Based on the information below, please conduct a break even analysis Startup Costs License: $1,500 Permits: $1,000 Equipment/Capital Costs Purchase of business: $100,000 Start-up capital: $100,000 Food equipment: $150,000 Rental lease costs (rent advance/deposit): $25,000 Computer equipment: $5,000 Computer software: $25,000 Phones: $4,500 Insurances: $30,000 Uniforms: $2,000 PPE: $3,000 Flyers/Business Cards: $500 Total: $63,000 Security system: $6,000 Total: $390,500
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- Consider an order delivery business that will be a 5-year project. The required net working capital is $6.6 million and it will be returned at the end of the life of the project. Required equipment (net capital spending) will cost $15 and it will be depreciated straight-line to 0 over the 5-year life of the project. The business will have sales of $3 million in year 1, $6 million in year 2, and $10 million in years 3, 4, and 5. Costs are 30% of sales and the tax rate is 20%. (If there is a loss at the EBIT line, assign taxes of 0 for that year and do not carry tax losses forward.) The equipment has no salvage value. Create an income statement for years 1, 2, and 3, 4, and 5 (3, 4, and 5 will have the same income statement). Use the information from the income statement to calculate the operating cash flow using EBIT + depreciation – taxes for each year. Put all cash flows (net working capital, net capital spending, and operating cash flows) on a timeline. Using total cash flows from…A general manager wants to know the economic service life of currently owned machines. The market value of the machines and the maintenance and operating costs are shown below. Use the company’s MARR of 15% per year to determine the ESL. Year Market Value Annual Cost Total Annual Worth 0 $40,000 N/A N/A 1 $30,000 $20,000 -$36,000 2 $25,000 $22,000 -$33,907 3 $12,000 $24,000 4 $2,000 $26,000 -$36,263Acme Food Co. Ltd. is considering the introduction of a new product Smackers. The firm hasgathered and provided your group the following information relevant to the project: Initial fixed capital outlay: $135,000 Initial working capital outlay: $10,800 Life of the project: 8 years Capital recovery at project end: fixed $20,000; working $8,200 Sales units forecast: 70,000 units in year one, growing at 7.00 % per annum thereafter Unit selling price: $3.75 Unit production cost: $1.78 Annual fixed overhead cost: $45,000 Annual tax rate of depreciation claimable: 20% per annum Annual income tax rate: 35% Required rate of return: 9 % per annum.Acme proposes to use $50,000 of its own funds which can provide an alternative investment return of7% and take a Current Account loan for the rest of the needed capital outlay at 11% per annum.Surplus cash flows can be invested at 6% or used to redeem the loan.Using the data provided:(a) Calculate an NPV for the project under the given…
- sing ACM, determine hourly rate to charge for this scenario: Machine cost $350,000 (w/tires) Regular maintenance $20,000 per yr Tires replaced once after 3 years; cost $4,000 present and in future Major repair in year 3 for $10,000 Salvage for $90,000 after 6 years 1,800 hrs/yr MARR = 6%The directors of Pelta Co are considering a planned investment project costing $25m, payableat the start of the first year of operation. The following information relates to the investmentproject:Year 1 Year 2 Year 3 Year 4Sales volume (units/year) 520,000 624,000 717,000 788,000Selling price ($/unit) 30·00 30·00 30·00 30·00Variable costs ($/unit) 10·00 10·20 10·61 10·93Fixed costs ($/year) 700,000 735,000 779,000 841,000This information needs adjusting to take account of selling price inflation of 4% per year andvariable cost inflation of 3% per year. The fixed costs, which are incremental and related to theinvestment project, are in nominal terms. The year 4 sales volume is expected to continue forthe foreseeable future.Pelta Co pays corporation tax of 30% one year in arrears. The company can claim tax-allowabledepreciation on a 25% reducing balance basis.The views of the directors of Pelta Co are that all investment projects must be evaluated overfour years of operations, with an…Use the following for the next 2 questions: A facility is to be built with construction costs of $50 per square foot amortized over 20 years. Receiving and put-away costs are expected to be $0.02 per box and pick-pack-ship costs are expected to be $0.10 per box. The facility will have an annual upkeep and maintenance cost of $5 per square foot. 1. If the company constructs a 100,000 square foot facility, what is the monthly fixed cost? - $102.500 - $62,500 - $92,500 - $112,500 - $82,500 - $52,500 - $72,500 2. If demand in April is 30,000 boxes, what is the variable cost in April? (assume the number of boxes received in April equals the number of boxes shipped in April) - $3,000 - $1,200 - $3,600 - $2,400 - $600 - $4,200
- Evaluate the following project using PW method. The MARR is set to 12% per year Initial Investment - 13,000 Useful Life - 15 yrs Annual Operating Expenses - 1000 Overhaul cost EOY 5 - 200 Overhaul cost EOY 10 - 550Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $491,000 cost with an expected four-year life and a $20,000 salvage value. Additional annual information for this new product line follows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Sales of new product $ 1,940,000 Expenses Materials, labor, and overhead (except depreciation) 1,507,000 Depreciation—Machinery 117,750 Selling, general, and administrative expenses 149,000 Required:1. Determine income and net cash flow for each year of this machine’s life.2. Compute this machine’s payback period, assuming that cash flows occur evenly throughout each year.3. Compute net present value for this machine using a discount rate of 7%Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $491,000 cost with an expected four-year life and a $10,000 salvage value. Additional annual information for this new product line follows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Sales of new product $ 1,970,000 Expenses Materials, labor, and overhead (except depreciation) 1,502,000 Depreciation—Machinery 120,250 Selling, general, and administrative expenses 180,000 Required:1. Determine income and net cash flow for each year of this machine’s life2. Compute this machine’s payback period, assuming that cash flows occur evenly throughout each year.3. Compute net present value for this machine using a discount rate of 7%. Do do not give solution in image fromat
- The engineering team at Manuel’s Manufacturing, Inc., is planning to purchase an enterprise resource planning (ERP) system. The software and installation from Vendor A costs $395,000 initially and is expected to increase revenue $110,000 per year every year. The software and installation from Vendor B costs $280,000 and is expected to increase revenue $110,000 per year. Manuel’s uses a 4-year planning horizon and a 8.0 % per year MARR. What is the present worth of each investment?Vendor A: $Vendor B: $Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±20.A company has the following information related to its new project. Initial investment: $1.740,000, Fixed costs: $440, 000, Variable costs: $24.00 per unit; Selling price: $50 per unit, Discount rate: 10 percent; Project life: 6 years: Tax rate: 21 percent. Fixed assets are depreciated using straight-line depreciation over the project's life. What is the financial break-even point ( e., the number of units that makes NPV = 50)7The directors of Pelta Co are considering a planned investment project costing $25m, payable at the start of the first year of operation. The following information relates to the investment project: Year 1 Year 2 Year 3 Year 4 Sales volume (units/year) 520,000 624,000 717,000 788,000 Selling price ($/unit) 30.00 30.00 30.00 30.00 Variable costs ($/unit) 10.00 10.20 10.61 10.93 Fixed costs ($/year) 700, 00 735, 00 779,000 841,000 This information needs adjusting to take account of selling price inflation of 4% per year and variable cost inflation of 3% per year. The fixed costs, which are incremental and related to the investment project, are in nominal terms.…