Module 6 Spreadsheet - MGT325Module6SpreadsheetExam PartA

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MGT 325 Module 6 Spreadsheet Exam  Part A MONARCH CORPORATION IS GOING TO START A NEW PRODUCT LINE OF PR THE DATA FOR ANALYSIS IS PRESENTED BELOW: COST OF THE EQUIPMENT NEEDED  $194,000  FIVE YEAR P NEW WORKING CAPITAL NEEDS  $50,000  WILL BE REC PROJECTED NEW REVENUES: SALES  PROBABILITY   $200,000  30%  $250,000  50%  $300,000  20% COST OF GOOD SOLD 30% OF SALES VARIABLE CASH COSTS 10% OF SALES ANNUAL FIXED CASH COSTS:    RENT  $50,000     CLEANING  $20,000   $10,000        TOTAL FIXED COSTS  $80,000  EQUIPMENT DISPOSAL PROCEEDS  $19,400  SALVAGE VA FIRM'S COST OF CAPITAL 12.00% TAX RATE 35% NOTE - WHEN COMPUTING TAX, A NET LOSS FOR THE YEAR MEANS A POSIT             SINCE THERE IS OTHER INCOME TAX ON OTHER INCOME TO OFFSET. DEPRECIATION RATES FOR TAX PURPOSES:       YEAR ONE 20.00%       YEAR TWO 32.00%       YEAR THREE 19.20%       YEAR FOUR 11.50%       YEAR FIVE 11.50%       YEAR SIX 5.80% ASSUMPTIONS: ALL CASH FLOWS IN YEARS 1-6 OCCUR AT THE END OF THE YEAR.  ALL INITI OUTFLOWS OCCUR TODAY. REQUIRED: A.   ASSUMING SALES ARE $200,000 COMPUTE THE PAYBACK, IRR AND NPV.        AT BOTH THE FIRM'S DISCOUNT RATE AND 16%, WHICH IS A 4% PREMIUM B.   COPY THE WHOLE WORKSHEET AND SOLUTIONS FOR PART A TO THE W       AND REDO THE COMPUTATIONS BY CHANGING THE ANNUAL SALES TO $ C.   COPY THE WHOLE WORKSHEET AND SOLUTIONS FOR PART A TO THE W       AND REDO THE COMPUTATIONS BY CHANGING THE ANNUAL SALES TO $ You should place your answers in each of the boxes shown below color-coded PART A
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YEARS 0 1 2 INITIAL INVESTMENT (NO INCOME TAX AFFECTS) COST OF THE EQUIPMENT NEEDED  $  WORKING CAPITAL NEEDS    TOTAL INITIAL INVESTMENT ANNUAL OPERATING RECEIPTS:  (using the information given above, fill in the  SALES  $   $  LESS COST OF GOODS SOLD GROSS PROFIT LESS VARIABLE COSTS LESS FIXED COSTS LESS DEPRECIATION EXPENSE    PROFIT (LOSS) BEFORE TAX LESS INCOME TAX EXPENSE (BENEFIT)    PROFIT (LOSS) AFTER TAX PLUS DEPRECIATION EXPENSE TOTAL OPERATING CASH INFLOWS  $   $  SALVAGE VALUE ON EQUIPMENT: (figure out the salvage value of the equ PROCEEDS LESS TAX BASIS OF EQUIPMENT:    COST    ACCUMULATED DEPRECIATION       TAX BASIS GAIN ON SALVAGE LESS INCOME TAX ON SALVAGE GAIN    NET PROCEEDS ON SALVAGE AFTER TAXES RELEASE OF ORIGINAL WORKING CAPITAL NEEDS (NO TAX AFFECT) TOTAL CASH INFLOWS (OUTFLOWS) CUMULATIVE CASH INFLOWS (OUTFLOWS) THREE METHODS OF EVALUATION:
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This note was uploaded on 11/14/2010 for the course MANAGEMENT 322 taught by Professor Saadmetwaa during the Fall '09 term at Alma College.

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Module 6 Spreadsheet - MGT325Module6SpreadsheetExam PartA

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