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chubhunter [2.5K]
3 years ago
9

Empire Industries is considering adding a new product to its lineup. This product is expected to generate sales for four years a

fter which time the product will be discontinued. What is the project's net present value if the firm wants to earn a 13 percent rate of return?
Year. Cash Flow
0 --- -62,000
1 --- 16.500
2 --- 23,800
3 --- 27,100
4 --- 23,300

a. $3,505.52
b. $3,767.24
c. $4,312.65
d. $4,519.58
e. $4,902.71
Business
2 answers:
Andreyy893 years ago
7 0

Answer:

The project's net present value if the firm wants to earn a 13 percent rate of return is c. $4,312.65

Explanation:

The Net Present Value of a Project is Calculated by Taking the Present Day (Discounted) Value of All future Net Cashflows based on the <em>Business Cost of Capital</em> and <em>Subtracting</em> the initial Cost of the Investment.

Using A Financial Calculator Cf Function:

Cf0 = -62,000

Cf1 =   16.500

Cf2 =  23,800

Cf3 =  27,100

Cf4 =  23,300

IRR = 13 %

NPV = 4,312.65

shepuryov [24]3 years ago
7 0

Answer: C. $4,312.65

Explanation:

Given the following;

Cashflow :

Year 0 --- -62,000

Year 1 --- 16,500

Year 2 --- 23,800

Year 3 --- 27,100

Year 4 --- 23,300

Net present value(NPV)

Internal Rate of Return(IRR) = 13% = 0.13

Using the formula ;

NPV = year 0 + (year 1 ÷ (1+IRR)) + (year 2 ÷ (1+IRR)^2) + (year 3 ÷ (1+IRR)^3) + (year 4 ÷ (1+IRR)^4)

NPV = - $62,000 + ($16,500 ÷ (1.13)) + ($23,000 ÷ (1.13)^2) + ($27,100 ÷ (1.13)^3) + ($23,300 ÷ (1.13)^4)

NPV = -$62,000 + $14,601.77 + $18,638.89 + $18,781.66 + $14,290.33 = $4,312.65

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3 0
3 years ago
ncome Statements under Absorption Costing and Variable Costing Gallatin County Motors Inc. assembles and sells snowmobile engine
Mnenie [13.5K]

Answer:

<u>Income statement according to the absorption costing</u>

Sales                                                                                         2,600,000

Less Cost of Goods Sold

Opening Stock                                                          0

Add Cost of Goods Manufactured

Direct materials                                                   1,218,000

Direct labor                                                           522,000

Variable factory overhead                                     87,000

Fixed factory overhead                                        130,500

Less Closing Stock (1,957,500/4,350)×350      (157,500)       1,800,000

Gross Profit                                                                                   800,000

Less Period Costs :

Selling and administrative expenses:

Variable selling and administrative expenses                           (60,000)

Fixed selling and administrative expenses                                (25,000)

Net Income                                                                                    715,000

Explanation:

<em>Product/Manufacturing Cost - Absorption Costing = Direct Materials + Direct Labor + Variable Overheads + Fixed Overheads</em>

<em>Period Cost - Absorption Costing  = All Non - Manufacturing Costs</em>

<u />

7 0
3 years ago
recent monthly contribution format income statement: Sales$1,652,000 Variable expenses 628,880 Contribution margin 1,023,120 Fix
kati45 [8]

Answer:

Gatty Corporation

1. Segmented Income Statement for the most recent month

Division                                         East        Central       West       Total

Sales                                       $422,000 $650,000 $580,000  $1,652,000

Variable expenses                   227,880    169,000    232,000       628,880

Contribution margin               $194,120  $481,000  $348,000    $1,023,120

Traceable fixed expenses   $268,000 $320,000   $191,000         779,000

Common fixed expenses                                                                  346,000

Net operating income (loss) $(73,880)  $161,000   $157,000       $(101,880)

2. Assuming these estimates are accurate and implemented, the company's net operating loss of $101,880 will decrease by $69,600 to $32,280.

Explanation:

a) Data and Calculations:

GATTY Corporation

Recent monthly contribution format income statement:

Sales                                    $1,652,000

Variable expenses                  628,880

Contribution margin              1,023,120

Fixed expenses                     1,125,000

Net operating income (loss) $(101,880)

Segmented Income Statement for the most recent month

Division                                                             East           Central     West

Sales                                                            $422,000 $650,000 $580,000

Variable expenses as a percentage of sales     54%           26%          40%

Traceable fixed expenses                         $268,000 $320,000   $191,000

1. Segmented Income Statement for the most recent month

Division                                         East        Central       West       Total

Sales                                       $422,000 $650,000 $580,000  $1,652,000

Variable expenses                   227,880    169,000    232,000       628,880

Contribution margin               $194,120  $481,000  $348,000    $1,023,120

Traceable fixed expenses   $268,000 $320,000   $191,000         779,000

Common fixed expenses                                                                  346,000

Net operating income (loss) $(73,880)  $161,000   $157,000       $(101,880)

Segmented Income Statement for the most recent month

Division                                         East        Central       West       Total

Sales                                       $422,000 $650,000 $678,600   $1,750,600

Variable expenses                   227,880    169,000    232,000       628,880

Contribution margin               $194,120  $481,000  $446,600     $1,121,720

Traceable fixed expenses   $268,000 $320,000  $220,000       808,000

Common fixed expenses                                                                 346,000

Net operating income (loss) $(73,880)   $161,000 $226,600      $(32,280)

$(101,880)

$(32,280)

$69,600

4 0
3 years ago
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TiliK225 [7]

Answer:

D. Ingestion

Explanation:

Absorption seems like something you would get through the skin. Injection it gets put into your body by a needle. Inhalation is through the nose. Ingestion you swallow.

8 0
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