Homework Answers
| Tax rate | 35% | ||||||
| Calculation of annual depreciation | |||||||
| Depreciation | Year-1 | Year-2 | Year-3 | Year-4 | Year-5 | Total | |
| Opening WDV | $ 20,000,000 | $ 16,000,000 | $ 12,800,000 | $ 10,240,000 | $ 8,192,000 | ||
| Dep Rate | 20.00% | 20.00% | 20.00% | 20.00% | 20.00% | ||
| Depreciation | $ 4,000,000 | $ 3,200,000 | $ 2,560,000 | $ 2,048,000 | $ 1,638,400 | $ 13,446,400 | |
| Closing WDV | $ 16,000,000 | $ 12,800,000 | $ 10,240,000 | $ 8,192,000 | $ 6,553,600 | ||
| Calculation of after-tax salvage value | |||||||
| Cost of machine | $ 20,000,000 | ||||||
| Depreciation | $ 13,446,400 | ||||||
| WDV | $ 6,553,600 | ||||||
| Sale price | $ 4,000,000 | 20% of actual cost | |||||
| Profit/(Loss) | $ (2,553,600) | ||||||
| Tax | $ (893,760) | ||||||
| Sale price after-tax | $ 4,893,760 | ||||||
| Calculation of annual operating cash flow | |||||||
| Year-1 | Year-2 | Year-3 | Year-4 | Year-5 | |||
| No of units | 99,000.00 | 111,000.00 | 134,000.00 | 140,000.00 | 93,000.00 | ||
| Selling price | $ 455 | $ 455 | $ 455 | $ 455 | $ 455 | ||
| Operating ost | $ 325 | $ 325 | $ 325 | $ 325 | $ 325 | ||
| Sale | $ 45,045,000 | $ 50,505,000 | $ 60,970,000 | $ 63,700,000 | $ 42,315,000 | ||
| Less: Operating Cost-75% | $ 32,175,000 | $ 36,075,000 | $ 43,550,000 | $ 45,500,000 | $ 30,225,000 | ||
| Contribution | $ 12,870,000 | $ 14,430,000 | $ 17,420,000 | $ 18,200,000 | $ 12,090,000 | ||
| Less: fixed cost | $ 2,100,000 | $ 2,100,000 | $ 2,100,000 | $ 2,100,000 | $ 2,100,000 | ||
| Less: Depreciation | $ 4,000,000 | $ 3,200,000 | $ 2,560,000 | $ 2,048,000 | $ 1,638,400 | ||
| Profit before tax | $ 6,770,000 | $ 9,130,000 | $ 12,760,000 | $ 14,052,000 | $ 8,351,600 | ||
| Tax@35% | $ 2,369,500 | $ 3,195,500 | $ 4,466,000 | $ 4,918,200 | $ 2,923,060 | ||
| Profit After Tax | $ 4,400,500 | $ 5,934,500 | $ 8,294,000 | $ 9,133,800 | $ 5,428,540 | ||
| Add Depreciation | $ 4,000,000 | $ 3,200,000 | $ 2,560,000 | $ 2,048,000 | $ 1,638,400 | ||
| Cash Profit after-tax | $ 8,400,500 | $ 9,134,500 | $ 10,854,000 | $ 11,181,800 | $ 7,066,940 | ||
| Calculation of working capital movement | |||||||
| Change in sale | $ 5,460,000 | $ 10,465,000 | $ 2,730,000 | $ (21,385,000) | |||
| Change in working capital @ 15% of change in sale | $ - | $ 819,000 | $ 1,569,750 | $ 409,500 | $ (3,207,750) | ||
| Calculation of NPV | |||||||
| 19.00% | |||||||
| Year | Capital | Working capital | Operating cash | Annual Cash flow | PV factor | Present values | |
| 0 | $ (20,000,000) | $ (1,800,000) | $ (21,800,000) | 1.0000 | $ (21,800,000) | ||
| 1 | $ (819,000) | $ 8,400,500 | $ 7,581,500 | 0.8403 | $ 6,371,008 | ||
| 2 | $ (1,569,750) | $ 9,134,500 | $ 7,564,750 | 0.7062 | $ 5,341,960 | ||
| 3 | $ (409,500) | $ 10,854,000 | $ 10,444,500 | 0.5934 | $ 6,197,931 | ||
| 4 | $ 3,207,750 | $ 11,181,800 | $ 14,389,550 | 0.4987 | $ 7,175,619 | ||
| 5 | $ 4,893,760 | $ 1,390,500 | $ 7,066,940 | $ 13,351,200 | 0.4190 | $ 5,594,812 | |
| Net Present Value | $ 8,881,331 | ||||||
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We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows:...
We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows:...
We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows: Unit Sales Year 100,500 112,500 135,500 141,500 94,500 1 2. 3 4 5 The new system will be priced to sell at $470 each. The cockroach eradicator project will require $2,100,000 in net working capital to start, and total net working capital will rise to 15% of the change in sales. The variable cost per unit is $340, and total fixed costs are $2,400,000...
We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows:...
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We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows: Unit Sales Year 100,500 112,500 135,500 141,500 94,500 1 2. 3 4 5 The new system will be priced to sell at $470 each. The cockroach eradicator project will require $2,100,000 in net working capital to start, and total net working capital will rise to 15% of the change in sales. The variable cost per unit is $340, and total fixed costs are $2,400,000...
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Aria Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implant as follows: Year NM Unit Sales 73,800 86,800 106,000 98,200 67,700 Production of the implants will require $1,700,000 in net working capital to start and additional networking capital investments each year equal to 10 percent of the projected sales increase for the following year. Total fixed costs are $3,600,000 per year, variable production costs are $259 per unit, and the units are priced at $387 each....
Question 3. (25 marks) Aguilera Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implant as follows: Year Unit Sales 91,000 106,000 1 2 111,000 3 104,500 4 5 81,000 Production of the implants will require $1,600,000 in net working capital to start and additional net working capital investments each year equal to 15 percent of the projected sales increase for the following year. Total fixed costs are $1,500,000 per year, variable production costs are $265 per...
Aria Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implant as follows: Year Unit Sales 73,000 86,000 105,000 97,000 67,000 mo Production of the implants will require $1,500,000 in net working capital to start and additional networking capital investments each year equal to 15 percent of the projected sales increase for the following year. Total fixed costs are $3,200,000 per year, variable production costs are $255 per unit, and the units are priced at $375 each....
Aria Acoustics inc projects unit sales for a new seven octave voice emulation implant as follows: year 1 74,000 2 87,000 Aria Acoustics, Inc. (AA, projects unit sales for a new seven-octave voice emulation mplant as folows 74,000 87000 3 106 250 98,500 67.800 Production of the implants will require $1750,000 in net working capital to start and additional net working capital investments each year equal to 15 percent of the projected sales increase for the following year Total fixed...
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