Business, 20.06.2020 19:57 janayshas84
The sales and finance team of a car company is evaluating a new proposed luxury model of its brand that will require an investment of $1Billion in a new machine for car interior decoration. Demand for the company’s car is expected to begin at 100,000 units in year 1, with 10% annual growth thereafter. Production cost will be $35,000 per unit in the first year, and increase by a rate of either 3% or 5% per year as a result of wage increase. Selling price will start at $37,000 and increase by 4% of the production cost. The model will be phased out at the end of year 10. In addition, 0.3%, 2% and 1.5% of before tax profit per year will be spent on social corporate responsibility, commercial (including promotions) and recalls respectively. Assume taxes will be 30% of yearly profit and that inflation will remain at 0% per year throughout the 10 year of production. Also assume interest rate is expected to be 3% per year in the first 5 years and 5% in the last 5 years. a. Based on present worth analysis, is the proposed investment profitable if production cost increases by a rate of 3% per year as a result of wage increase? Justify your answer. (15 marks) b. Based on present worth analysis, is the proposed investment profitable if production cost increases by a rate of 5% per year as a result of wage increase? Justify your answer.
Answers: 3
Business, 22.06.2019 20:00
Lillypad toys is a manufacturer of educational toys for children. six months ago, the company's research and development division came up with an idea for a unique touchscreen device that can be used to introduce children to a number of foreign languages. three months ago, the company produced a working prototype, and last month the company successfully launched its new device on the commercial market. what should lillypad's managers prepare for next? a. increased competition from imitators b. a prolonged period of uncontested success c. a sharp decline in demand for the product d. a difficult struggle to move from invention to innovation
Answers: 2
Business, 23.06.2019 14:00
In some markets, the government regulates the price of utilities so that they are not priced out of range of peoples ability to pay. this is a example a/an
Answers: 2
Business, 23.06.2019 19:10
Economic models a. are constructed to mirror reality as closely as possible, and in this respect economic models are no different from other scientific models. b. are constructed to mirror reality as closely as possible, and in this respect economic models are very different from other scientific models. c. are simplifications of reality, and in this respect economic models are no different from other scientific models. d. are simplifications of reality, and in this respect economic models are very different from other scientific models.
Answers: 2
Business, 23.06.2019 21:00
True or false: suppose that the hypothetical country of paddyland has a chronic scarcity of rice, its staple grain. this implies that if paddyland has a market economy, rice will be available only for a price.
Answers: 1
The sales and finance team of a car company is evaluating a new proposed luxury model of its brand t...
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