2. The ABC company is considering constructing a plant to manufacture a proposed new product. The land `costs P15,000,000, the building costs P30,000,000, the equipment costs P12,500,000, and P5,000,000 working capital is required. At the end of 12 years, the land can be sold for P25,000,000, the building for P12,000,000, the equipment for P250,000 and all of the working capital recovered. The annual disbursements for labor, materials, and all other expenses are estimated to cost P23,750,000. If the company requires a minimum return of 25%, what should be the minimum annual sales for 12 years to justify the investment?

2. The ABC company is considering constructing a plant to manufacture a proposed new product. The land `costs P15,000,000, the building costs P30,000,000, the equipment costs P12,500,000, and P5,000,000 working capital is required. At the end of 12 years, the land can be sold for P25,000,000, the building for P12,000,000, the equipment for P250,000 and all of the working capital recovered. The annual disbursements for labor, materials, and all other expenses are estimated to cost P23,750,000. If the company requires a minimum return of 25%, what should be the minimum annual sales for 12 years to justify the investment?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A company is considering constructing a plant to manufacture aproposed new product. The land costs P5,000,000, the building costsP30,000,000, the equipment costs P5,000,000, and P60,000,000additional working capital is required. It is expected that the productwill result in sales of P20,000,000 per year for 10 years, at which timethe land can be sold for P13,000,000, the building for P18,000,000,and the equipment for P1,500,000. All of the working capital wouldbe recovered at the EOY 10. The annual expenses for labor, materials,and all other items are estimated to total P18,000,000. If the companyrequires a MARR of 15% per year on projects of comparable risk,determine if it should invest in the new product line. Use the AWmethod.
manufacture a proposed new product. The land `costs P15,000,000, the building costs P30,000,000, the equipment costs P12,500,000, and P5,000,000 working capital is required. At the end of 12 years, the land can be sold for P25,000,000, the building for P12,000,000, the equipment for P250,000 and all of the working capital recovered. The annual disbursements for labor, materials, and all other expenses are estimated to cost P23,750,000. If the company requires a minimum return of 25%, what should be the minimum annual sales for 12 years to justify the investment? Ans. P39,748,560
The ABC company is considering constructing a plant to manufacture a proposed new product. The land costs P15,000,000, the building costs P30,000,000, the equipment costs P12,500,000, and P5,000,000 working capital is required. At the end of 12 years, the land can be sold for P25,000,000, the building for P12,000,000, the equipment for P250,000 and all of the working capital recovered. The annual disbursements for labor, materials, and all other expenses are estimated to cost P23,750,000. If the company requires a minimum return of 25%, what should be the minimum annual sales for 12 years to justify the investment? > Anal worth kunal oct Find: Minimum annual sales for 12 years to justify the investment
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A COMPANY IS CONSIDERING CONSTRUCTING A PLANT TO MANUFACTURE A PROPOSED NEW PRODUCT. THE LAND COSTS P300,000, AND THE BUILDING COSTS P600,000, THE EQUIPMENT COSTS P250,000 AND P100,000 ADDITIONAL WORKING CAPITAL IS REQUIRED. IT IS EXPECTED THAT THE PRODUCT WILL RESULT IN SALES OF P750,000 PER YEAR FOR 10 YEARS, AT WHICH TIME THE LAND CAN BE SOLD FOR P400,000, THE BUILDING FOR P350,000 AND THE EQUIPMENT FOR P50,000. ALL OF THE WORKING CAPITAL WOULD BE RECOVERED AT THE END OF YEAR 10. THE ANNUAL EXPENSES FOR LABOR, MATERIALS, AND ALL OTHER ITEMS ARE ESTIMATED TO TOTAL P475,000. IF THE COMPANY REQUIRESS MARR OF 15% PER YEAR ON PROJECTS OF COMPARABLE RISK, DETERMINE IF IT SHOULD INVEST IN THE NEW PRODUCT LINE. EVALUATE USING ALL METHODS: A. RATE OF RETURN METHOD (RR) B. ANNUAL COST METHOD C. PRESENT WORTH METHOD D. FUTURE WORTH METHOD E. ANNUAL WORTH METHOD
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A company is considering constructing a plant to manufacture a proposed new product. The land costs 300,000.00, the building costs 600,000.00, the equipment costs 250,000.00 and 100,000.00 additional working capital is required. It is expected that the product will result in sales of P750,000 per year for 10 years, at which time the land can be sold for 400,000.00, the building for 350,000.00 and the equipment for 50,000.00. All of the working capital would be recovered at the end of year 10. The annual expenses for labor, materials, and all other items are estimated to total 475,000.00. If the company requires a MARR of 15% per year on projects of comparable risk, determine if it should invest in the new product line. Evaluate using Payback Period.. Payback Period Please answer in this format. Given: Formula (Please use this formula): Payout period (years) = investment – salvage value over net annual cash flow Note: If there is a required value before using the given formula, then…
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A company is considering constructing a plant to manufacture a proposed new product. The land costs 300,000.00, the building costs 600,000.00, the equipment costs 250,000.00 and 100,000.00 additional working capital is required. It is expected that the product will result in sales of P750,000 per year for 10 years, at which time the land can be sold for 400,000.00, the building for 350,000.00 and the equipment for 50,000.00. All of the working capital would be recovered at the end of year 10. The annual expenses for labor, materials, and all other items are estimated to total 475,000.00. If the company requires a MARR of 15% per year on projects of comparable risk, determine if it should invest in the new product line. Evaluate using all methods. a.) Rate of Return Please answer in this format. Given: Formula (Please use this formula): net annual profit Rate of return capita invested Note: If there is a required value before using the given formula, then solve for it to be able to use…