Compute each investment’s Internal Rate of Return (IRR). v. Which investment should Mr. Dates accept and why? vi. Based on the above calculations and analysis, what has caused the ranking conflict?
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iv. Compute each investment’s
v. Which investment should Mr. Dates accept and why?
vi. Based on the above calculations and analysis, what has caused the ranking conflict?
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- Mr. Kevin Dates is the owner of an expanding business operating in bakery industry located inBridgetown, Barbados. Over the last few years business has been great. However, he believes itis time to grow and be more profitable. As such Mr. Dates has decided to invest in a newsophisticated convection oven that would boost production levels by 400% in a more efficientmanner.As an astute assistant manager to Mr. Dates have asked you to analyze the following variables toassist in informing the correct decision:1. Mr. Dates is considering investing in one of two convection ovens - Type ABC and Type XYZ;2. The initial investment costs of ovens Type ABC and Type XYZ are both $115,000 each;3. Over a 5 year period directly following the investment, projected revenue attributed to the TypeABC oven is $72,000 a year. While projected expenditure is $42,000 a year for the Type ABCoven;4. This is not the same for the Type XYZ oven investment, which is projected to only have revenueand expenditure of…Mr. Kevin Dates is the owner of an expanding business operating in bakery industry located inBridgetown, Barbados. Over the last few years business has been great. However, he believes itis time to grow and be more profitable. As such Mr. Dates has decided to invest in a newsophisticated convection oven that would boost production levels by 400% in a more efficientmanner.As an astute assistant manager to Mr. Dates have asked you to analyze the following variables toassist in informing the correct decision:1. Mr. Dates is considering investing in one of two convection ovens - Type ABC and Type XYZ;2. The initial investment costs of ovens Type ABC and Type XYZ are both $115,000 each;3. Over a 5 year period directly following the investment, projected revenue attributed to the TypeABC oven is $72,000 a year. While projected expenditure is $42,000 a year for the Type ABCoven;4. This is not the same for the Type XYZ oven investment, which is projected to only have revenueand expenditure of…Mr. Kevin Dates is the owner of an expanding business operating in bakery industry located in Bridgetown, Barbados. Over the last few years business has been great. However, he believes it is time to grow and be more profitable. As such Mr. Dates has decided to invest in a new sophisticated convection oven that would boost production levels by 400% in a more efficient manner. As an astute assistant manager to Mr. Dates have asked you to analyze the following variables to assist in informing the correct decision:1. Mr. Dates is considering investing in one of two convection ovens - Type ABC and Type XYZ;2. The initial investment costs of ovens Type ABC and Type XYZ are both $115,000 each;3. Over a 5 year period directly following the investment, projected revenue attributed to the Type ABC oven is $72,000 a year. While projected expenditure is $42,000 a year for the Type ABCoven;4. This is not the same for the Type XYZ oven investment, which is projected to only have revenue and…
- Mrs. Stellar Conch is the owner of an expanding business operating in bakery industry located in Kinston, Jamaica. Over the last few years business has been great. However, she believes it is time to grow and be more profitable. As such Mrs. Conch has decided to invest in a new sophisticated convection oven that would boost production levels by 200% in a more efficient manner. As an astute assistant manager to Mrs. Conch have asked you to analyze the following variables to assist in informing the correct decision: Mrs. Conch is considering investing in one of two convection ovens - Type ABC and Type XYZ; The initial investment costs of ovens Type ABC and Type XYZ are both $120,000 each; Over a 5 year period directly following the investment, projected revenue attributed to the Type ABC oven is $70,000 a year. While projected expenditure is $40,000 a year for the Type ABC oven; This is not the same for the Type XYZ oven investment, which is projected to only have revenue and…Mrs. Stellar Conch is the owner of an expanding business operating in bakery industry located in Kinston, Jamaica. Over the last few years business has been great. However, she believes it is time to grow and be more profitable. As such Mrs. Conch has decided to invest in a new sophisticated convection oven that would boost production levels by 200% in a more efficient manner. As an astute assistant manager to Mrs. Conch have asked you to analyze the following variables to assist in informing the correct decision: Mrs. Conch is considering investing in one of two convection ovens - Type ABC and Type XYZ; The initial investment costs of ovens Type ABC and Type XYZ are both $120,000 each. Over a 5 year period directly following the investment, projected revenue attributed to the Type ABC oven is $70,000 a year. While projected expenditure is $40,000 a year for the Type ABC oven; This is not the same for the Type XYZ oven investment, which is projected to only have revenue and…Mrs. Stellar Conch is the owner of an expanding business operating in bakery industry located in Kinston, Jamaica. Over the last few years business has been great. However, she believes it is time to grow and be more profitable. As such Mrs. Conch has decided to invest in a new sophisticated convection oven that would boost production levels by 200% in a more efficient manner. As an astute assistant manager to Mrs. Conch have asked you to analyze the following variables to assist in informing the correct decision: 1. Mrs. Conch is considering investing in one of two convection ovens - Type ABC and Type XYZ; 2. The initial investment costs of ovens Type ABC and Type XYZ are both $120,000 each; 3. Over a 5 year period directly following the investment, projected revenue attributed to the Type ABC oven is $70,000 a year. While projected expenditure is $40,000 a year for the Type ABC oven; This is not the same for the Type XYZ oven investment, which is projected to only have revenue and…
