Genesis Pharmaceutical has developed a new diabetes medication. It estimates that the sales volume during the first year will be 200,000 units. The sales volume is projected to grow by 20% each year. The price of each unit is $50 during the first year and will increase by 5% each year. The fixed manufacturing costs for the medication are $500,000 for every 100,000 units, and the variable costs are $25 per unit. The variable costs will increase by 10% each year due to increased material and labor costs. a. Develop a spreadsheet model to estimate the total profit Genesis Pharmaceutical makes on this medication over the next five years. Note: Round your answer to 2 decimal places. Total profit b-1. Convert the future profits into their net present value. If it costs Genesis Pharmaceutical $12,000,000 in R&D to develop the medication, What is the net present value (NPV) of the 3-year profit assuming a discount rate of 3%? Note: Round your answer to 2 decimal places. NPV of the total profit
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- Quick Computing currently sells 11 million computer chips each year at a price of $31 per chip. It is about to introduce a new chip, and it forecasts annual sales of 21 million of these improved chips at a price of $39 each. However, demand for the old chip will decrease, and sales of the old chip are expected to fall to 1 million per year. The old chips cost $16 each to manufacture, and the new ones will cost $10 each. What is the proper cash flow to use to evaluate the present value of the introduction of the new chip? cash flow = _____ milionQuick computing currently sells 19 million computer chips each year at a price of $23 per chip. It is about to introduce a new chip, and it forecasts annual sales of 13 million of these improved chips at a price of $36 each. However, demand for the old chip will decrease. and sales of the old chip are expected to fall to $3 million per year. The old chips cost $14 each to manufacture, and the new ones will cost $17 each. What is the proper cash flow to use to evaluate the present value of the introduction of the new chip? (Enter your answer in millions.)Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $2,140,000 and will last for 6 years. Variable costs are 36 percent of sales, and fixed costs are $125,000 per year. Machine B costs $4,340,000 and will last for years. Variable costs for this machine are 31 percent of sales and fixed costs are $78,000 per year. The sales for each machine will be $8.68 million per year. The required return is 10 percent and the tax rate is 21 percent. Both machines will be depreciated on a straight-line basis. If the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine A? EAC $ -2,983,801.79 $ 3,873,398.21 $-12,995,234.69 $ -3,132,991.88 $ -2,834,611.70 If the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine B? EAC $ -2,886,934.04 $-15,401,580.02 $ 3,970,265.96 $ -3,031,280.74 $ -2,742,587.33
- A software company is considering translating its program into French. Each unit of the program sells for $50 and incurs a variable cost of $10 to produce. Currently, the size of the market for the product is 300,000 units per year, and the English version of the software has a 30% share of the market. The company estimates that the market size will grow by 10% a year for the next five years, and at 5% per year after that. It will cost the company $6 million to create a French version of the program. The translation will increase its market share to 40%. Given a 10-year planning horizon, for what discount rates is it profitable to create the French version of the software?Vandelay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,210,000 and will last for six years. Variable costs are 37 percent of sales, and fixed costs are $350,000 per year. Machine B costs $5,455,000 and will last for nine years. Variable costs for this machine are 32 percent of sales and fixed costs are $240,000 per year. The sales for each machine will be $12.4 million per year. The required return is 9 percent, and the tax rate is 24 percent. Both machines will be depreciated on a straight-line basis. The company plans to replace the machine when it wears out on a perpetual basis. Calculate the EAC for each machine. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) Answer is complete but not entirely correct. System A $ -4,473,627.60 X System B $ -4,090,361.10A mobile manufacturer company plans to produce 50000 mobiles this year. The company will sell for 150 OMR each. The fixed cost of the company 3 million and total variable costs are 5 million OMR. (a) Calculate the break-even point? (b) Suppose the company wanted to produce 100000 mobiles in the next year. How breakeven point will change.
