Q2. The directors of Foresight Industries are currently considering launching a new product. The production of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Q2. The directors of Foresight Industries are currently considering launching a new product. The production of the new product involves the purchase of new machinery. The following information is available for the project: Probabilities Profit Year 1 Profit Year 2 Profit Year 3 Cost (Immediate Outlay) €120,000 Residual/Scrap Value Product 1 0.3 €35,000 €56,000 E110,000 €140,000 €52,500 €84,000 €165,000 €210,000 €47,250 €75,600 €148,500 €189,000 0.15 0.4 0.15 €25,000 The company has an estimated cost of capital of 10% and employs the straight-line method of depreciation for all fixed assets when calculating net profit. Neither project would increase the working capital of the company. The company has sufficient funds to meet all capital expenditure requirements. Required: a) Calculate the expected profit for each year of the life of product 1 (9 marks) b) Calculate for product 1: i) The net present value ii) The payback period (10 marks) (6 marks) Q2. The directors of Foresight Industries are currently considering launching a new product. The production of the new product involves the purchase of new machinery. The following information is available for the project: Probabilities Profit Year 1 Profit Year 2 Profit Year 3 Cost (Immediate Outlay) €120,000 Residual/Scrap Value Product 1 0.3 €35,000 €56,000 E110,000 €140,000 €52,500 €84,000 €165,000 €210,000 €47,250 €75,600 €148,500 €189,000 0.15 0.4 0.15 €25,000 The company has an estimated cost of capital of 10% and employs the straight-line method of depreciation for all fixed assets when calculating net profit. Neither project would increase the working capital of the company. The company has sufficient funds to meet all capital expenditure requirements. Required: a) Calculate the expected profit for each year of the life of product 1 (9 marks) b) Calculate for product 1: i) The net present value ii) The payback period (10 marks) (6 marks)
Expert Answer:
Answer rating: 100% (QA)
Probability 03 015 04 015 100 3500003 56000015 11000004 140000015 5250003 ... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
A software company is considering launching a new product in the market. To record consumer behavior, the company participated in two domestic software fairs in Athens and Thessaloniki that cost...
-
The following information is available for Brimley Inc. Note: All inventory is purchased on account, and Accounts Payable relates only to the purchase of inventory. Compute the following for 2008: 1....
-
The following information is available for Gerard Corporation (a) Compute earnings per share for 2012 and 2011 for Gerard, and comment on the change. Gerard??s primary competitor, Thorpe Corporation,...
-
5.In a nut shell, when you look back over time, the power of image has always been there. Even in the prehistoric era, they used imagery to communicate, and what's even more incredible is that we are...
-
Determine the sample size necessary to estimate p for the following information. a. E = .02, p is approximately .40, and confidence level is 96% b. E is to be within .04, p is unknown, and confidence...
-
The active site of the enzyme Ritzolinine (RZN45) contains three positively charged lysine residues. When ascorbic acid is present, binding of JB-76, the substrate of RZN45, decreases. The reaction...
-
During the year ended 30 June 2025, Trendline Pty Ltd incurred the following costs. The company charges factory overhead costs to work in process inventory and finished goods inventory, using an...
-
In its annual report for the year ended January 31, 2011, Virco Manufacturing Corporation , a producer of school desks and other furniture, provided the following information regarding a change in...
-
The City of Evansville operated a summer camp program for at-risk youth. Businesses and nonprofit organizations sponsor one or more youth by paying the registration fee for program participants. The...
-
A tennis ball is mounted on a spring that is suspended from a ceiling in John's dorm room. For entertainment, stress relief, boredom or just for a pure conversation piece, the tennis ball can be...
-
Janet McKinley is employed by the Quality Products Corporation, a publicly traded conglomerate. The corporation manufactures and sells many different kinds of products, including luggage, music...
-
(a) Verify that GLS on (8.19) yields (8.20). (b) For the error component model with \(\widetilde{\Omega}=\widetilde{\sigma}_{u}^{2} I_{T}+\widetilde{\sigma}_{\mu}^{2} J_{T}\) and...
-
Using Kripfganz (2016) xtdpdqml command in Stata, replicate his illustration using the Arellano and Bond (1991) dynamic employment empirical application in Problem 8.8. Unlike the original study, the...
-
Acemoglu et al. (2019) provide evidence that democracy has a significant and robust positive effect on log GDP per capita. They estimate a dynamic panel data model of log GDP per capita for 175...
-
Sarah Jones and Jack Peterson are working on a business plan for their proposed venture. Their plan calls for them to locate and operate 10 kiosks in malls and other high-traffic areas to sell...
-
One challenge that businesses confront is cutting costs in ways that do not erode their competitiveness. Many cost-cutting techniques, such as scaling back on hiring, lowering marketing expenses, or...
-
Drug policies regarding marijuana use vary by state and company, but it is still illegal under federal law. Companies with zero-tolerance drug policies seem to be protected against reimbursement...
-
State whether each statement is true or false. If false, give a reason. {purple, green, yellow} = {green, pink, yellow}
-
A railroad provides passenger and freight service. The table shows the long-run total annual costs TC(F, P), where P measures the volume of passenger traffic and F the volume of freight traffic. For...
-
Consider the optimal choice of labor and leisure discussed in the text. Suppose a consumer works the first 8 hours of the day at a wage rate of $10 per hour, but receives an overtime wage rate of $20...
-
In the upcoming year, the income from your current job will be $90,000. There is a 0.8 chance that you will keep your job and earn this income. However, there is 0.2 chance that you will be laid off,...
-
Refer to Exercise 2.34, page 46, concerning the number for board failures for \(n=32\) integrated circuits (IC). A computer calculates \(\bar{x}=7.6563\) and \(s=5.2216\). Obtain a 95\% confidence...
-
To monitor complex chemical processes, chemical engineers will consider key process indicators, which may be just yield but most often depend on several quantities. Before trying to improve a...
-
Refer to the \(2 \times 4\) lumber strength data in Exercise 2.58, page 48. According to the computer output, a sample of \(n=30\) specimens had \(\bar{x}=1908.8\) and \(s=\) 327.1. Find a \(95 \%\)...
Study smarter with the SolutionInn App