Solve the following and show detailed simplified step-by-step calculations: We believe we can sell 90,000 camera devices
Posted: Wed Mar 16, 2022 9:10 am
Solve the following and show detailed simplified step-by-step
calculations:
We believe we can sell 90,000 camera devices per year at
$150 per piece. They cost $130 to manufacture (variable cost).
Fixed production costs run $215,000 per year. The necessary
equipment costs $785,000 to buy and would be depreciated at a 25
percent CCA rate. The equipment would have a zero-salvage value
after the five-year life of the project. We need to invest $140,000
in net working capital up front; no additional net working capital
investment is necessary. The discount rate is 19 percent, and the
tax rate is 35 percent. What do you think of the proposal
calculations:
We believe we can sell 90,000 camera devices per year at
$150 per piece. They cost $130 to manufacture (variable cost).
Fixed production costs run $215,000 per year. The necessary
equipment costs $785,000 to buy and would be depreciated at a 25
percent CCA rate. The equipment would have a zero-salvage value
after the five-year life of the project. We need to invest $140,000
in net working capital up front; no additional net working capital
investment is necessary. The discount rate is 19 percent, and the
tax rate is 35 percent. What do you think of the proposal