Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Business Management Expert

problem:
Looner Industries is considering investing in a new manufacturing plant. The plant requires an item of equipment that costs $200,000. In addition, Looner will spend $10,000 on shipping costs and $30,000 on installation charges. The equipment will be housed in a building currently owned by the company. The building was bought at a cost of $75,000 five years ago, but it could be sold now for $125,000. Similar buildings in the area are leasing for $5,000 per month.

You estimate that if the new plant is constructed, the company will increase its inventories by $25,000, while accounts payable also will rise by $5,000. New sales from the plant are estimated to be 120,000 units per year, at a price of $3.50 per unit. Variable costs are expected to total 60% of sales, while fixed costs are estimated at $20,000 per year. The plant has an estimated economic life of 4 years, after which time it will be scrapped for $25,000 (excluding the building). Depreciation will be find outd using the 3-year MACRS rates of 33%, 45%, 15%, and 7% for the first through the fourth year, respectively. Looner Industries' marginal tax rate is 40%, and its cost of capital is 10%. Should the plant be built?

Business Management, Management Studies

  • Category:- Business Management
  • Reference No.:- M928367
  • Price:- $15

Guranteed 24 Hours Delivery, In Price:- $15

Have any Question? 


Related Questions in Business Management

Describe in depth the steps involved in the strategy-making

Describe in depth the steps involved in the strategy-making process.

1 differentiate among the different types of team and take

1. Differentiate among the different types of team and take group and their uses in health care organizational. 2. Understand the factor associated with high performing team 3. Define the communication process and what c ...

Watch the riverbend city community information mission in

Watch the Riverbend City: Community Information Mission in this unit's studies. Then answer the following questions: 1. What is the difference between official and unofficial information? In the context of the Riverbend ...

You just won the publishers clearing house sweepstakes and

You just won the Publisher's Clearing House Sweepstakes and the right to 20 after-tax ordinary annuity cash flows of $163,291.18. Assuming a discount rate of 7.50%, what is the present value of your lottery winnings? Use ...

What characteristics result in toxic leadership what are

What characteristics result in toxic leadership? What are possible repercussions of toxic leadership? Provide a personal experience (do not disclose specific names) or public example of toxic leadership.

In his book blink the power of thinking without thinking

In his book Blink: The Power of Thinking Without Thinking, Malcolm Gladwell suggests that formal marketing research, including focus groups, is not very valuable and effective because the people being asked to evaluate t ...

1 a situation is called pareto ecient if there is no way in

1. A situation is called Pareto e?cient if there is no way in which we can make at least one person better o? without harming at least one other person. Suppose we have to allocate $100 between two individuals. What are ...

Applied business mathematicsyou are looking ahead to

Applied Business Mathematics You are looking ahead to starting a business after graduation. A colleague recommended that the two of you begin developing a plan now to determine how funds will be obtained to launch the bu ...

Walmart the nations largest retailer has perfected a

Walmart, the nation's largest retailer, has perfected a "just-in-time competitive strategy." This retail giant relies on barcodes for instant inventory, distribution centers that purchase supplies at the last minute and ...

Identify and define up to three concepts associated with

Identify and define up to three concepts associated with making capital investment decisions such as cash flows, sunk costs, opportunity costs, or others. Discuss why your selected concepts are important for the investor ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate