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question 1-6 thank you

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Answered 1 days After Mar 11, 2021

Solution

Sugandh answered on Mar 13 2021
142 Votes
Input
    
        Full Production                                    Common Assumptions
            T +1    T+2    T+3    T+4    T+5    T+6    T+7        Market Testing    $125,000
            1997    1998    1999    2000    2001    2002    2003        Probability of Success    75%
                                            Probability of Failure    25%
        Intial Investment    $800,000                                Cost of Capital/Discount Rate    15%
        Sales Price        $28.00    $28.00    $28.00    $28.00    $28.00    $28.00        Tax Rate    40%
        Unit Sales        70,000    80,000    110,000    110,000    110,000    110,000        Terminal Value    30%
        Adjusted Unit Sales        70,000    80,000    110,000    110,000    110,000    110,000
        COGS (% of Sales)        64%    64%    64%    64%    64%    64%
        Administrative        $156,800    $179,200    $246,400    $246,400    $246,400    $246,400        NWC Assumptions
        Marketing        $137,200    $112,000    $77,000    $77,000    $77,000    $77,000        Old NWC    $49,000
        Misc.        $70,600    $78,400    $80,100    $80,100    $80,100    $80,100        ACP    35.9
                                            Inventory (% of Sales)    15%
        Limited Production                                    Accurals (% of Sales)    2.2%
            T +1    T+2    T+3    T+4    T+5    T+6    T+7        Purchases (% of COGS)    80%
            1997    1998    1999    2000    2001    2002    2003        Average Payment Period    30
                                            Days in year (NWC)    360
        Intial Investment    $390,000
        Sales Price        $28.00    $28.00    $28.00    $28.00    $28.00    $28.00        Scenario Analysis Assumtions
        Unit Sales        20,000    25,000    30,000    30,000    30,000    30,000        Sales Price    $0.00
        Adjusted Unit Sales        20,000    25,000    30,000    30,000    30,000    30,000        Additional Fixed Costs (Ball Department)    $0.00
        COGS (% of Sales)        67%    67%    67%    67%    67%    67%        Unit Sales (New Cleat)    100%
        Administrative        $84,000    $105,000    $100,800    $100,800    $100,800    $100,800        Unit Sales (Old Cleat)    100%
        Marketing        $30,000    $30,000    $25,000    $25,000    $25,000    $25,000        COGS (FP)    64%
        Misc.        $39,200    $49,000    $50,400    $50,400    $50,400    $50,400        COGS (LP)    67%
                                            COGS (Old Cleat)    70%
        Old Cleat
            T + 1    T + 2    T + 3    T + 4    T + 5    T + 6    T + 7
            1997    1998    1999    2000    2001    2002    2003
        Sales Price        $20.00    $20.00    $20.00    $20.00    $20.00    $20.00
        Unit Sales        13,000    13,000    13,000    13,000    13,000    13,000
        Adjusted Unit Sales        13,000    13,000    13,000    13,000    13,000    13,000
        COGS (% of Sales)        70%    70%    70%    70%    70%    70%
        Administrative        $30,000    $30,000    $30,000    $30,000    $30,000    $30,000
        Marketing        $5,000    $5,000    $5,000    $5,000    $5,000    $5,000
        Misc.        $15,000    $15,000    $15,000    $15,000    $15,000    $15,000
OCF (New Cleat)
    
        Full...
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