Project B Captial Budgeting (3)

Project B Captial Budgeting (3) - Capital Budgeting...

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Capital Budgeting Anal Project Data Cost of new equipment $200,000 Expected life of equipment in years 5 Disposal value in 5 years $40,000 Life production - number of cans 5,500,000 Annual production or purchase needs 1,100,000 Number of workers needed 3 Annual hours to be worked per employee 2000 Earnings per hour for employees $12.00 Annual health benefits per employee $2,500 Other annual benefits per employee-% of wages 18% Cost of raw materials per can $0.25 Other variable production costs per can $0.05 Costs to purchase cans - per can $0.45 Required rate of return 12% Tax rate 35% Cost to Produce Make Purchase Annual Cost of Production: Direct Materials (Need for 1,100,000 cans) $275,000.00 Variable Costs (Need for 1,100,000 cans) $55,000 Total Production Costs $330,000 Annual Cost for Direct Labor for New Employees: Wages $72,000.00 Health Benefits $7,500 Other Benefits $12,960 Total Wages & Benefits $92,460 The Clark Paint Company is investigating possible ways to trim total production. One of that has been prepared to help make that decision. The various calculations used to ma Rate of return; Net present value; and Internal rate of return (IRR).
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This note was uploaded on 05/24/2011 for the course AC 505 taught by Professor Willis during the Fall '09 term at Keller Graduate School of Management.

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Project B Captial Budgeting (3) - Capital Budgeting...

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