Swindler Ltd has completed a feasibility study costing $16769 to determine if there is any benefit in
Question:
Swindler Ltd has completed a feasibility study costing $16769 to determine if there is any benefit in purchasing a new asset. The machine will cost $318900 and an additional $14152 will need to spent to have the machine in operational state. Before the machine can be used staff must be trained at a further cost of $9602.
The project is expected to last for 5 years and the Taxation Office has confirmed this. At the end of the project the machine will be fully depreciated.
Initial advertising costs are expected to $20571 and additional stock of $68525 will be needed. Wages will change from $85000 to $39495 and Fixed Costs will remain at $59609.
The new machine is expected to produce sales of $1125787 in the first year and will grow by 10% each year of the project. Material costs will be 24% of sales in each year.
You are required to calculate the net cash flow (round to the nearest dollar and DO NOT include $ sign) that would appear in Year 1 of a Capital Budget.
Assume the Australian Company tax Rate applies.Business Statistics a decision making approach
ISBN: 978-0133021844
9th edition
Authors: David F. Groebner, Patrick W. Shannon, Phillip C. Fry