lesson5assignment4

lesson5assignment4 - Chapter 10 Conch Republic Electronics,...

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Chapter 10 Conch Republic Electronics, Part 1 Input Area: Equipment $21,500,000 Salvage value $4,100,000 $750,000 sunk cost Marketing study $200,000 sunk cost Year 1 Year 2 Year 3 Sales(units) 74,000 95,000 125,000 Depreciation rate 14.29% 24.49% 17.49% Sales of old PDA 80,000 60,000 Lost sales 15,000 15,000 Price $360 VC $155 FC $4,700,000 Price of old PDA $290 Price reduction of old PDA $35 VC of old PDA $120 Tax rate 35% NWC percentage 20% Required return 12% For 7 year MACRS, the depreciation rates are Year 1 2 3 Depreciation Rate 0.14 0.25 0.18 The cash flows are below Year 0 1 2 Sales Volume 74,000 95,000 Unit Price 360 360 Variable Cost 155 155 Total revenue 26,640,000 34,200,000
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Total Variable Cost 11,470,000 14,725,000 Fixed Cost 4,700,000 4,700,000 Depreciation 3,074,500 5,267,500 Profit Before Tax 7,395,500 9,507,500 Tax (35%) 2,588,425 3,327,625 Net Income 4,807,075 6,179,875 Operating Cash Flow 7,881,575 11,447,375 Investment (21,500,000) Change in NWC (5,328,000) (1,512,000)
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lesson5assignment4 - Chapter 10 Conch Republic Electronics,...

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