(1). A car parts manufacturer currently sells 1 million headlamps every year. The cost of each headlamp...
Fantastic news! We've Found the answer you've been seeking!
Question:
- (1). A car parts manufacturer currently sells 1 million headlamps every year. The cost of each headlamp to manufacturer is $40 dollars. The headlamps are sold to the automobile manufacturers for $100 dollars each. With the introduction of LED headlamps sales are expected to go up to 1.5 million at the new price $125 dollars for each LED headlamp. The new headlamp costs $60 each to manufacture. Demand for the old lamps will drastically reduce to replacement levels of 10000 only. What is the proper cash flow to use to evaluate the present value of the introduction of the new headlamps?
- (2). The manufacturer installed its (old) headlamps manufacturing equipment three years ago. Some of that older equipment will become unnecessary when the company goes into production of its new product. The obsolete equipment, which originally cost $50 million, has been depreciated straight-line over an assumed tax life of 5 years, but it can now be sold for $20 million. The firm's tax rate is 35 percent. What is the after-tax cash flow from the sale of the equipment?
Related Book For
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
Posted Date: