Butcher Butcher is considering whether to invest in a new product, the Zam. Details of the Zam are as follows:   £ £ Selling price   22.00 Direct labour 5.00   Material 4.50   Variable overheads 2.50       12.00 Contribution   10.00   The company expects to sell 10,000 each year for 5 years and to incur additional fixed costs of £13,000 pa.  It has a cost of capital of 15%. The product would require the purchase of a machine for £300,000, which would be sold at the end of the project for £50,000. Required: Calculate the NPV based on the estimates above. Calculate the sensitivity of the decision to changes in the sales price, the material cost per unit, the sales volume and the disposal value of the machine.

Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $5.09 million per year. Your upfront setup costs to be ready to produce the part would be $7.92 million. Your discount rate for this contract is 8.3%. a. What is the IRR? b. The NPV is $5.13 million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule? a. What is the IRR? The IRR is %. (Round to two decimal places.) b. The NPV is $5.13 million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule? (Select from the drop-down menu.) The IRR rule with the NPV rule.

A manufacturer of automated optical inspection devices is deciding on a project to increase the productivity of the manufacturing processes. The estimated costs for the two feasible alternatives being compared are shown below. Use the internal rate of return (IRR) method to determine which alternative should be selected if the analysis period is 8 years and the company's MARR is 4% per year. Alternative M N Initial costs $30,000 $45,000 Net annual cash flow $4,500 $7,000 Life in years 8 8 (a) IRR of base alternative = (b) IRR of incremental cash flow = (c) Choose Alternative

Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $5.05 million per year. Your upfront setup costs to be ready to produce the part would be $7.92 million. Your discount rate for this contract is 7.5%. a. What is the IRR? b. The NPV is $5.21 million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule? a. What is the IRR? The IRR is %. (Round to two decimal places.)

Your storage firm has been offered $100,000 in one year to store some goods for one year. Assume your costs are $95.700, payable immediately, and the cost of capital is 8.5%. Should you take the contract? The NPV will be $ (Round to the nearest cent.)

Can you kindly help show the steps for calculating the Working Capital for a product line capable of producing 1.25 Million units per year, total estimated investment cost for the new line is $25 Million, selling price is fixed for the project life at $125 per unit. Working capital based on a 2.5-month supply of raw materials and 1.5 months of combined inventory (WIP and finished goods)? Variable costs per unit include $35 for materials, $20 for manufacturing, and $18 for labor. There are additional fixed operating and maintenance costs totaling $14.25 Million per year. Salvage value equal to 20% of the purchase price at the end of the 6-year project life. The Federal tax rate is 23% and State tax rate is 8.75%. MARR of 18%. Inflation is expected to increase the variable and fixed costs by 6.4% after the first year. In years 3- 6, inflation is expected to decline by 1.2% each year (year 2 inflation is 6.4%, year 3 is 5.2%, etc.)  The project falls under a 7-year MACRS class life.  The…

a new process for a manufacturing process will have a first cost of $45,000 with annual costs of $38,000. Extra income associated with the new process is expected to be $62,000 per year. What is the discounted payback period at i=12% per year? Options: 2.48 3.23 2.25 4.52