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- A manufacturer of woodworking tools wants to introduce a new power screwdriver. To compete effectively, the screwdriver cannot be priced at more than ₱20. The company requires a 35% rate of return on investment on all new products. In order to produce and sell 40,000 screwdrivers each year, the company will need to make an investment of ₱1,200,000. The target cost per screwdriver would be: a. ₱15.50 b. ₱10.00 c. ₱9.50 d. ₱12.50 e. ₱30.00 f. ₱1.50A plant operation has fixed costs of ₱2,000,000 per year, and its output capacity is 100,000 electrical appliances per year. The variable cost is ₱40 per unit, and the product sells for ₱90 per unit. a. What is the plant’s breakeven point in terms of quantity per year? b.If the selling price is increased to ₱100 per unit, how many units must be sold to achieve a profit of 3M per year? c.If 80% of the output capacity per year are sold, what would be the annual profit? If 100%? d.If 100% of the output capacity per year are sold, what would be the annual profit?A young mechanical engineer is considering establishing his own small company. An investment of ₱400,000 will be required, which will be recovered in 15 years. It is estimated that sales will be ₱800,000 per year and that operating expenses will be as follows: Materials ₱360,000 per yearLabor ₱280,000 per yearOverhead ₱40,000 + 10% of sales per yearSelling Expense ₱60,000 per year The man will give up his regular job paying ₱216,000 per year an devote full time to the operation of the business; this will result in decreasing labor cost by ₱40,000 per year, material cost by ₱28,000 per year and overhead cost by ₱32,000 per year. If the man expects to earn at least 20% of his capital, should he invest? Answer: The man should not invest.
- Heiko Company, a manufacturer of moderately priced timepieces, would like to introduce a new electronic watch. To compete effectively, Heiko cannot price the watch at more than €30. The company requires a return on investment of 15% on all new products. The plan is to produce and sell 20,000 watches each year. This would require a €500,000 investment. What is the target cost per watch? a) €26.25 b) €28.00 c) €29.50 d) €30.001. DPCL is a small-sized firm manufacturing hand tools. Its manufacturing plant is situated in Sohar. The company’s sales in the year ending December 2014 were OMR 1000 million on an asset base of OMR 650 million. The net profit of the company is OMR76 million. The management of the company wants to improve profitability further. The required rate of return of the company is 10%. The company is currently considering two investment proposals. One is to expand its production capacity. The estimated cost of the new equipment is OMR 250 million and has a life of 10 years. Forecasts of cash inflows would be OMR45 million per annum for the first 3 years, OMR 68 million from 4 to 8 years and OMR 30 million for the last 2 years. The plant can be sold for 55 million at the end of its economic life. The second proposal is to replace one of the old machines in Sohar to reduce the cost of operations. The new machine will cost OMR 50 million. The life of the machine is 10 years without any…9. A company that sells high-purity laboratory chemicals is considering investing in new equipment that will reduce cardboard costs by better matching the size of the products to be shipped to the size of the shipping container. If the new equipment will cost Php1M to purchase and install, how much must the company save each year for 3 years in order to justify the investment, if the interest rate is 10% per year? A Php66465.26 B Php88465.26 Php302114.80 Php402114.80
- 1. DPCL is a small-sized firm manufacturing hand tools. Its manufacturing plant is situated in Sohar. The company’s sales in the year ending December 2014 were OMR 1000 million on an asset base of OMR 650 million. The net profit of the company is OMR76 million. The management of the company wants to improve profitability further. The required rate of return of the company is 10%. The company is currently considering two investment proposals. One is to expand its production capacity. The estimated cost of the new equipment is OMR 250 million and has a life of 10 years. Forecasts of cash inflows would be OMR45 million per annum for the first 3 years, OMR 68 million from 4 to 8 years and OMR 30 million for the last 2 years. The plant can be sold for 55 million at the end of its economic life. The second proposal is to replace one of the old machines in Sohar to reduce the cost of operations. The new machine will cost OMR 50 million. The life of the machine is 10 years without any…A company is launching a new product-their initial investment is $22,000,000 and their factory will cost 4,500,000 per year to operate. They are going to produce high end treadmills. Every treadmill will have a variable cost of $375.00. They intend to sell the following number of treadmills at an average wholesale price of $895.00. The interest rate to use is 5% per year. Calculate the annual break even point over a 5 year period (spread the investment over 5 years) and calculate the profit or loss expected in the following years.The ABC Corporation is considering introducing a new product, which will require buying new equipment for a monthly payment of $5,000. Each unit produced can be sold for $20.00. ABC incurs a variable cost of $10.00 per unit. Suppose that ABC would like to realize a monthly profit of $50,000. How many units must they sell each month to realize this profit?
- Chevrolet Corporation is considering replacing an obsolete machine with a new machine. The new machine would cost P250,000 and would have a ten-year useful life. The new machine would cost P12,000 per year to operate and maintain, but would save P55,000 per year in labor and other costs. The old machine can be sold now for P10,000. The simple rate of return on the new machine is closest to: A. 17.9% B. 7.5% C. 22.0% D. 7.2%21. A new product, an automated crepe maker, is being introduced at Knutt Corporation. At a selling price of RM59 per unit, management projects sales of 70,000 units. Launching the crepe maker as a new product would require an investment of RM500,000. The desired return on investment is 12%. The target cost per crepe maker is closest to: A. RM59.00 B. RM66.08 C. RM58.14 D. RM65.12A manufacturing company is considerign the purchase of new machinery to increase its production capacity. The company has identified a new machine that costs $500,000 and is expected to increase production by 20%. The company expects to sell the additional products for $600,000, resulting in a net profit of $100,000. The company can finance the purchase through a bank loan with an interest rate of 5% over a five year term. What is the expected return on investment (ROI) for the purchase of the new machinery 5% 10% 20% 25%
