What is the initial outlay required to replace the existing fleet with the newer fleet?
The initial investment is used to show us the amount of cash we require to start a project. The initial investment required to replace the existing fleet can be found using three steps: Calculate the Installed cost of the new fleet, which is done by adding the cost of the new fleet with any installation costs. Subtract the after tax proceeds of the sale of the existing fleet from the installed cost of the new fleet. This is subtracted because it is cash that we do not need to have on hand right now. Finally, add or subtract a change in net working capital, which is the difference between current asset and current liabilities of the existing fleet and the new fleet.
Initial Outlay for new fleet for Lynda’s Fruit Company
Book value of the
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IRR, or the internal rate of return, refers to the interest rate that is needed for the NPV to equal $0. The IRR in this case is 187%.
If Lynda’s requires a 15% discount rate for the new investments, should the fleet be replaced?
To find the present value of the cash flows for Lynda’s Fruit Company we are required to multiply the cash flow by the present value interest factor for 15% for the correlating years. For example, the cash flow from year 1 will be multiplied by the factor for 15% at 1 period; the cash flow for the second year will be multiplied by the factor for 15% at 2 periods and so on.
Year Cash Flow PVIF(15%) Present Value
0 (313 000) 1.000 (313 000.00)
1 588 600 0.877 516 202.20
2 588 600 0.769 452 633.40
3 588 600 0.675 397 305.00
4 588 600 0.592 348 451.20
5 588 600 0.519 305 483.40
NPV = 1 707 075.20
IRR= 152%
This project would be accepted because the NPV is greater than
The presentation of the material is in dollars only. Overhead is applied to products as a percent of direct labor dollar cost. Factory profit for each year is found by subtracting direct material, direct labor, and direct overhead costs from total sales. The overhead percentage is calculated at the same time budgeting and is applied as a single overhead pool throughout each model year. The consulting company used 435% of direct labor costs in 1987 for their study; the budgeted was actually 437% (OH/DL=107,954/24,682). A similar percentage applies in the following year (109890/25294=434.5%). However in the next two years, after the outsourcing of oil pans and mufflers was enacted, the allocation of overhead in...
This object is one of the financial goals to invest properly. Marriott used discounted cash flow techniques to evaluate potential investment. It is beneficial because it is considered present time value. Projects which increase shareholder value could be formed with benchmark hurdle rates, the company can ensure a return on projects which results in profitable and competitive advantage.
Found in the case study entitled, Promotion from Within at Citrus Glen, is a staffing process concern. The Citrus Glen Company, based in Florida, is a juice producer that supplies orange and grapefruit to food processors, grocery stores, convenience stores and restaurants in the United States. With rapid growth over the last few years, the HR vice president, Mandarine “Mandy” Pamplemousse, has been worried about how to staff the ever-expanding array of positions for Citrus Glen. Her concern is how to hire and promote enough individuals who are qualified for the needed positions. When Mandy is trying to staff internally, she uses a contractor based in Charlotte, NC called, Staffing Systems International (SSI). When positions become available that are appropriate to staff internally, she sends a group of candidates for the position to SSI to participate in the assessment center. The candidates are in the assessment process for three days. Mandy receives the results with recommendations, a few days after
The model X was issued in 4Q15, only 208 units was sold while 2400 units were sold in 1Q16. Therefore, we assume a 2400 units of sales of model X in each quarter of 2016. In 2015, 50580 automotive (model S and model S) were sold. There is a sales report from AUTHOR FORECAST which we used in the spreadsheet.
Without considering financing the purchase through debt, the cash costs for buying the truck for years 0- 4 are:
a used car for one year. To show the different costs for cars I have made a
The estimated free cash flows for the two strategies are $391 million for the growth strategy and $365 million for the maintain strategy. (Please refer to the excel sheet for breakdown of calculation).
a) Re-engineer 71/2hp for higher torque mfg cost of $790. would be $410. per unit or a "mark up" of 52%.
This case examines issues of asset control for Ben & Jerry’s Homemade, Inc., in light of the outstanding takeover offers by Chartwell Investments, Dreyer‘s Grand, Unilever, and Meadowbrook Lane Capital in January 2000.
For the year 2010, the return on sales was .0892. That number is calculated by dividing the net earnings by the total sales. 2010 Return on Sales = $1,069,326 / $11,991,558 and 2011 Return on Sales = $891,082 / $11,850,460.
To begin the analysis on Krispy Kreme, the first analysis is that of the depreciation analysis. There are three different methods to calculate depreciation and they are straight-line, units-of-production and double-declining-balance (Larson, Wild, & Chiappetta, 2005). The Krispy Kreme Company uses the straight-line method to calculate their depreciation on building, machinery, equipment and leasehold improvements. The breakdown of the depreciation on property and equipment consist of land, buildings, machinery and equipment, leasehold improvements and construction in process (Larson, Wild, & Chiappetta, 2005). Krispy Kreme’s total gross property and equipment in 2002 was a total of $156,484,000 and in 2003, it was a total of $252,770,000. The accumulated depreciation for the year 2002 was a total of $43,907,000 and for the year 2003, the total was $50,212,000. To find the net property and equipment amount, taking the gross property and equipment and subtracting the accumulated depreciation is the equation used. The net property and equipment for the year 2002 would be $112,577,000 and 2003 would be $202,558,000. Once b...
One of the key areas of long-term decision-making that firms must tackle is that of investment - the need to commit funds by purchasing land, buildings, machinery, etc., in anticipation of being able to earn an income greater than the funds committed. In order to handle these decisions, firms have to make an assessment of the size of the outflows and inflows of funds, the lifespan of the investment, the degree of risk attached and the cost of obtaining funds.
If the company follow this recommendations, it will obtain a profit of $ 531,000 that represents $180,000 more than with seasonal production
o. 1. Harry Davis estimates that if it issues new common stock, the flotation cost will be 15%. Harry Davis incorporates the flotation costs into the DCF approach. What is the estimated cost of newly issued common stock, taking into account the flotation cost?
The cash flows from investing activities are cash flows from transactions that affect the investments in non-current assets. Some of these include investments in bottling companies; purchases of property, plant and equipment; and purchases of investments and assets. For the most part, these figures have remained fairly stable. From 2001 to 2003 it went from $1.1 million to $9.3 million, showing a slight decline (2).