al TMobile LTE 855 AM 99 Done 11 of 11 many a an opportunity

al T-Mobile LTE 8:55 AM 99% Done 11 of 11 many a an opportunity to invet 53.000 aineThe chine will result in cost savings of $22,000 in year 1, $16,000 in year 2, $15,000 in year 3, $14,000 in year & in year 5, the asset will save S3,000, and then can be sold for salvage value of $5,o0o Sketch the cash flows in the diagram belowNP Acceptable? The company discounts future cash flows at 11 percent. BUDGETS Corson Compay expects sales of 18,000 units in sanuary, 24,000 units in February, and 30,000 units in March. The sales price is $14 per unit. Create a sales budget Total Sales Budget Unit Sales Price Sales Revenue Corson wants to finish each month with 20 percent of next month\'s sales in units Create a production budget, assuming that January beginning inventory is 20,000 units and April sales will be 34,000 units Production Budget Sales in Units Desired End Iv. Subtotal Beginning Inw Units to Produce Feb A SERIES OF $1.00 ESENT VALUE OF S 0 ap 0573 08417 0 8264 08116 07021 035 07004 06 08355 0578 06601 0 5 547 05132 04817 04823 0 465t 33121 39 31000 3.1004 3007 8684 47122 456 6.801T 62469 5.062 5.750 5537 53 08302 05068 05643 0 1446 88892 0 3202472

Solution

Calculation of NPV

0

1

2

3

4

5

Total

Cash Inflows (Outflows)

$ (53,000.00)

$    22,000.00

$    16,000.00

$        15,000.00

$ 14,000.00

$   8,000.00

$ 22,000.00

Discounting Factor @ 11% rate

1

0.90090

0.81160

0.73120

0.65870

0.59350

Discounted Cash Flows

$ (53,000.00)

$    19,819.80

$    12,985.60

$        10,968.00

$    9,221.80

$   4,748.00

$    4,743.20

Net Present Value of the Project

$      4,743.20

Project is Acceptable.

Notes:

Budget

Sales Budget

jan

Feb

Mar

Total

Unit Sales

18000

24000

30000

72000

Price

$            14.00

$            14.00

$            14.00

$                14.00

Sales Revenue

$ 252,000.00

$ 336,000.00

$ 420,000.00

$ 1,008,000.00

Production Budget

jan

Feb

Mar

Total

Sales in Units

18000

24000

30000

72000

Desired Ending Inventory

4800

6000

6800

17600

Subtotal

22800

30000

36800

89600

Beginning Inventory

0

4800

6000

10800

Units to Produce

22800

25200

30800

78800

Notes:

2) Calculation of Closing stock in March= (34000*20%)=6800 Units

Calculation of NPV
	0	1	2	3	4	5	Total
Cash Inflows (Outflows)	$ (53,000.00)	$    22,000.00	$    16,000.00	$        15,000.00	$ 14,000.00	$   8,000.00	$ 22,000.00
Discounting Factor @ 11% rate	1	0.90090	0.81160	0.73120	0.65870	0.59350
Discounted Cash Flows	$ (53,000.00)	$    19,819.80	$    12,985.60	$        10,968.00	$    9,221.80	$   4,748.00	$    4,743.20