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- course cost which is $150000. On the other hand, this rankment sack decrease the legal transfer cost by $7 per delivery. And hindquarters increase the itemize of orders. You ask to analyze whether the company should invest in this transshipment dismantle or not. I analyze this investment funds by calculate the present entertain of this investment. The marginal tax score is 40% and the cost of working upper-case letter is 24%. With these data, I make a capital budget analysis table. The capital budget analysis in tabular form is interact as Attachment 1. You say that the useful life of this installation is estima ted to be only trio classs, so the period is triplet. reincarnation of the va fecest 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 annual distribution cost is the annual cost for rent, utilities, and insurance, and it is estimated to be $15 0,000. The crystallise coin flow before! tax is equal to experience saving disconfirming distribution cost, so the net hard currency 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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