c spent $23000 last week in applying for a patent its new invention. the company is now evaluating the npv of a project to manufacture a product based on the invention. how should the company treat the $23000 when evaluating npv? opportunity, incremental ,initial, financing cost
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- Assume that the capital requirement of "Purchase new equipment" in Year 3 is 3000. Suppose that if basic research is carried out, the advertising campaign must also be conducted. Add this constraint to your model and find the new optimal solution. What is the optimal revenue?Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided manufacturing system. The annual net cash benefits and savings associated with the system are described as follows: The system will cost 9,000,000 and last 10 years. The companys cost of capital is 12 percent. Required: 1. Calculate the payback period for the system. Assume that the company has a policy of only accepting projects with a payback of five years or less. Would the system be acquired? 2. Calculate the NPV and IRR for the project. Should the system be purchasedeven if it does not meet the payback criterion? 3. The project manager reviewed the projected cash flows and pointed out that two items had been missed. First, the system would have a salvage value, net of any tax effects, of 1,000,000 at the end of 10 years. Second, the increased quality and delivery performance would allow the company to increase its market share by 20 percent. This would produce an additional annual net benefit of 300,000. Recalculate the payback period, NPV, and IRR given this new information. (For the IRR computation, initially ignore salvage value.) Does the decision change? Suppose that the salvage value is only half what is projected. Does this make a difference in the outcome? Does salvage value have any real bearing on the companys decision?Austins cell phone manufacturer wants to upgrade their product mix to encompass an exciting new feature on their cell phone. This would require a new high-tech machine. You are excited about his new project and are recommending the purchase to your board of directors. Here is the information you have compiled in order to complete this recommendation: According to the information, the project will last 10 years and require an initial investment of $800,000, depreciated with straight-line over the life of the project until the final value is zero. The firms tax rate is 30% and the required rate of return is 12%. You believe that the variable cost and sales volume may be as much as 10% higher or lower than the initial estimate. Your boss understands the risks but asks you to explain the alternatives in a brief memo to the board, Write a memo to the Board of Directors objectively weighing out the pros and cons of this project and make your recommendation(s).
- Assume that your company is planning to implement a new information system to improve its operations. For this purpose, the company top management is evaluating two information systems project proposals. The costs and benefits details for the two proposals are shown in the following tables. (The marginal value of money is 15% per year) Proposal A Year Costs Benefit 0 25000 0 15000 100000 2 6000 150000 3 7000 200000 Proposal B Year Costs Benefit 0 52000 0 16000 200000 2 8000 250000 3 11000 300000 Evaluate the two proposals and determine the better by using the following: 1. Payback 1 2. Net present value (NPV) 3. Return on investment (ROI)Develop a financial feasibility study for a radiators' factory in an excel sheet. Please assume that the total cost of the factory is C million SR. Show all the expenses details such as land cost, machine cost, etc. for the establishment and running costs. C equals = 9 The Annual Percentage Rate (APR) =10% Adjust all other assumptions in the excel sheet so that the Net Present Value (NPV) = 2 Million SR in 4 years.Two altemnative machines will produce the same product, but one is capable of higher-quality work, which can be expected to return greater revenue. The following are relevant data. Determine which is the better alternative, assuming repeatability and using SL depreciation, an income-tax rate of 25%, and an after-tax MARR of 10%. Capital investment Life Machine A $20,000 12 years $3,500 Calculate the AW value for the Machine A. AWA (10%) = $(Round to the nearest dollar.) Terminal BV (and MV) Annual receipts Annual expenses Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. Machine B $34,000 9 years $2,000 $144,000 $142,000 $190,000 $163,000
- A company received from a dealer who wishes to offer a new generator to power theirindustrial hoist for the replacement of their existing unit. The company wants to know how much they could afford to pay for another unit for the same purpose if the money is worth 10%. Data as follows: Given:Required:Solution:Acme Products, Inc. is interested in producing and selling an improved widget. Market research indicates that customers would be willing to pay $90 for such a widget and that 50,000 units could be sold each year at this price. If Acme Products requires a 75% return on sales to undertake production, what is the target cost for the new widget? Select one: O a. $31.50. O b. $67.50. OC. $58.50. Od. $22.50.Hello, how can I solve the activity and what is the answer? If a manufacturer of electronic devices invests $660,000 in equipment for making compact piezoelectric accelerometers for general purpose vibration measurement, estimate the rate of return from revenue of $250,000 per year for 10 years and $86,000 in salvage value from the used equipment sale in year 10. What is the rate of return?
- Two alternative machines will produce the same product, but one is capable of higher-quality work, which can be expected to return greater revenue. The following are relevant data. Determine which is the better alternative, assuming repeatability and using SL depreciation, an income-tax rate of 27%, and an after-tax MARR of 11%. Capital investment Life Calculate the AW value for the Machine A. Machine A $23,000 12 years $4,000 Terminal BV (and MV) Annual receipts Annual expenses Click the icon to view the interest and annuity table for discrete compounding when the MARR is 11%er year. AWA (11%) = $ (Round to the nearest dollar.) Machine B $33,000 6 years $1,500 $197,000 $176,000 $152,000 $130,000An engineer developed a fee proposal that requests the owner pay $20,000 after 6 months of work and $40,000 after 12 months. The engineer spent $8.000 developing the proposal and will spend $4,000 each month working on the project. The engineer can borrow funds at enn- 12% per year, invest at eny 6% per year, and desires an MARR of 9%. Using MIRR analysis, determine the attractiveness of this project. O Attractive O Not Attrative O No answer text provided. O No answer text provided.Your manager has asked you to advise your client Kofi Gyato, owner and director of Kofi Gyato Limited, on the implications of the proposed transaction.Your client has identified an opportunity to develop his business by manufacturing the products which he sells. To do this he would need to buy a machine which will have an expected life of ten years. He has received this quotation for the machine.GHȼPrice of machine70,000Delivery and installation3,500Commissioning costs1,500Annual maintenance costs3,500Required:Prepare a report to your client. Your report should:(a) Explain the difference between capital and revenue expenditure, and how each type of expenditure affects the accounts of a business.(b) Indicate which of the costs of the machine should be considered as capital cost and which should be considered as revenue cost.(c) Define depreciation and explain how the accounting entries for depreciation affect each element of the accounting equation.(d) Indicate:(i) What the annual…