Assume that the following data has been determined for the development and sale of a new digital thermometer for home use: development cost = $100,000, production investment = $300,000, annual production volume = 15,000 units per year, and sales lifetime 6 years. Assuming a variable production cost of $4 per unit. Determine the followings: a) The sales price necessary to break even within 2 years b) The profit expected over the estimated sales lifetime.

Assume that the following data has been determined for the development and sale of a new digital thermometer for home use: development cost = $100,000, production investment = $300,000, annual production volume = 15,000 units per year, and sales lifetime 6 years. Assuming a variable production cost of $4 per unit. Determine the followings: a) The sales price necessary to break even within 2 years b) The profit expected over the estimated sales lifetime.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.15E

See similar textbooks

Similar questions

Question no.3 Assume that the following data has been determined for the development and sale of a new digital thermometer for home use: development cost = $100,000, production investment = $300,000, annual production volume = 15,000 units per year, and sales lifetime 6 years. Assuming a variable production cost of $4 per unit. Determine the followings: a) The sales price necessary to break even within 2 years b) The profit expected over the estimated sales lifetime. Question no.4 Consider a software development project where the team has proposed a design and estimates that it will require 800,000 lines of code to complete. The average cost to the company for an engineer is $200,000 per year, including salary, benefits, and overhead. Estimate the followings: a) The number of engineers needed to complete the project within 20 months b) The labor costs.
REQUIRED Study the information given below and calculate the following: Payback period (in years, months and days) Net Present Value Internal Rate of Return (expressed to two decimal places). (Note: Your answer must include the interpolation.) information Eva Limited is considering the purchase of a machine. The company desires a minimum required rate of return of 12%. The machine will cost R2 200 000 plus installation costs of R200 000 and is expected to have a useful life of six years. It is anticipated that the machine will have a salvage value of R100 000. The machine is expected to increase revenues by R800 000 per year but will require the employment of two new machine operators at R100 000 per year for each operator, and it will also require maintenance and repairs averaging R50 000 per year. Depreciation is estimated to be R400 000 per year.
! Required information A process for producing the mosquito repellant Deet has an initial investment of $165,000 with annual costs of $43,000. Income is expected to be $90,000 per year. What is the annual breakeven production quantity for both payback periods if net profit, that is, income minus cost, is $10 per gallon? (Consider the rounded values of years calculated in part a. Also, round your answer to the nearest integer.) When i = 0%, the annual breakeven production quantity is determined to be When i = 12%, the annual breakeven production quantity is determined to be gallons per year. gallons per year.
7.5 Consider a machine that costs $5000 to replace and its maintenance cost is $500 per year. The expected failure time of the machine is five years. (a) Find the optimal time to replace the machine. (b) Generate multicriteria alternatives for times t = 2, 3, 4, 5, 6 years. %3D (c) Rank the alternatives generated in part (a) using an additive utility function, where the weights of importance for the two normalized objectives are 0.7 and 0.3. respectively.
A company is thinking of investing in one of two potential new products for sale. The projections are as follows: Year Revenue/cost £ (Product A) Revenue/cost £ (Product B)0 (150,000) outlay (150,000) outlay 1 24,000 12,0002 24,000 25,3333 44,000 52,0004 84,000 63,333 1.Calculate the payback period for both products in years and months, not as a decimal. Please present answer to nearest half a month.
The purchasing price for a dye press is $30,000. It is expected to provide labour cost savings of $5,000 in year 1. The savings are expected to increase linearly by X$ each year for seven years. Find the dollar value of X such that the purchase price is justified by the labour savings at MARR = 5%.The solution is with $1 of which of the following?65.8067.8069.8071.80None of the above
The costs associated with manufacturing a multifunction portable gas analyzer are estimated. At an interest rate of 8% per year and a present worth analysis, which method should be selected?
4. Machine A costs $800, requires annual maintenance of $150, and will last for 10 years. Machine B costs $600, requires annual maintenance of $200, and will last for 5 years. What is the calculated present worth of machine B if the alternative will be chosen based on a present worth analysis and the required return is 10%? A. $843.31 B. $1,358.16 C. $1,721.69 D. $2,201.47 E. $2,716.47 Answer: D
Acme Products, Inc. is interested in producing and selling an improved widget. Market research indicates that customers would be willing to pay $90 for such a widget and that 50,000 units could be sold each year at this price. If Acme Products requires a 75% return on sales to undertake production, what is the target cost for the new widget? Select one: O a. $31.50. O b. $67.50. OC. $58.50. Od. $22.50.
How do I calculate the Internal Rate of Return using interpolation: info: A machine with a purchase price of R1 200 000 is estimated to eliminate manual operations by R400 000 per year. The machine is expected to have a useful life of four years.
“Happy Your Self" ( HYS) Co. is evaluating an investment proposal to manufacture GB pen drives, which has performed well in test marketing trials conducted recently by the company’s research and development division. The following information relating to this investment proposal has now been prepared. Initial investment GH¢ 2 million Selling price (current price terms) GH¢ 20 per unit Expected selling price inflation 3% per year Variable operating costs (current price terms) GH¢ 8 per unit Fixed operating costs (current price terms) GH¢ 170,000 per year Expected operating cost inflation 4% per year The research and development division has prepared the following demand forecast as a result of its test marketing trials. The forecast reflects expected technological change and its effect on the anticipated life-cycle of GB pen drives. Year 1 2 3 4 Demand (units) 60,000 70,000 120,000 45,000 It is expected that all units of GB pen drives produced will be sold, in line with…
PARC Co. has asked you to recommend a new nutcracker machine. After months of hard research, you have collected the following data: Data Life, Years First Cost (FC) Benefit, Yearly (AB) Benefit Gradient (ABG) O&M cost Gradient (M&OG) O&M Cost uniform annual Salvage Value O 21 years O 12 years O 18 years KRAX 6 O 24 years $202,000 73,000 1,200 600 18,000 42,000 SPLIT-NUT 9 $285,000 88,000 PARC Co. assumes MARR = 15%. Using the Net Present Worth (NPW) analysis: The analysis period if you are going to use NPW is close to: 1,300 1,100 34,000 48,000