Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

My group is about to start a new company that will enter the international microcomputer business.
In order to get our new company off the ground, the members of the executive team, (including myself) will need to provide the seed capital (investment money). This is the money that we will use for all the initial expenses related to starting up our company.

Within the first year, we will invest 4,000,000. ($1,000,000 each quarter). Our firm will issue 40,000 shares of common stock to the other members of the executive team at 100 per share in exchange for the 4,000,000 investment.

We need to determine the fixed plant capacity for our business.

Below are the options:

Units/Day Units/Quarter Capital Investment Capital Costs/Unit
25------ 1,625---- 600,000---- 24,000
50------ 3,250---- 1,100,000---- 22,000
100------ 6,500---- 2,100,000---- 21,000

My group submitted the following manufacturing strategic planning to the professor:

"Our manufacturing for this quarter is planned to be 25 units per day with the capital costs per unit totaling $24,000. This manufacturing strategy allows us to retain cash at the end of the quarter. We will also have sufficient cash on-hand if problems arise".

This was the professor's comment:

"You are building a plant with a fixed capacity of 25 units per day. When you operate the plant in Q3, you will set an operating capacity that is limited by the fixed capacity".

Do you think we should start with 50 units per day instead of 25 - fixed plant capacity?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M925545

Have any Question? 


Related Questions in Basic Finance

What rate of return do investors require on general

What rate of return do investors require on General Electric (ticker: U:GE) common stock? Use the annual dividends per share reported for the last fi ve years to determine the compound annual growth rate in dividends. As ...

The black bird company plans an expansion to be financed by

The black bird company plans an expansion to be financed by selling $190 million in new debut and $121 million in new common stock. The before-tax required rate of return on debut is 6.21% and the required rate of return ...

1 what is the difference between global remuneration and

1. What is the difference between global remuneration and international assignment compensation? 2. What are the major issues related to the effectiveness of global remuneration plans? 3. How are equity compensation plan ...

Define prying action sketch an alternative joint diagram

Define prying action ? Sketch an alternative joint diagram showing the effects of prying action Name at least two things the joint designer can do to reduce prying action ? This and the following three questions are all ...

Discussion please use references bullwhat effect do

Discussion ** please use references ** • What effect do interest rates have on the calculation of future and present value? ( 125- words ) • How does the length of time affect future and present value? How do these two f ...

An investor is considering the purchase of either an io or

An investor is considering the purchase of either an IO or PO strip from a CMO offering. The portion of the mortgage pool backing this tranche consists of $1,000,000 in mortgages with a remaining maturity of 10 years and ...

1 how can an investor increase the amounts that they save2

1. How can an investor increase the amounts that they save? 2. How can investors benefit from the compounding of interest (time value of money)? 3. Match the objectives to the different types of investment groups (money ...

A random sample of 100 students was chosen from florida mat

A random sample of 100 students was chosen from Florida MAT 200 classes. The frequency distribution below shows the distribution for study time each week (in hours). Study Time (in hours)         Frequency             Re ...

The following appeared in an article in the wall street

The following appeared in an article in the Wall Street Journal: Credit Suisse Group equity-derivatives strategist Sveinn Palsson suggests a "strangle" in the company's options. The strategy involves selling a call and a ...

1 why do researchers use factor analysis2 imagine that you

1. Why do researchers use factor analysis? 2. Imagine that you conducted a factor analysis on a set of variables that were uncorrelated with one another. How many factors would you expect to find? Why?

  • 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

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen