Initial investment cost Savings (from suppliers) Total variable cost Transportation cost New costs Total variable cost Extra cost Salvage value Free cash flow CFCF Year 0 Year 1 Year 2 Year 3 15.65% Year 4 Cost of capital (WACC) Output level per year (cans) Cost per can (supplier) $ Cost per can (manufacturing) $ Transportation cost $ 12,000.00 Salvage value per machine $ 3,000.00 Currently the supplier charges the company $1.50 per 300,000 1.50 Year 5 1.20

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Initial investment cost
Savings (from suppliers)
Total variable cost
Transportation cost
New costs
Total variable cost
Extra cost
Salvage value
Free cash flow
CFCF
Year 0
Year 1
Year 2
Year 3
15.65%
Year 4
Cost of capital (WACC)
Output level per year (cans)
Cost per can (supplier)
Cost per can (manufacturing)
Transportation cost
Salvage value per machine
Currently the supplier charges the company $1.50 per
can with the transportation cost of $12,000 per year.
If Pepsico starts producing its own cans, the variable
cost is estimated to be $1.20 per can. In addition,
these are the extra costs that will incur each year:
Year 1 - $25,000
Year 2 - $20,000
Year 3 - $28,000
Year 4 - $32,000
Year 5 - $35,000
All other fixed costs will remain the same. At the end
of 5-year time, each machine can be sold for $3,000
each.
Need fill the table !!!
300,000
$
$
$ 12,000.00
$ 3,000.00
Year 5
1.50
1.20
Transcribed Image Text:Initial investment cost Savings (from suppliers) Total variable cost Transportation cost New costs Total variable cost Extra cost Salvage value Free cash flow CFCF Year 0 Year 1 Year 2 Year 3 15.65% Year 4 Cost of capital (WACC) Output level per year (cans) Cost per can (supplier) Cost per can (manufacturing) Transportation cost Salvage value per machine Currently the supplier charges the company $1.50 per can with the transportation cost of $12,000 per year. If Pepsico starts producing its own cans, the variable cost is estimated to be $1.20 per can. In addition, these are the extra costs that will incur each year: Year 1 - $25,000 Year 2 - $20,000 Year 3 - $28,000 Year 4 - $32,000 Year 5 - $35,000 All other fixed costs will remain the same. At the end of 5-year time, each machine can be sold for $3,000 each. Need fill the table !!! 300,000 $ $ $ 12,000.00 $ 3,000.00 Year 5 1.50 1.20
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