed costs for A: are 725,000 while for B: they are 850,000. Initial investment in project "A" is: 800,000 while for "B" it is: 1,400,000. Additional info: The investment will have a capital cost of 15% and the ISR is 27%. the depreciation method used is the straight line according to the categories in force in the DGII. It is required: a) Develop forecasted income statement with the data provided Then determine: b) Recovery Period or Pay Back c) Productivity Index d) Net Present Value (NPV) e) Develop capital investment budget (CAPEX) and select the most feasible project according to the indicators Summary Initial Investment Time (in years) N Cost of capital Taxes A B 800,000.00 1,400,000.00 4.00 4.00 15% 15% 40% 40% A company is introducing a product that can sell at: 10 DOP per unit, it is estimated that the volume of sales to be made is 200,000 units the first year and for the following years an increase of 5% compared to the sales of the previous year, this during the useful life of the project, which is 4 years. The company has two investment alternatives. 1st. Project A, and 2nd. Project B. The cost distribution is as follows: Variable costs from A: 400,000 to B: 200,000. The fixed costs for A: are 725,000 while for B: they are 850,000. Initial investment in project "A" is: 800,000 while for "B" it is: 1,400,000. Additional info: The investment will have a capital cost of 15% and the ISR is 27%. the depreciation method used is the straight line according to the categories in force in the DGII. It is required: a) Develop forecasted income statement with the data provided Then determine: b) Recovery Period or Pay Back c) Productivity Index d) Net Present Value (NPV) e) Develop capital investment budget (CAPEX) and select the most feasible project according to the indicators Summary Initial Investment Time (in years) N Cost of capital Taxes A B 800,000.00 1,400,000.00 4.00 4.00 15% 15% 40% 40%
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Answer rating: 100% (QA)
ANSWER Product A Year 1 2 3 4 total sales in units sales in year 11growth raten growth rate 5 n 123 200000 210000 220500 231525 total sales revenue to... View the full answer
Related Book For
Fundamental accounting principle
ISBN: 978-0078025587
21st edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
Posted Date:
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