{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

358846 - Conch Republic Electronics Spent $750,000 to...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Conch Republic Electronics Spent $750,000 to develop a new PDA Spent an additional $200,000 for marketing study to determine the expected sales. Can manufacture the new PDA with variable cost for $155.00 each. Fixed Costs for the operation are estimated at $4.7 million per year. Unit Price $360.00 each Necessary equipment to produce the PDA will cost $21.5 million, with depreciation for 7 years MACRS sched It is believed that this equipment after 5 years will be worth $4.1 million. NWC will be 20% of Sales Changes in NWC will occur in Year 1, with the first year sales. There is no initial outlay for NWC. Conch Republic Corporate Tax Rate is 35% and has a 12% required return. Estimated Sales Volumes: NWC 20% Estimated sales volume per year is 1. 74,000 2. 95,000 3. 125,000 4. 105,000 5. 80,000 What is the payback period, profitability index, IRR and the NPV of this project? For 7 year MACRS, the depreciation rates are Year 1 2 3 4 5 Depreciation Rate 0.14 0.25 0.18 0.13 0.09 The cash flows are below Year 0 1 2 3 4 Sales Volume 74,000 95,000 125,000 105,000 Unit Price 360 360 360 360 Variable Cost 155 155 155 155 Total revenue 26,640,000 34,200,000 45,000,000 37,800,000 Total Variable Cost 11,470,000 14,725,000 19,375,000 16,275,000 Fixed Cost 4,700,000
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Background image of page 2
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Background image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}