XYZ Corporation is considering buying a new machine for $ 4 0 , 0 0 0 .
Question:
XYZ Corporation is considering buying a new machine for $ The machine will be good for years and will allow the company to process and sell an additional units per year at $ per unit. Variable costs will be $ per unit. Fixed costs will be $ per year. This project will require an upfront investment in inventory of $ that will be reclaimed at the end of the project. Depreciation will be straight line with no salvage. The tax rate is and the required return is Assume the information given is the same for all years.
Sales units at $unit
$
Variable Costs $unit
Gross profit
$
Fixed costs
Depreciation $
EBIT
$
Taxes
Net Income
$
Year
NWC
$
$ $ $ $
Net Fixed Assets
Total $s Invested
$ $ $ $ $
Using the above information calculate the CFFA per year, the NPV and the IRR. Using this, determine whether then project should be accepted or rejected.
NPV $ and IRR ; Accept the project.
NPV $ and IRR ; Reject the project.
NPV $ and IRR ; Accept the project.
NPV $ and IRR ; Accept the project.
Cost Management Measuring Monitoring And Motivating Performance
ISBN: 9781118168875
2nd Canadian Edition
Authors: Leslie G. Eldenburg, Susan Wolcott, Liang Hsuan Chen, Gail Cook