Apec Analyz

To: Alison Sexton Re: Analyze Investment in a Transshipment Point. This report summarizes finding from analysis of the present grade of an investment in leasing a small va providet supermarket and converting it into a transshipment crest for deliveries to customers. On one hand, this action needs initial coronation which is $ 350000 and one- social class cost which is $150000. On the other hand, this rankment sack decrease the language cost by $7 per delivery. And hindquarters increase the play of orders. You ask to analyze whether the company should invest in this transshipment argue or not. I analyze this investment funds by calculate the present cheer of this investment. The marginal tax valuate is 40% and the cost of working peachy is 24%. With these data, I make a capital budget analysis table. The capital budget analysis in tabular form is machine-accessible as Attachment 1. You say that the useful life of this adeptness is estimated to be onl y trio classs, so the period is tierce. metempsychosis of the va senst supermarket into a transshipment facility will cost $350,000 so the initial investment is $ 350,000. You estimate that with the transshipment point, the cost of delivery can reduce by $7 dollars, and the expected weekly orders for year 1, year 2 and year 3 are 600, 1400, and 2000 respectively.

So the ramble saving for three years are 600*$ 7*52= $218,400, 1400*$7*52=$509,600 and 2000*$7*52=$728,000 respectively. The one-year distribution cost is the annual cost for rent, utilities, and insurance, and it is estimated to be $150,000. The clarify coin flow be fore tax is equal to foresee saving discon! firming distribution cost, so the net hard cash flow for three years are $68,400, $359,600 and $578,000 respectively. Because after three years, the facility will have on salvage value for the company, so the annual depreciation is: 350000/3=684000. The change in tax income is equal to net cash flow minus depreciation, thus the change is tax income are: -$48,267 $242,933 and$ 46,1333 respectively. The change in tax...If you want to get a full essay, order it on our website: BestEssayCheap.com

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