A frame store has decided to start selling complete prints placed in the frame. Since frames...

 

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A frame store has decided to start selling complete prints placed in the frame. Since frames are already being sold, their cost is NOT considered in your analysis. You need to find a large frame printer that is capable of making 13 inches x 19 inches prints, Marketing department believes that store can sell frames with prints inside for an additional income of $10.00 per frame. It is believed that there is a market for 5,000 prints per year. Therefore, Total expected income = $50,000 per year Number of prints to be sold = 5,000 per year Costs to be considered: . Cost of purchasing and maintaining printer (consider printer's purchase price, taxes and expected life of printer if you print 5,000 color prints (13x19 inches) per year. • Additional labor cost (consider printing time and print handling time as major parts of the labor cost, which is $12 /hr. including all benefits and overtime) • Costs of 5,000 sheets of photo paper (13 x 19), purchased wholesale . Cost of cartridges (it is not easy to determine how long will cartridge last, but you can estimate) Cost of electricity consumed by the printer . Any other cost you believe to be appropriate All costs increase every year by 2%. Project life life of the printer (you must make this determination, but assume it to be at least 2 years) You must compare at least 2 printers (a color inkjet printer and a color laser printer) determine IRR of this project and draw conclusions b. Make a second set of analysis, assuming that instead of having additional labor cost, you have decided to hire additional part-time employee at $8 /hr. You must estimate: . Cost of hiring/training new employee • How many hours will this employee be working? • Cost of labor compensation insurance for the new employee Determine whether it is more beneficial to pay current employee $12/hr.) (including all benefits and other costs) or to pay new employee $8/hr. + labor compensation insurance + costs of hiring/training. A frame store has decided to start selling complete prints placed in the frame. Since frames are already being sold, their cost is NOT considered in your analysis. You need to find a large frame printer that is capable of making 13 inches x 19 inches prints, Marketing department believes that store can sell frames with prints inside for an additional income of $10.00 per frame. It is believed that there is a market for 5,000 prints per year. Therefore, Total expected income = $50,000 per year Number of prints to be sold = 5,000 per year Costs to be considered: . Cost of purchasing and maintaining printer (consider printer's purchase price, taxes and expected life of printer if you print 5,000 color prints (13x19 inches) per year. • Additional labor cost (consider printing time and print handling time as major parts of the labor cost, which is $12 /hr. including all benefits and overtime) • Costs of 5,000 sheets of photo paper (13 x 19), purchased wholesale . Cost of cartridges (it is not easy to determine how long will cartridge last, but you can estimate) Cost of electricity consumed by the printer . Any other cost you believe to be appropriate All costs increase every year by 2%. Project life life of the printer (you must make this determination, but assume it to be at least 2 years) You must compare at least 2 printers (a color inkjet printer and a color laser printer) determine IRR of this project and draw conclusions b. Make a second set of analysis, assuming that instead of having additional labor cost, you have decided to hire additional part-time employee at $8 /hr. You must estimate: . Cost of hiring/training new employee • How many hours will this employee be working? • Cost of labor compensation insurance for the new employee Determine whether it is more beneficial to pay current employee $12/hr.) (including all benefits and other costs) or to pay new employee $8/hr. + labor compensation insurance + costs of hiring/training.

Answer rating: 100% (QA)

A In order to determine the Internal Rate of Return IRR of the project one must first calculate the total costs and total expected income Costs 1 Cost of purchasing and maintaining printer The cost of ... View the full answer