The following information was obtained for this proposal: Two vans with refrigerated facilities will be...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The following information was obtained for this proposal: • Two vans with refrigerated facilities will be purchased at a cost of $30,000 each. The vans have an expected life of five years and will not have a residual value at the end of their life. DDC uses straight-line depreciation. • The marketing department plans to spend $100,000 on pre-launch advertising. The advertising budget for years 1 to 5 is expected to be $50,000 per annum.e • Van drivers: Two van drivers will be employed in years 1 and 2; three drivers will be employed in years 3, 4 and 5. Each van driver is expected to eam $25,000 per annum. • Van running costs: Costs are expected to be $10,000 in year 1 then rise by $2,000 per annum for each of the next four years. • No charge will be made for delivery since a minimum order value of $30 will be set for each order. • The cost of running central services- accounting, IT- will be increased by $60,000 in years 1 and 2 and by $80,000 for years 3, 4 and 5. • No new premises are required since the direct delivery business will be run from the company's factory in Essex, The average selling price is expected to be $5 per litre. While the cost of the ingredients required to make the ice-cream will remain the same at $1.00 per litre, packaging costs will be $0.20 per litre. • Factory fixed costs will not be affected by this proposal since the factory is highly automated. • A consultant was employed to advise the company on this proposal and provide figures for expected demand. The consultant, who has yet to invoice the company, will be paid $21,000 for this work. Assume sufficient capacity is available at the factory to produce the ice- cream for this proposed business. The company's cost of capital is 10 %. The following estimate of demand for ice-cream sales in central London was recently provided by the consultant: Year 2 60,000- Year 3 80,000- Year 4 90,000 Year 1 Year 5 Ice-cream (litres)* 30,000 100,000- Required (Total Marks 30) (a) Calculate the net present value for the proposal. (19 marks) (b) Calculate the payback period for the proposal. (3 marks) (c) Discuss the analyses produced for parts (a) and (b). (8 marks) The following information was obtained for this proposal: • Two vans with refrigerated facilities will be purchased at a cost of $30,000 each. The vans have an expected life of five years and will not have a residual value at the end of their life. DDC uses straight-line depreciation. • The marketing department plans to spend $100,000 on pre-launch advertising. The advertising budget for years 1 to 5 is expected to be $50,000 per annum.e • Van drivers: Two van drivers will be employed in years 1 and 2; three drivers will be employed in years 3, 4 and 5. Each van driver is expected to eam $25,000 per annum. • Van running costs: Costs are expected to be $10,000 in year 1 then rise by $2,000 per annum for each of the next four years. • No charge will be made for delivery since a minimum order value of $30 will be set for each order. • The cost of running central services- accounting, IT- will be increased by $60,000 in years 1 and 2 and by $80,000 for years 3, 4 and 5. • No new premises are required since the direct delivery business will be run from the company's factory in Essex, The average selling price is expected to be $5 per litre. While the cost of the ingredients required to make the ice-cream will remain the same at $1.00 per litre, packaging costs will be $0.20 per litre. • Factory fixed costs will not be affected by this proposal since the factory is highly automated. • A consultant was employed to advise the company on this proposal and provide figures for expected demand. The consultant, who has yet to invoice the company, will be paid $21,000 for this work. Assume sufficient capacity is available at the factory to produce the ice- cream for this proposed business. The company's cost of capital is 10 %. The following estimate of demand for ice-cream sales in central London was recently provided by the consultant: Year 2 60,000- Year 3 80,000- Year 4 90,000 Year 1 Year 5 Ice-cream (litres)* 30,000 100,000- Required (Total Marks 30) (a) Calculate the net present value for the proposal. (19 marks) (b) Calculate the payback period for the proposal. (3 marks) (c) Discuss the analyses produced for parts (a) and (b). (8 marks) The following information was obtained for this proposal: • Two vans with refrigerated facilities will be purchased at a cost of $30,000 each. The vans have an expected life of five years and will not have a residual value at the