Tabie Net Profit Machine 1 (cost $90,000) $20,000 $30,000 $40,000 $20,000 $20,000 Machine 2 (cost $110,000) $10,000 $20,000 $40,000 $60,000 $50,000 Year 1 Year 2 Year 3 Year 4 Year 5 $180,000 $130,000 Total
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You own a furniture manufacturing company. You are looking to expand into glass furniture and need to buy new manufacturing equipment to manufacture this type of furniture. You have researched many suppliers but have found that two machines will best suit your needs. The cost of machine 1 is $90,000, and the cost of machine 2 is $110,000. The estimated net profits the machines will generate are in the attached image.
a)Compare the ARR for both machines and decide which machine you should buy.
b)Critically evaluate the ARR technique in evaluating investment options.
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- Sales price per unit R15 R19Variable cost per unit R6 R7Fixed cost (FC) per annum R650 000 R 855 500Fixed cost per unit R3 R4 Current assets R450 600 R560 700Current liabilities R510 000 R780 000Retained profit R21 809 R17 600Net Sales R2 900 320 R 3 100 100Cost of sales R390 000 R475 000 Calculate the break‐even point for 2019 and 2020. The current ratio reflects the relationship between the value of the current assets and the extent of the current liabilities of a businessA consulting company has designed the accompanying spreadsheet model to compute a project's revenues and profits. The costs of each project include technology costs, labor costs, and project manager (PM) bonus. The PM bonus is computed as 10% of the profit of the project if the project makes a profit and 0 if the project loses money. The spreadsheet model seems to be producing erroneous results. Click here for the Excel Data File a. Use the model auditing tools to identify the error. The error is due to O circular reference O incorrect cell reference O invalid user inputs O none of the above b. Repair the spreadsheet so that it produces correct outcomes. What should be the PM bonus for Project 1? What is the project profit for Project 2? PM bonus for Project 1: Final project profit for Project 2:Internal rate of return and modified internal rate of return. Quark Industries has three potential projects, all with an initial cost of $2,100,000. Given the discount rate and the future cash flow of each project in the following table, E, what are the IRRS and MIRRS of the three projects for Quark Industries?
- H. Total Sales $300,000 $210.000 $340,000 $850,000 Costs: Variable costs $180,000 $180,000 $220,000 $590,000 Fixed costs 50.000 50,000 40,000 140,000 Total costs $230.000 $230.000 $260,000 $730,000 Income (loss) $ 70.000 $(20,000) $ 80,000 $120,000 Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products Fand H. What is the amount of change in net income for the current year that will result from the discontinuance of Product G? O $30.000 increase $20.000 increase O$20.000 decrcase 530.000 dccrcaseGeorgetown Berbice Income before tax. 20,000 75,000Required rate of return. 12% 12%Investment 100,000 500,000 Calculate the residual income for Georgetown a. 1,500 b. 150,000 c. 15,000 d. 8,000ABFHRL437 Corporation’s info is bel ow: Sales $509,000 VC $101,800 FC $22,730 NOI $384,470 Q. How much is ABFHRL437’s Contribution Margin? A. $
- NPV profiles WACC (Dollars in Millions) Plan A Plan B Project NPV Calculations: NPVA NPVB Project IRR Calculations: IRRA IRRB NPV Profiles: Discount Rates 0% 5% 10% 15% 20% 22% 25% 11.00% NPVA $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 0 -$40.00 Formulas #N/A #N/A -$11.00 $2.47 $2.47 $2.47 #N/A #N/A NPVB 1 $6.39 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 2 3 $6.39 $6.39 4 $6.39 $2.47 5 6 7 $6.39 $6.39 $6.39 $2.47 $2.47 8 9 $6.39 $6.39 $2.47 $2.47 $2.47 10 $6.39 $2.47 11 $6.39 12 $6.39 13 $6.39 $2.47 $2.47 $2.47 14 $6.39 15 $6.39 $2.47 $2.47 16 $6.39 $6.39 $2.47 17 39 $2.47Question 9-43 A project has the following costs and benefits. What is the payback period? Year Costs Benefits 0 $65,000 1-2 15,000 3 5,000 $50,000 4-10 $10,000 in each yearSCRUMPTIOUS CUPCAKESProfit and loss accountfor the year ended 30 April 20202020£SalesSales 220,000Cost of sales 120,000Gross Profit 100,000ExpensesSalaries 24,000Other Fixed cost 4,800Distribution 3,000Advertising 4,500Rent 13,200AHUtilities 3,600Other Cost 4,00057,100Operating Profit 42,900 SCRUMPTIOUS CUPCAKESBalance Sheetas at 30 April 20202020£Fixed assetsIntangible assets -Tangible assets 35,000Investments -35,000Current assetsStocks 3,000Debtors 10,000Cash at bank and in hand 6,30019,300Written ReportsCreditors: amounts falling duewithin one year (11,300)Net Current Assets 8,000Total assets less currentliabilities 43,000Net Assets 43,000Capital and reservesCalled up share capital 100Profit and loss account 42,900Shareholders' funds 43,000 please calculate the folliwing ratios: Profitability Ratios – Gross Profit Margin, Net Profit Margin and ROCE● Liquidity – Current Test and Acid Test● Gearing● Activity/Performance – Stock Turnover, Debtors’ Collection Period and AssetTurnover…
- $ 90,000 $ 40,000 $ 35,000 $ 15,000 $ 4,000 $ 5,000 $ 20,000 $ 1,000 $ 2,500 $ 105,000 $ 6,000 $ 7,000 Direct labor Advertising Factory supervision Sales commissions Depreciation, office equipment Indirect materials Depreciation, factory building Administrative office salaries Utilities, factory equipment Direct materials Insurance, factory Property taxes, factory What Is the total fixed cost? Multiple Choice $68,000 $128.000 $118.000 $113,000PROGRAMS SELF DEVELOPMENT E-LIBRARY 8. 6. 10 11 12 13 14 15 16 Your company wants to invest JD 10,000,000 in network, taking into consideration the below table Investment 10,000,000.00 Lifetime Annual Revenues in Yearl 2,000,000.00 2% Annual decline in revenues from Y2 30% Direct Cost % of revenues 15% OPEX % of revenues 7% Interest Discount rate/fWACC) COI & Question 24 If John is expecting sales of $80,000, cost of goods sold of $40,000, operating expenses of $37,000, interest expense of $3,000, and a tax rate of 25%, what is his estimated gross profits? A B $40,000 $0 $20,000 D) $10,000 .