The BLE company is considering constructing a plant to manufacture a propose new products. The land costs P 15,000,000; the building costs P 30,000,000; the equipment cost p 12,500,000; and P 5,000,000 working capital is required. At the end of 12 years, the land can be sold for P 25,000,000; the building for P 12,000,000; the equipment for P 250,000; and all of the working capital recovered. The annual disbursement for labor, materials, and all other expenses are estimated to cost P 23,750,000. If the company requires a minimum return of 25%, what should be the minimum annual sales for 12 years to justify this investment?
The BLE company is considering constructing a plant to manufacture a propose new products. The land costs P 15,000,000; the building costs P 30,000,000; the equipment cost p 12,500,000; and P 5,000,000 working capital is required. At the end of 12 years, the land can be sold for P 25,000,000; the building for P 12,000,000; the equipment for P 250,000; and all of the working capital recovered. The annual disbursement for labor, materials, and all other expenses are estimated to cost P 23,750,000. If the company requires a minimum return of 25%, what should be the minimum annual sales for 12 years to justify this investment?
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter11: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 1P: Talbot Industries is considering launching a new product. The new manufacturing equipment will cost...
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The BLE company is considering constructing a plant to manufacture a propose new
products. The land costs P 15,000,000; the building costs P 30,000,000; the equipment
cost p 12,500,000; and P 5,000,000 working capital is required. At the end of 12 years,
the land can be sold for P 25,000,000; the building for P 12,000,000; the equipment for
P 250,000; and all of the working capital recovered. The annual disbursement for labor,
materials, and all other expenses are estimated to cost P 23,750,000. If the company
requires a minimum return of 25%, what should be the minimum annual sales for 12
years to justify this investment?
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