end of their life. DDC uses straight-line depreciation. • The marketing department plans to spend $100,000 on pre-launch advertising. The advertising budget for years 1 to 5 is expected to be $50,000 per annum.e • Van drivers: Two van drivers will be employed in years 1 and 2; three drivers will be employed in years 3, 4 and 5. Each van driver is expected to eam $25,000 per annum. • Van running costs: Costs are expected to be $10,000 in year 1 then rise by $2,000 per annum for each of the next four years. • No charge will be made for delivery since a minimum order value of $30 will be set for each order. • The cost of running central services- accounting, IT- will be increased by $60,000 in years 1 and 2 and by $80,000 for years 3, 4 and 5. • No new premises are required since the direct delivery business will be run from the company's factory in Essex, The average selling price is expected to be $5 per litre. While the cost of the ingredients required to make the ice-cream will remain the same at $1.00 per litre, packaging costs will be $0.20 per litre. • Factory fixed costs will not be affected by this proposal since the factory is highly automated. • A consultant was employed to advise the company on this proposal and provide figures for expected demand. The consultant, who has yet to invoice the company, will be paid $21,000 for this work. Assume sufficient capacity is available at the factory to produce the ice- cream for this proposed business. The company's cost of capital is 10 %. The following estimate of demand for ice-cream sales in central London was recently provided by the consultant: Year 2 60,000- Year 3 80,000- Year 4 90,000 Year 1 Year 5 Ice-cream (litres)* 30,000 100,000- Required (Total Marks 30) (a) Calculate the net present value for the proposal. (19 marks) (b) Calculate the payback period for the proposal. (3 marks) (c) Discuss the analyses produced for parts (a) and (b). (8 marks) The following information was obtained for this proposal: • Two vans with refrigerated facilities will be purchased at a cost of $30,000 each. The vans have an expected life of five years and will not have a residual value at the end of their life. DDC uses straight-line depreciation. • The marketing department plans to spend $100,000 on pre-launch advertising. The advertising budget for years 1 to 5 is expected to be $50,000 per annum.e • Van drivers: Two van drivers will be employed in years 1 and 2; three drivers will be employed in years 3, 4 and 5. Each van driver is expected to eam $25,000 per annum. • Van running costs: Costs are expected to be $10,000 in year 1 then rise by $2,000 per annum for each of the next four years. • No charge will be made for delivery since a minimum order value of $30 will be set for each order. • The cost of running central services- accounting, IT- will be increased by $60,000 in years 1 and 2 and by $80,000 for years 3, 4 and 5. • No new premises are required since the direct delivery business will be run from the company's factory in Essex, The average selling price is expected to be $5 per litre. While the cost of the ingredients required to make the ice-cream will remain the same at $1.00 per litre, packaging costs will be $0.20 per litre. • Factory fixed costs will not be affected by this proposal since the factory is highly automated. • A consultant was employed to advise the company on this proposal and provide figures for expected demand. The consultant, who has yet to invoice the company, will be paid $21,000 for this work. Assume sufficient capacity is available at the factory to produce the ice- cream for this proposed business. The company's cost of capital is 10 %. The following estimate of demand for ice-cream sales in central London was recently provided by the consultant: Year 2 60,000- Year 3 80,000- Year 4 90,000 Year 1 Year 5 Ice-cream (litres)* 30,000 100,000- Required (Total Marks 30) (a) Calculate the net present value for the proposal. (19 marks) (b) Calculate the payback period for the proposal. (3 marks) (c) Discuss the analyses produced for parts (a) and (b). (8 marks)
Expert Answer:
Answer rating: 100% (QA)
Particulars Year 1 Year 2 Year 3 Year 4 Year 5 Litres of ice cream sold 30000 60000 80000 90000 100000 Revenue litres sold price per litre 5 150000 30... View the full answer
Related Book For
Mathematical Statistics with Applications in R
ISBN: 978-0124171138
2nd edition
Authors: Chris P. Tsokos, K.M. Ramachandran
Posted Date:
Students also viewed these accounting questions
-
The following information was obtained for the first department of LPZ Company for April: a. BWIP had 30,500 units, 30 percent complete with respect to manufacturing costs. b. EWIP had 8,400 units,...
