BCOR%202200%20Project%2003%20Assignment - BCOR 2200 Fall...

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BCOR 2200 Fall 2008 Dr. David M. Gross Project Assignment 3 – Due Friday December 12 at 5:00pm Instructions: Download the Last_First Project 3 Assignment.xls spreadsheet from CULearn. Carefully read the instructions below. Use this information as well as your knowledge of capital budgeting models (from the lectures, homework, text and sample spreadsheets) to create a working spreadsheet model that calculates the output values in green cells using the input values in the orange cells of the Model sheet. Follow the Analysis instructions below and enter answers in the green answer cells on the Analysis sheet. Upload your completed Excel spreadsheet to CULearn by Friday, December 12 at 5:00pm. No late assignments will be accepted! Project Overview A company that makes ski racks wants to start manufacturing and selling a new style of bicycle racks. Based on marketing and manufacturing research study (the cost of which was $100,000) it expects that it can sell the racks for the next 6 years, at which time it believes the racks will be obsolete. The discount rate for the project is 10% and the firm’s tax rate is 35%. Some data of the data for the project is listed in the table below: Base Estimates: Machine Cost $2,000,000 Market Value of machine at time 6 0 Annual Units Sold 200,000 Sale Price Per Unit $40.00 Variable Cost (VC) per Unit $25.00 Annual Fixed Costs (FC) $1,000,000 The company currently spends $3.3 million per year on human resource management. The increased labor force associated with manufacturing bike racks will require the company to spend an additional $300,000 per year on human resource management. Direct labor costs associated with manufacturing are included in the fixed and variable costs listed above.
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BCOR%202200%20Project%2003%20Assignment - BCOR 2200 Fall...

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