As the financial consultant, what recommendation on the financial viability of the project would you make to the Trytonic Ltd using the NPV. (Present your answer in thousands of GHS)
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Trytonic Ltd is considering a new project for manufacture of pocket video games involving a
capital expenditure of GHS 60m and working capital of GHS 15m. The capacity of the plant is for
annual production of 1.2m units and the capacity utilization during the 6-year life of the project is
expected to be as follows:
Year
1
2
3
4 – 6
Capacity utilization One-third
Two-thirds 90 %
100%
The average price per unit of product is expected to be GHS 200 with a contribution per unit of
40% of the selling price. The annual fixed cost, excluding depreciation, are estimated to GHS
24m and GHS 36m for years 1 and 2 respectively, and GHS 48m per year from the third year
onwards. The fixed asset will be
m. The rate of income tax and cost of capital may be taken as 35% and 15% respectively.
At end of the third year, an additional investment of GHS 10m would be required for working
capital. The fixed assets will be sold at 10% of initial cost and working capital will be recouped
fully at the end of the project.
As the financial consultant, what recommendation on the financial viability of the project would
you make to the Trytonic Ltd using the
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- A process for producing the mosquito repellant Deet has an initial investment of $200,000 with annual costs of $50,000. Income is expected to be $90,000 per year. (a) What is the payback period at i = 0% per year? A i = 12% per year? (Note: Round your answers to the nearest integer.) (b) What is the annual breakeven production quantity for both payback periods (determined above) if net profit, that is, income minus cost, is $10 per gallon?A process for producing the mosquito repellant Deet has an initial investment of $205,000 with annual costs of $51,000. Income is expected to be $90,000 per year. What is the payback period at /= 0% per year? At i=12% per year? (Note: Round your answers to the nearest integer.) The payback period at /= 0% is determined to be The payback period at /= 12% is determined to be years. years.Estimate the Working capital for a 55000ton/month ammonia plant using the TOR. The current gross selling price of ammonia is $120/ ton. The plant will operate at a 95% stream time. (Assume TOR=0.65 and Working capital 15% of TCI)
- Aguilera Acoustics, Inc. (AAI), projects unit sales for a newseven-octave voice emulation implant as follows: Year Unit Sales 1 8300 2 9200 3 10400 4 9800 5 8400 Production of the implants will require GH¢ 150,000 in net working capital to start and additional net working capital investments each year equal to 15 percent of the projected sales for that year. In the final year of the project, net working capital will decline to zero as the project is wound down. In other words, the investment in working capital is to be completely recovered by the end of the project’s life. Total fixed costs are GH¢ 240,000 per year, variable production costs are GH¢ 190 per unit, and the units are priced at GH¢ 345 each. The equipment needed to begin production has an installed cost of GH¢ 2,300,000. Because the implants are intended for professional singers, this equipment depreciated using the straight-line basis. In five years,…The directors of Limalh Co are considering a planned investment project costing RM25 million, 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 (RM per unit) 30 30 30 30 Variable costs (RM per unit) 10 10.20 10.61 10.93 Fixed costs RM per year 700,000 735,000 779,000 841,000 The information above needs adjusting to take account the selling price inflation 4% per year and the variable cost inflation of 3% per year. The fixed costs, which are incremental and related to the investment, are in nominal terms. The year 4 sales volume is expected to continue for the foreseeable future. Limalh Co pays corporation tax of 30% one year in arrears. The company can claim tax-allowance depreciation on a 25% reducing balance basis. The view of the directors of Limalh Co…Elearning Company would like to develop its technology process by purchasing a production equipment for 11.2 million HUF. The equipment is expected to have a useful life of 5 years, and will be sold at the end of 5 years for 2.5 million HUF. The annual operating costs are predicted to be 1.5 million HUF. The estimated revenues are in yearly sequence ( HUF) 5.2 million; 5.5 million; 6.1million; 7 million; 7.5 million. The company's required rate of return is 12 percent. You can see the way of the economic efficiency calculation in the table. Some of the data are missing. Enter the missing data in the table. Perform further calculations and explain the results obtained. Data Year O Year 1 Year 2 Year 3 Year 4 Year 5 Pt (M HUF) 5.2 5.5 6.1 7 kt (M HUF) 1.5 1.5 1.5 1.5 1.5 Et (M HUF) 11.2 CFt (M HUF) -11.2 3.7 4 4.6 5.5 8.5 Dt 1 0.89286 0.79719 0.63552 0.56743 CFt*Dt (M HUF) -11.20 3.30 3.19 3.27 4.82 ECF**Dt (M HUF) -11.20 -7.90 -4.71 -1.43 2.06 The NPV of the project is million HUF.
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- A process for producing the mosquito repellant Deet has an initial investment of $210,000 with annual costs of $52,000. Income is expected to be $90,000 per year. What is the payback period at i = 0% per year? At i = 12% per year?A project requires an initial investment in equipment of $99,000 and then requires an initial investment in working capital of $16,000 (at t = 0). You expect the project to produce sales revenue of $135,000 per year for three years. You estimate manufacturing costs at 60 percent of revenues. (Assume all revenues and costs occur at year-end [i.e., t = 1, t = 2, and t = 3]). The equipment depreciates using straight-line depreciation over three years. At the end of the project, the firm can sell the equipment for $13,300 and recover the investment in net working capital. The corporate tax rate is 21 percent and the cost of capital is 15 percent. Calculate the NPV of the project. Multiple Choice $4,985 $13,879 −$3,880 $8,487A company is considering the introduction of a new product line. The initial investmentrequired for this project is $620,000, and annual maintenance costs are anticipated to be$53,400. Annual operating costs will be $10.5 per unit, and each unit of product can be soldfor $76. If the MARR is 10% and the project has a life of 6 years.What is the minimum annual production level for which the project is economicallyviable