- Mrs. Stellar Conch is the owner of an expanding business operating in bakery industry located in Kinston, Jamaica. Over the last few years business has been great. However, she believes it is time to grow and be more profitable. As such Mrs. Conch has decided to invest in a new sophisticated convection oven that would boost production levels by 200% in a more efficient manner. As an astute assistant manager to Mrs. Conch have asked you to analyze the following variables to assist in informing the correct decision: 1. Mrs. Conch is considering investing in one of two convection ovens - Type ABC and Type XYZ; 2. The initial investment costs of ovens Type ABC and Type XYZ are both $120,000 each; 3. Over a 5 year period directly following the investment, projected revenue attributed to the Type ABC oven is $70,000 a year. While projected expenditure is $40,000 a year for the Type ABC oven; 4. This is not the same for the Type XYZ oven investment, which is projected to only have revenue and…Mrs. Stellar Conch is the owner of an expanding business operating in bakery industry located in Kinston, Jamaica. Over the last few years business has been great. However, she believes it is time to grow and be more profitable. As such Mrs. Conch has decided to invest in a new sophisticated convection oven that would boost production levels by 200% in a more efficient manner. As an astute assistant manager to Mrs. Conch have asked you to analyze the following variables to assist in informing the correct decision: 1. Mrs. Conch is considering investing in one of two convection ovens - Type ABC and Type XYZ; 2. The initial investment costs of ovens Type ABC and Type XYZ are both $120,000 each; 3. Over a 5 year period directly following the investment, projected revenue attributed to the Type ABC oven is $70,000 a year. While projected expenditure is $40,000 a year for the Type ABC oven; This is not the same for the Type XYZ oven investment, which is projected to only have revenue and…Mrs. Stellar Conch is the owner of an expanding business operating in bakery industry located in Kinston, Jamaica. Over the last few years business has been great. However, she believes it is time to grow and be more profitable. As such Mrs. Conch has decided to invest in a new sophisticated convection oven that would boost production levels by 200% in a more efficient manner. As an astute assistant manager to Mrs. Conch have asked you to analyze the following variables to assist in informing the correct decision: 1. Mrs. Conch is considering investing in one of two convection ovens - Type ABC and Type XYZ; 2. The initial investment costs of ovens Type ABC and Type XYZ are both $120,000 each; 3. Over a 5 year period directly following the investment, projected revenue attributed to the Type ABC oven is $70,000 a year. While projected expenditure is $40,000 a year for the Type ABC oven; This is not the same for the Type XYZ oven investment, which is projected to only have revenue and…
- Eve Corporation is considering a significant expansion to its product line. The sales force is excited about the opportunities that the new products will bring. The new products are a significant step up in quality above the company’s current offerings but offer a complementary fit to its existing product line. Sergei Bates, senior production department manager, is very excited about the high-tech new equipment that will have to be acquired to produce the new products. Will Smith, the company’s CFO, has provided the following projections based on results with and without the new products. Without New Products With New Products Sales revenue $10,000,000 $16,000,000 Net income $500,000 $960,000 Average total assets $5,000,000 $12,000,000 Instructions a) Compute the company’s return on assets, profit margin, and asset turnover, both with and without the new product line. b) Discuss the implications that your findings in part (a) have for the company’s decision.Lon Timur is an accounting major at a midwestern state university located approximately 60 miles from a major city. Many of the students attending the university are from the metropolitan area and visit their homes regularly on the weekends. Lon, an entrepreneur at heart, realizes that few good commuting alternatives are available for students doing weekend travel. He believes that a weekend commuting service could be organized and run profitably from several suburban and downtown shopping mall locations. Lon has gathered the following investment information. 1. Five used vans would cost a total of $75,551 to purchase and would have a 3-year useful life with negligible salvage value. Lon plans to use straight-line depreciation. 2. Ten drivers would have to be employed at a total payroll expense of $48,300. 3. Other annual out-of-pocket expenses associated with running the commuter service would include Gasoline $16,200, Maintenance $3,300, Repairs $3,800, Insurance…XYZ Company has two divisions, the logistics division and foods division. Suppose that the foods division has the opportunity to invest in two projects for the coming year. The first project is a new cheese-coated corn chip that requires additional factory space and special coating machinery. The second project is star-shaped corn chips. That project will require special extruding machinery to create the desired shapes. The outlay required for each investment, the dollar returns, and the ROI are as follows: Project I: Investment - $10,000,000, Operating income - $1,500,000, and ROI – 15% Project II: Investment - $4,000,000, Operating income - $760,000, and ROI – 19% The division is currently earning an ROI of 18 percent, using operating assets of $10 million to generate operating income of $1.8 million. Corporate…