Question: : Lillian is considering using some of the cash generated from her mail-order business to open a retail store. The fixed investment in the store is expected to be $3.5 million. This investment can be depreciated straight line over five years. Variable costs are estimated to be 35% of sales. The tax rate is 0%. Cash fixed costs total $600,000 per year.   a) What is the net income breakeven point (in sales $) during the first five years? What is it after the fifth year?

Q: Lillian is considering using some of the cash generated from her mail-order business to open a…

A: Breakeven Point in Value = Fixed Cost / Pv Ratio PV ratio = Sales % - Varaible Cost %…

Q: Your company is planning to purchase a new log splitter for its lawn and garden business. The new…

A: working notes: Payback period = $204,000 / 30,000 = 6.8 Years 125,080-70,000 =55,080 Accounting rate…

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A: Depreciation Capital cost allowance (CCA) CCA has a set of rates based on which the annual…

Q: Assume everything is given in n=0, CONSTANT dollars unless otherwise stated: Hartsfield Company is…

A: IRR:- IRR stands for Internal Rate of return. IRR is the rate that measures the profitability for…

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A: Internal rate of return (IRR) of an alternative refers to the rate at which the Net present value…

Q: Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows.…

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Q: Shonda & Shonda is a company that does land surveys and engineering consulting. They have an…

A: Formula: Contribution margin = Sales price - variable cost.

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: The capital budgeting is a technique that helps to analyze the profitability of the project.

Q: You have the opportunity to expand your business by purchasing new equipment for $152,000. The…

A: Cost of equipment = $152,000. Useful life = 9 years  Fixed cost = $79,000 Variable cost = 5%

Q: templating the purchase of a new $545,000 computer-based order entry system. The system will be…

A: IRR is a rate where present value of cashinfows is equal to present value of cashoutflows.

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Formulas:

Q: revenues of $2 million per year. Next year, based upon a decision on a long-term government…

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A: Operating Cash Flows: It computes whether operations of the company can be sustained and grow…

Q: Billy Brown, owner of Billy refrigeration unit. The van would cost $99,000, have an eight-year…

A: Cost of Van purchased - $99,000 Cost of savings - $19,500 Increase in sales - $3,600 (1,800 x $2)

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Operating cash flow :- Operating cash flow (OCF) is a proportion of the measure of money produced by…

Q: Lillian is considering using some of the cash generated from her mail-order business to open a…

A: Breakeven Point (in sales $) = Total Fixed Cost / PV ratio PV Ratio = Sales  % -Variable Costs %…

Q: John Walker Company is planning to buy a new machine costing Php2,000,000 with a useful life of five…

A: 1) Payback period = Initial investment                                   -------------------…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

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A: Capital Budgeting is a technique that helps to analyze the profitability of the project.

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Formulas:

Q: Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows.…

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A: Requirement 2:   Compute the present value annuity factor.

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A: Net Cash Flow: Net cash flow is the difference between a cash inflow and cash outflow of a Company…

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A: An interest rate is defined as the percentage value that helps in comparing the financial products.…

Q: Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase…

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Q: Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: The operating cash flows is calculated as net Income plus depreciation, total cash flows would be…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Operating cash flow refers to the cash generated by the company from its normal business operations.…

Q: You have the opportunity to expand your business by purchasing new equipment for $152,000. The…

A: Note: We are answering 1st sub-part of the question as information related to the second part is…

Q: The initial purchase price of a new stamp press is $6,000. The firm will spend $5,000 on shipping…

A: Initial purchase price of a new stamp is $6,000 Shipping and installation cost us $5,000 Training…

Q: Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows.…

A: The question is based on the concept of Net Present Value.

Q: Nine Point Industries is trying to decide whether to invest in equipment to manufacture a ne…

A: Increase in sales = $94,000 Decrease in Material Cost =$37,000 Equipment Cost = $148,000 Time Period…

Q: JoJo purchased a water jet cutter in which their total manufacturing cost is expected to decrease…

A: a.

Q: Johnny's Lunches is considering purchasing a new energy-efficient grill. The grill will cost $32,000…

A: Given information: Cost of equipment is $32,000 Depreciated over 3 years Scrap value after year 5 is…

Q: A firm has only $10,000 to invest and must choose between two projects. Project A returns $12,400…

A: Return on investment represents income earned by the company on the investment made.

Q: A gym owner is considering opening a location on the other side of town. The new facility will cost…

A: Given, Cost = $1.38 million  Annual Sales =  $541,000

Q: Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows.…

A: Capital budgeting is the process of choosing the best project or investment alternative from a given…

Q: Suppose you wish to purchase a factory that will yield an annual return of $12,000 for 12 years,…

A: Here, Required Return on Investment is 8.25% Annual Return from Investment is $12,000 Time Period of…

Q: Safe Driving School is considering purchasing new autos costing $235,000. The company's management…

A: YEAR  CASH FLOW CUMULATIVE CASH FLOW  0 ($235,000) ($235,000) 1 $80,000 ($155,000) 2 $85,000…

Q: Compute the NPV for Campbell Manufacturing, assuming a discount rate of 12%. If required, round all…

A: Step 1: Introduction “Since you have asked multiple question, we will solve the first (1) question…

Q: Bottoms up Diaper Service is considering the purchase of a new industrial washer. It can purchase…

A: Given data; Price of new washer = $3600 selling price of old washer = $900 Life of new washer = 6…

Q: Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase…

A: a.Calculate the cash flows from year 0 to 6 as follows:

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Computation of the operating cash flows in each year are shown as below: Formula sheet is annexed…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.