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wait for 2 years o de baile on are currently wailable to purchase Robe Dell 1010K2 Use the basic. PV and/or NPV, your present value calculator Round your owe (NPV) to the west whole della 4 Performing the wholowaho impune product quality Management believes that the quality impernement in ruler ude at very difficult to quantify Should be firment ? 12-6) 12.55 Comparison of Capital Budgeting Techniques Sensitivity Analysis Strategy Rob Roy Corporation has been using its present facilities at all capacity of 10.000 nits for the last year. Still the way is unable to keep a widaning end for the product that is esti med to be 25. annually. This demanded is expected time is a least other + years Te expand manufacturing capacity and the age of the demand. Rob Roy must acquire que conting 1.000.000. The equipment will double the productie quantity. This equipment baseul life of 10 years and can be wild for the end of your $30.000 at the end of your 10. Analysis of current operating data provides the formation Per Unit $200 597 TO 5107 Sales price Variable costs Manufacturing Marketing Fixed costs Manufacturing Other Pretax operating income $45 25 70 177 5.23 The fred costs include depreciation expense of the current oppment The quiet will not change variable costs, but the firm will incur additional featuringcofeciding depreciation on the machine of $250.000 ally. The firm spend an additional $200,000 in fed marketing costs per year for tilby is in the dirt Management has a minimum te ofreu ofera o mes. Anum. for simplicity, that MACRS depreciation des do not pls. Required 1. Assume that the equipment will be deprecated over a 4-year period in the right line method What effects will the new equipment have others opening income in cache yaan 2. What effect will the new equipes have contra cash inflow ach of the year 3. Com the proposed invent's back period in cand the mother- laflows occur evenly throughout the year and your decimal places 4. Compute the accounting book CARR) hos en Round your answer 2 decimal place le 14816142 5. Compite the net pent (NPV) of the prepredmet Uwe bed the bon functies in Excel (NPV). Round you were whole dollar 6. Compute the internal me of return of the point in IR function Excel: Round your awer o 2 decimal places 7. Compute the modified internal role of MRI of the proposed to the buite- MIRR function in Excel Round your answer to decimal places. In resping to this muirement, you might find the following sources to be helpful to support office.com/searchresult querymir functionarea unor httpwww.journalfacteuntancy.com/2017/ calculate internal rate of relum in excel & Museen las decided to invest in the new membuthentily of me of the este und schwed somewirauti. Trachte wing two independently By how much can the varie con for produced by the increase and will til the purchase of the epipment Leave the investeer R of actly 19. cost of capital T Round you to 2 decimal places. The prevale annuity facts from Appendis. The 2 for years, 195 is 2914) b. The company is anticipating in competition. Mana believe that is response will be to reduce the prior of the predict by how much the firm the per willing price for all its old and still be able to jumaty the purchase of the newest Round - ANOS JUONDPUNOI PIDS AS CAdoro 520 Part Two Manning and Decision Making your answer to 2 decimal places. What percentage decrease in selling price (rounded to 2 decim places) does this represent? 9. What strategic considerations and other factors might bear on this investment decision? How can considerations be dealt with formally in the planning and decision-making process? [LO 12-1, 12-5, 12-8] 12-56 Sensitivity Analysis: Equipment-Replacement Decision The Mendoza Company disc in the chapter is now considering replacing a piece of equipment that the company uses to the integrity of metal pipes used for deep-sea drilling purposes. The company's pretax WC count rate) is estimated as 10%. The following data are pertinent to the question you've been to analyze: ... wait for you do the this planned are currently available to purchase Robert 100K (the the function. PV and/or NPV, for your present value calculation Round your awer (NPV) to the nearest whole doll 1. Performing the overhaul bow also improves product quality Management believes that the quality improvement in her side and very difficult to quantity Should the firm overhaul now? 126 12:55 Comparison of Capital Budgeting Technique: Sansitivity Analysis: Strategy Rob Roy Corporation has been presence in annual full capacity of 10.00 mts for the last 3 yeun. Still the company is able to keep pace with evening demand for the product that is esti- mated to be 25.000 units annually. This demander is expected to continue for at least other 4 years. To expand manufacturing capacity and take aantage of the demand, Rob Roy must quite ament conting $1.000.00. The aiment will double the current productes quantity. This equipment has a settle of 10 years and can be sold for 300.000 at the end of year 4 of 530.000 at the end of year 10 Analysis of current prating data provides the following information Per Unit $200 Sales price Variable costs Manufacturing Marketing Fred costs Manufacturing Other Pretax operating income $97 10 $107 $45 25 70 172 $ 22 The fined coinchate depreciation expense of the current equipment. The new equipment will or change variable, but the firm will lacur additional fixed manufacturing costs (excluding depreciation on the new machine) of $350,000 nally. The firm needs to spend an additional 5200,000 in Pied marketing costs per year for additional al Rob Roy is in the tax bracket Management et minimum of return of 14 sent for all capital investment. Am for simplicity, the MACRS depreciation miles de opply Required 1. Assume that the equipment will be depreciated her a year period using the right-line method. What effects will the new phave her tax operating income in each of the years 2. What effect will the new equipment hawe of cash flows in each of the years 3. Compile the proposed metment's pack pened in year under the amption that we ax cash inflow occur evenly throughout the yeat (Round your www to 2 decimal places) 4. Compute the accounting (bookmate of return (ARR) bied on the mape investment. Round your answer to 2 decimal places 1416 14.25) 5. Compute the priest Value (NPV) of the proposed investment. Use both the built-in foi Excel (NPV). Round you to care whole dollar) 6. Compute the internal rate of RR of the proposed met ming the built IRR function in Excel. Round your newer to 2 decimal place 7. Compare the modified internal refertur (MIRR) of the proposed investment ning the built-in MIRR function in Excel. Rondo 2 decimal place. In responding to this requirement, you might find the following comes to be helpful http://support.office.com/en/Search resultat querymir functions under hittp/www.journaloccountancy.com/es/2017/ calculate-internate-of-turn-in-exch). * Management has decided to loves in the wcipient bulise of the reliability of some of the estimates and as such as med somewhair questo Treat each of the following the independently By how much on the unit wariable con for units produced by the new quipment increase and still justify the purchase of du quintile, we the usement generate an het IRR of exactly 143, icon of capital Round your answer to decimal place. The present value annuity face from Appendix Table 2 for 4 years, 1452914) The company is anticipating increase in competice Management believes that, in response, it will have to reduce the welling price of the product. Hy how much can the firm decrease the per unit selling price for all is old and will be able to justify the purchase of the new equipment Round 20) Dis ova - ANNS fo Loropuno1 121 SLAHJO Budowa OM SHOZ 520 Part Two Planning and Decision Making your answer to 2 decimal places. What percentage decrease in selling price (rounded to 2 deci places) does this represent? 9. What strategic considerations and other factors might bear on this investment decision? How can considerations be dealt with formally in the planning and decision-making process? [LO 12-1. 12-5, 12-8] 12-56 Sensitivity Analysis: Equipment-Replacement Decision The Mendoza Company disc in the chapter is now considering replacing a piece of equipment that the company uses to the integrity of metal pipes used for deep-sea drilling purposes. The company's pretax WAC count rate) is estimated as 10%. The following data are pertinent to the question you've been to analyze

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