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yarga [219]
4 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]4 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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Amount Number of units sold 11,000 Selling price per unit $ 16 Variable selling expense per unit $ 1 Variable administrative exp
german

Traditional income statement : Net operating income $47,000

Contribution income statement : Net operating income  $25,000

1.

Traditional Income Statement

Sales  (11,000 x $16)                       $176,000

Cost of goods sold

(9,000 + 87,000 - 25,000)            ($71,000)

Gross Margin                                  105,000

Selling and administrative expenses:  

Selling expense

(11,000 x 1) + 22,000                      $33,000

Administrative expense

(11,000 x 1) + 14,000                       $25000

Net operating income                  $47,000

2.

Contribution format income statement

Sales                                                $176,000

Variable expenses:  

Cost of goods sold        71,000  

Selling expense              11,000  

Administrative expense  11,000      ($93,000)

Contribution Margin                         $83,000

Fixed expenses:  

Selling expense                33,000  

Administrative expense   25,000     (58,000)

Net operating income                     $25,000

Learn more about preparation of income statement here : brainly.com/question/24498019

3 0
2 years ago
Which sentence from the passage supports the following statement?
vazorg [7]

Answer:

idk sorry have a good day!!!!!

Explanation:

8 0
3 years ago
Why is cooperative skill important in good trade? give the reasons..​
klio [65]

Answer:

Team cooperation encourages employees to work together for the benefit of the organization. It reduces the desire of employees to complete against each other,which often never good for the business,and instead focus on working together to achieve a common goal.

3 0
3 years ago
Visibility, the road situation, and your physical condition can all influence your
Andrews [41]

Visibility, the road situation, and your physical condition can all influence your blind area.

Explanation:

A field of vision in an automobile is an area across the car which, under current conditions, the driver could not monitor directly during checks. A wide variety of vehicles contain blind spots, including airplanes, cars, motor yachts, sailboats and trucks.

The A-pillar (which is also referred to as a window pillar), sideview mirror or rear mirror in the inner of the rider's sideview mirrors might be obstructed by blindspots at the front of rider. The visibility can diminish behind passengers, freight, headrests and other pillars.

8 0
3 years ago
Alex sees that his neighbors' lawns all need mowing. He offers to provide the service in exchange for a wage of $20 per hour. So
mixas84 [53]

Answer:

This is the complete question with options

Alex sees that his neighbors' lawns all need mowing. He offers to provide the service in exchange for a wage of $20 per hour. Some neighbors accept Alex's offer and others refuse. Economists would describe Alex's behavior as

A. rational self-interest because he is attempting to increase his own income by identifying and satisfying someone else's wants.

B. greedy because he is asking for a high wage that some of his neighbors can't afford to pay.

C. selfish because he is asking for a wage that is higher than others might charge.

D. irrational because some neighbors refused his offer.

The answer is A . rational self-interest because he is attempting to increase his own income by identifying and satisfying someone else's wants.

Explanation:

Alex is regarded as a rational self - interest individual  because  his decision   focuses on his own monetary benefits which also influences the environment in which he is, in the sense that he is helping his neighbor mow their lawns.  

5 0
3 years ago
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