A farmer in mufulira, copper belt province of Zambia would like to introduce a new product .it has estimated that the cost of purchasing, delivery and installation the new machine required to manufacture the product is k160, 000.the expected life span of the product is six years. The first revenues 200,000 second 240,000 and 220,000, Revenues estimates are k205,000 in each of the remaining three years. The incremental variable of producing the product are estimated to be 54% of the revenues. The marginal tax rate of the farm is 40% of the revenues. The machine purchased will have a salvage value of k35,000 and the farm is expecting to recoup k10,000 of its working capital at the end of six years. The farm has fixed cost of k30,000.a. Calculate the IRR at a discount rate of your choice.

In a make-or-buy decision, relevant costs include: incremental fixed costs fixed factory overhead costs allocated to products ) unavoidable fixed costs prior investments in production equipment

Ritz​ Products's materials​ manager, Tej​ Dhakar, must determine whether to make or buy a new semiconductor for the wrist TV that the firm is about to produce. Three million units are expected to be produced over the life cycle. If the product is​ made, start-up and production costs of the make decision total ​$1 ​million, with a probability of 0.5 that the product will be satisfactory and a 0.5 probability that it will not. If the product is not​ satisfactory, the firm will have to reevaluate the decision. If the decision is​ reevaluated, the choice will be whether to spend another ​$1 million to redesign the semiconductor or to purchase. Likelihood of success the second time that the make decision is made is 0.8. If the second make decision also​ fails, the firm must purchase. Regardless of when the purchase takes​ place, Dhakar's best judgment of cost is that Ritz will pay ​$0.40 for each purchased semiconductor plus ​$2 million in vendor development cost.   ​a) Assuming that Ritz…

Howard​ Weiss, Inc., is considering building a sensitive new radiation scanning device.  His managers believe that there is aprobability of .35  that the ATR Co. will come out with a competitive product.  If Weiss adds an assembly line for the product and ATR Co. does not follow with a competitive​ product, Weiss's expected profit is $40,000 ​; if Weiss adds an assembly line and ATR follows​ suit, Weiss still expects $20,000 profit.  If Weiss adds a new plant addition and ATR does not produce a competitive​ product, Weiss expects a profit of $600,000 ​; if ATR does compete for this​ market, Weiss expects a loss of $120,000.Part 2​a) Expected value for the  option​ = ​$                                                                                                                           b)Expected value for the build new plant option =                                                                                                       c) The alternative that provides Weiss the…

DBS is also expecting the demand for its top-of-the range devices to increase further from the next year. Given the increase in annual requirement, the production manager is contemplating to start manufacturing the special components in-house to save costs rather than sourcing them from outside.   Given the current purchase price of $9000 per unit, what will the average annual requirement need to be in order to justify making the components in-house if the variable cost of making is $6750 per unit and an upfront fixed cost of $55,000,000 is needed to procure the necessary plant and equipment? However, in the event that the expected increase in demand does not materialize and the demand is actually forecast to drop to 20,000 units next year, then what will be the maximum price per unit that DBS would be willing to pay to the supplier in order to continue buying from them?     Going forward, if it is found to be a better decision to make the components in-house, DBS will then need to…

A building has an NO of $130,000 and is being valued with acap rate of 4%. Using the income approach, what is the value of the building? $3,250,000 $2.450,000 $1,300,000 $4.130,000

Company DEF has a choice of two machines to purchase. They both make the same product which sells for P10. Machine A has FC of P5,000 and a per unit cost of P5. Machine B has FC of P15,000 and a per unit cost of P1. Under what conditions would you select Machine A?

Carizick Co manufactures gaming products. It has created a new games console called the QpBox which is about to be launched. Demand for the QpBox is anticipated to be high. The product life cycle of the QpBox is expected to be three years with 300,000 units forecast to be sold during its first year. Sales volumes are expected to decrease by 75,000 units in each subsequent year. Production volumes will be based on expected demand levels. The following costs for the QpBox have been determined: Design and development Pre-launch advertising Advertising in Year 2 Packaging Manufacturing cost $120m $0.5m $0.4m $3 per unit $80 per unit At a recent board meeting, the finance director said that Carizick Co should look to maximise the profitability of the QpBox over its life cycle. The marketing director made the comment that Carizick Co should focus on extending the maturity phase of the life cycle only as this stage is where the QpBox is most profitable. Contract with Zone Co Carizick Co has…