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yarga [219]
3 years ago
14

Hawke Skateboards is considering building a new plant. Bob Skerritt, the company's marketing manager, is an enthusiastic support

er of the new plant. Lucy Liu, the company's chief financial officer, is not so sure that the new plant is a good idea. Currently, the company purchases its skateboards from foreign manufacturers. The following figures were estimated regarding the construction of a new plant.
Cost of plant - $4,160,000
Estimated useful life -15 years
Annual cash inflows - 4,160,000
Salvage value - $2,080,000
Annual cash outflows - 3,682,000
Discount rate - 11%

Bob Skerritt believes that these figures understate the true potential value of the plant. He suggests that by manufacturing its own skateboards the company will benefit from a "buy American" patriotism that he believes is common among skateboarders. He also notes that the firm has had numerous quality problems with the skateboards manufactured by its suppliers. He suggests that the inconsistent quality has resulted in lost sales, increased warranty claims, and some costly lawsuits.

Overall, he believes sales will be $208,000 higher than projected above, and that the savings from lower warranty costs and legal costs will be $62,000 per year. He also believes that the project is not as risky as assumed above and that a 9% discount rate is more reasonable.

Answer each of the following.

a. Compute the net present value of the project based on the original projections.

b. Compute the net present value incorporating Bob's estimates of the value of the intangible benefits, but still using the 11% discount rate.

c. Compute the net present value using the original estimates, but employing the 9% discount rate that Bob suggests is more appropriate.

Business
1 answer:
HACTEHA [7]3 years ago
4 0

Answer: net values are calculated as

a) $4530100

b) $4770400

c) $4631900

Explanation:

detailed calculation and explanation is shown in the image below

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Search... Unlock all answers JOIN FOR FREE jswagballerlife4060 01/08/2020 Business College answered LO 5.3Direct material costs
Tomtit [17]

Answer:

$130,000

Explanation:

Calculation to determine the value of the inventory transferred to the next department

First step is to calculate the Cost per unit

Using this formula

Cost per unit = Direct material costs + Direct labor costs + Overhead

Let plug in the formula

Cost per unit=$3+$5+(100%*$5)

Cost per unit = $3 + $5 + $5

Cost per unit = $13

Second step is to calculate the inventory transferred using this formula

Inventory transferred = Beginning inventory + Started Inventory - Ending inventory .

Let plug in the formula

Inventory transferred = 2,000 + 9,000 - 1,000

Inventory transferred = 10,000 units

Now let calculate the value of the inventory transferred

Using this formula

Value of inventory transferred = Inventory transferred × Cost per unit

Let plug in the formula

Value of inventory transferred = 10000 × $13

Value of inventory transferred = $130,000

Therefore the value of the inventory transferred to the next department is $130,000

8 0
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Describes how a monopoly controls an industry
stira [4]

Answer:

Key ideas:

  • A single entity controls the flow of the product.
  • Possesses the power to limit prices.
  • Will have some influence in politics.
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Explanation:

Monopoly refers to the state when there is only one company controlling the flow of products, therefore controlling the prices of it. There are a lot of examples of monopoly in the contemporary era such as AB Inbev, but it doesn't mean that it is totally a modern concept. Monopoly existed even in history take for example the case of Carnegie steel mills or the issue of railroads.

When one company possess such power that it can control the price, it can badly damages the interest of other investors and consumers. But the reason they create a monopoly is that they have heavy influence in politics. That is how they turn up the decisions to their own benefits. And monopolies always try to create hurdles for new investors to get in the market. Because they are charging whatever they want due to no competition, as soon as new competition arrive it will challenge the monopoly which it can't take.

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Answer:

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