- Vandelay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $ 3,210,000 and will last for six years. Variable costs are 37 percent of sales, and fixed costs are $350,000 per year. Machine B costs $5,455,000 and will last for nine years. Variable costs for this machine are 32 percent of sales and fixed costs are $240,000 per year. The sales for each machine will be $12.4 million per year. The required return is 9 percent, and the tax rate is 24 percent. Both machines will be depreciated on a straight-line basis. The company plans to replace the machine when it wears out on a perpetual basis. Calculate the EAC for each machine.Jax Inc is considering the purchase of a new machine for the production of computers. Machine A costs $7,000,000 and will last for six years. Variable costs are 25% of sales, and fixed costs are $500,000 annually. Machine B costs $10,000,000 and will last for ten years. Variable costs for the machine are 15% of sales, and fixed costs are $750,000 annually. The sales for each machine will be $4,000,000 per year. The required rate of return is 9%, the tax rate is 21%, and both machines will be depreciated using straight-line depreciation with no salvage value. Calculate the equivalent annual annuity for Machine B. (Round to 2 decimals) What is the Net Present Value for Machine B? (round to 2 decimals)Vandalay industries is considering the purchase of a new machine for the production of latex. Machine A cost $2,270,000 and will last for 4 years. Variable cost are 38 percent of sales, and fixed cost are $145,000 per year. Machine B cost $4,290,000 and will last for 8 years. Variable costs for this machine are 29 percent of sales and fixed costs are $84,000 per year. The sales for each machine will be $8.58 million per year. The required return is 10 percent and the tax rate is 35 percent. Both machines will be depreciated on a straight line basis. A.Required: if the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine A? Do not round your intermediate calculations. B. If the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine B? Do not round your intermediate calculations.
- The new UltraGuard flea collar is about to be introduced to the market. It will be priced at $ 9.63 and has unit variable costs of $ 3.66. The company expects to sell 49,044 UltraGuard collars during the next six months. Some of the sales will come at the expense of the current product, the PetArmor collar, priced at $ 6.22 with variable costs of $ 3.04. Projected sales for the PetArmor collar are 95,000 units (without the introduction of the UltraGuard). The analyst estimates that the UltraGuard collar will cannibalize 19,948 PetArmor collars during the introductory 6 month period. The company is planning a sales promotion campaign to target veterinarians at the time of the new product launch. The company is going to invest $ 54,514 in printed materials and samples. Calculate the breakeven sales volume necessary to justify the promotional campaign. Round your answer to the nearest whole number. Your Answer:Sweet - o- licious makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Sweet - o- licious makes a variety of candy, the cost differences are insignificant, and the cases all sell for the same price. Sweet - o- licious has a total capital investment of $11,000,000. It expects to produce and sell 700,000 cases of candy next year. Sweet - o- licious requires a 10% target return on investment. Expected costs for next year are as follows: E (Click the icon to view the costs.) Sweet - o- licious prices the cases of candy at full cost plus markup to generate profits equal to the target return on capital. Read the requirements. Requirement 1. What is the target operating income? (Enter the percentage as a whole number.) Capital investment Target return on investment Target operating income 2$ 11,000,000 10 % 2$ 1,100,000 Requirement 2. What is the selling price Sweet - o- licious needs to charge to earn the target operating income? Calculate the markup…Madetaylor Inc. manufactures financial calculators. The company is deciding whether to introduce a new calculator. Thiscalculator will sell for $130. The company feels that sales will be 18, 000, 22, 000, 24, 000, 22, 000, and 18, 000 unitsannually for the next five years. Variable costs will be 21% of sales, and fixed costs are $500, 000 annually. The firm hireda marketing team to analyze the product's viability, and the marketing analysis cost $1, 250, 000. The company plans tomanufacture and store the calculators in a vacant warehouse. Based on a recent appraisal, the warehouse and theproperty are worth $2.5 million after tax. If the company does not sell the property today, it will sell it five years fromtoday at the currently appraised value. This project will require an injection of net working capital at the onset of theproject, $250, 000. The firm recovers the net working capital at the end of the project. The firm must purchaseequipment for $5, 000, 000 to produce the new…