-
The following information was obtained for the grinding department of Harlan Company for May: a. BWIP had 91,500 units, 30 percent complete with respect to manufacturing costs. b. EWIP had 25,200...
-
The following information was obtained from analysis of selected accounts of Orlando Company for the year ended December 31, 2011. Increase in long-term debt . . . . . . . . . . . . . . . . . . . . ....
-
Linda has d dollars in an account that pays 1.4% interest, compounded weekly. She withdraws w dollars. Express her first weeks interest algebraically.
-
Change Algorithms 12.2 and 12.3 to accommodate the partial differential equation u / t 2 2u / x2 = 0, 0 < x < l, 0 < t; u(0, t) = (t), u(l, t) = (t), 0 < t; u(x, 0) = f (x), 0 x l, where f (0) =...
-
Stitch Fix is an online personal styling service that was founded in 2011 by entrepreneur Katrina Lake. Lake's vision was to disrupt the fashion retail industry by curating personalized wardrobe...
-
For the streams listed in Table 7.9 (cyclohexane process) and Table 7.13 (HDA process), specify (or select) a pressure (or temperature), and calculate temperature (or pressure). Indicate the reasons...
-
a. Sammys Seashore Supplies rents beach equipment such as kayaks, canoes, beach chairs, and umbrellas to tourists. In Chapter 2, you wrote an application that prompts the user for the number of...
-
Camila Company has set the following standard cost per unit for direct materials and direct labor. Direct materials (14 pounds @ $4 per pound) Direct labor (2 hours @ $14 per hour) $ 56 28 During...
-
John Wallace is an automotive enthusiast. He has over 25 years of experience as a mechanic for the dealership of a large car manufacturer in Oakville. John also gained experience doing minor body...
-
By using Consumer behavior in a service context and design service processes to explain How the operations and delivery systems of A website for book-ing flights can interact to provide excellent...
-
Address your memo to your client John Kimble. Mr. Kimble is a retired kindergarten teacher. Assume that you are writing on March 1, 2013, shortly after the filing of the 2012 Form 10-K. In the...
-
Five Styrofoam balls are suspended from insulating threads. Several experiments are performed on the balls and the following observations are made: Ball B attracts D and repels E. Ball C attracts D...
-
After reading the Texas Board of Nursing "Delegation Packet, describe a situation that can occur in a work setting, or that could potentially occur, that demonstrates the importance of following the...
-
An analyst is evaluating two companies, A and B. Company A has a debt ratio of 50% and Company B has a debt ratio of 25%. In his report, the analyst is concerned about Company B's debt level, but not...
-
Supply the missing data for three service companies shown in the table below: Note: Loss amounts should be indicated by a minus sign. Round your percentage answers to nearest whole percent. Sales Net...
-
1. Identify the key differences between quantitative and qualitative research? 2. Define evidence-based practices and what are the three areas that makeup EBPs for pubic relations research? 3....
-
Use Stokes' Theorem to evaluate f(y+sin x) dx+(z+cos y) dy+rdz, where C is the rve r(t) = (sint, cost, sin 2t), t = [0, 2].
-
The following information was obtained from two independent samples selected from two normally distributed populations with unknown but equal variances. Construct a 95% confidence interval for the...
-
If Xi ~ Pois (i), I = 1, 2, . . ., k, are independent, and Then -LA.
-
Let X1, . . ., Xn be a random sample from a negative binomial distribution with pmf Find method of moments estimators for r and p. [Here E[X] = r(1 p) / p and E[X2] = r(1 p) (r rp + 1) / p2.] p(x,...
-
The potential problem with Yorktons approach to identifying ESG factors is the: A. promotion of uniform accounting standards. B. subjective assessment of ESG scores and rankings. C. inconsistent...
-
Strattons estimated conglomerate discount just prior to the announcement is: A. USD17 billion. B. USD0. C. USD17 billion. Elaine Lee is an analyst at an investment bank covering the energy sector....
-
The most relevant industry risk factors affecting Titian are: A. social. B. governance. C. environmental. Theresa Blass manages the Toptier Balanced Fund (the Fund) and recently hired John Yorkton, a...
Study smarter with the SolutionInn App