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Title: The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an ...
Post by: rsbains on Jul 7, 2019

Use the information for the question(s) below.

The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated life of three years.  The cost of the machine is $30,000 and the machine will be depreciated straight line over its three-year life to a residual value of $0.  

The cane manufacturing machine will result in sales of 2000 canes in year 1.  Sales are estimated to grow by 10% per year each year through year 3.  The price per cane that Sisyphean will charge its customers is $18 each and is to remain constant.  The canes have a cost per unit to manufacture of $9 each.

Installation of the machine and the resulting increase in manufacturing capacity will require an increase in various net working capital accounts.  It is estimated that the Sisyphean Corporation needs to hold 2% of its annual sales in cash, 4% of its annual sales in accounts receivable, 9% of its annual sales in inventory, and 5% of its annual sales in accounts payable.  The firm is in the 35% tax bracket and has a cost of capital of 10%.


The required net working capital in the first year for the Sisyphean Corporation's project is closest to:

▸ $2880

▸ $3600

▸ $5400

▸ $3960


Title: The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an ...
Post by: kamronet on Jul 7, 2019
Content hidden


Title: The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an ...
Post by: dskmvld on Jul 7, 2019

Use the information for the question(s) below.

The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated life of three years.  The cost of the machine is $30,000 and the machine will be depreciated straight line over its three-year life to a residual value of $0.  

The cane manufacturing machine will result in sales of 2000 canes in year 1.  Sales are estimated to grow by 10% per year each year through year 3.  The price per cane that Sisyphean will charge its customers is $18 each and is to remain constant.  The canes have a cost per unit to manufacture of $9 each.

Installation of the machine and the resulting increase in manufacturing capacity will require an increase in various net working capital accounts.  It is estimated that the Sisyphean Corporation needs to hold 2% of its annual sales in cash, 4% of its annual sales in accounts receivable, 9% of its annual sales in inventory, and 5% of its annual sales in accounts payable.  The firm is in the 35% tax bracket and has a cost of capital of 10%.


The required net working capital in the second year for the Sisyphean Corporation's project is closest to:

▸ $3190

▸ $3960

▸ $5940

▸ $4360


Title: The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an ...
Post by: Strategyboyz21 on Jul 7, 2019
$3960


Title: The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an ...
Post by: dskmvld on Jul 7, 2019
Exactly what I needed for my project, TYSM


Title: The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an ...
Post by: jujubee600 on Jul 7, 2019

Use the information for the question(s) below.

The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated life of three years.  The cost of the machine is $30,000 and the machine will be depreciated straight line over its three-year life to a residual value of $0.  

The cane manufacturing machine will result in sales of 2000 canes in year 1.  Sales are estimated to grow by 10% per year each year through year 3.  The price per cane that Sisyphean will charge its customers is $18 each and is to remain constant.  The canes have a cost per unit to manufacture of $9 each.

Installation of the machine and the resulting increase in manufacturing capacity will require an increase in various net working capital accounts.  It is estimated that the Sisyphean Corporation needs to hold 2% of its annual sales in cash, 4% of its annual sales in accounts receivable, 9% of its annual sales in inventory, and 5% of its annual sales in accounts payable.  The firm is in the 35% tax bracket and has a cost of capital of 10%.


The change in net working capital from year 1 to year 2 is closest to:

▸ a decrease of $396

▸ an increase of $396

▸ a decrease of $360

▸ an increase of $360


Title: The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an ...
Post by: sarahlouhigg on Jul 7, 2019
an increase of $360