Urgenthomework logo
UrgentHomeWork
Live chat

Loading..

Finc330 Business Finance | Capital Assessment Answers

Booli Electronics is an electronics manufacturer located in Carlton, Victoria, Australia.

The Company’s Managing Director is Monica Chen, who inherited the company from her father. The company originally repaired radios and other household items when it was founded more than fifty years ago. Over the years, the company has expanded, and is now a reputable manufacturer of various specialty electronics items. Richard Das, a recent MBA graduate, has been hired by the company in the finance department.

One of the major revenue producing items manufactured by Booli Electronics is a ‘smart speaker and home assistant (SSHA).’ Booli Electronics currently has one SSHA model on the market and sales have been excellent. The SSHA is a unique item in that it comes in a variety of colours and is pre-programmed to play the AC/DC back catalogue (and nothing else) on high rotation. However, as with any electronic item, technology changes rapidly, and the current SSHA has limited features in comparison with newer models. Booli Electronics has spent $1 175 000 developing a prototype for a new SSHA that has all the features of the existing one (except for the AC/DC back catalogue), but adds new features such as Wi-Fi tethering and access to a large number of music streaming services including Spotify, Amazon Music, Sirius, Tidal and Pandora. The company has spent a further $650 000 for a marketing study to determine the expected sales figures for the new SSHA.

Booli Electronics’ production manager has produced estimates of the costs associated with manufacture of the new SSHA. Variable costs are estimated at $325 per unit in Year 1, then rising with inflation, and fixed costs for the operation are expected to run at $6.5 million per year (not rising with inflation). The estimated sales volume is 92 000 in Year 1; 142 000 units in Year 2; 108 000 units in Year 3; 71 000 units in Year 4; and 62 000 units in Year 5. The unit price of the new SSHA will be $687 in Year 1, then rising with inflation. Expected inflation is 2.% over this time. The necessary manufacturing equipment can be purchased for $45.2 million and will be depreciated for tax purposes over a seven-year life (straight-line to zero). It is believed the salvage value of the manufacturing equipment in five years’ time will be $ 9.5 million.

Net working capital for the SSHAs will be 18% of the first-year sales and will have to be purchased at the end of the year. The cost of raw materials is reflected in the variable cost per unit. Booli Electronics has a 28% corporate tax rate and a 12%, after tax, required return.?
 
Required

Monica has asked Richard to prepare a short report that answers the following questions:
1. What is the non-discounted payback period of the project? 
2. What is the profitability index of the project? 
3. What is the IRR of the project? 
4. What is the NPV of the project? 
5. How sensitive is the NPV to changes in the price of the new SSHA? 
6. How sensitive is the NPV to changes in the quantity sold of the new SSHA?
7. Should Booli Electronics produce the new SSHA?
8. Suppose Booli Electronics loses sales on other modelsrk because of the introduction of the new SSHA. How would this affect your analysis?

Buy Finc330 Business Finance | Capital Assessment Answers Online


Talk to our expert to get the help with Finc330 Business Finance | Capital Assessment Answers to complete your assessment on time and boost your grades now

The main aim/motive of the management assignment help services is to get connect with a greater number of students, and effectively help, and support them in getting completing their assignments the students also get find this a wonderful opportunity where they could effectively learn more about their topics, as the experts also have the best team members with them in which all the members effectively support each other to get complete their diploma assignments. They complete the assessments of the students in an appropriate manner and deliver them back to the students before the due date of the assignment so that the students could timely submit this, and can score higher marks. The experts of the assignment help services at urgenthomework.com are so much skilled, capable, talented, and experienced in their field of programming homework help writing assignments, so, for this, they can effectively write the best economics assignment help services.


Get Online Support for Finc330 Business Finance | Capital Assessment Answers Assignment Help Online


); }
Copyright © 2009-2023 UrgentHomework.com, All right reserved.