You Are Evaluating a Project for Your Company

question 63

Multiple Choice

You are evaluating a project for your company. You estimate the sales price to be $10 per unit and sales volume to be 3,000 units in year 1; 10,000 units in year 2; and 1,000 units in year 3. The project has a three-year life. Variable costs amount to $3 per unit and fixed costs are $25,000 per year. The project requires an initial investment of $50,000 in assets that will be depreciated straight-line to zero over the three-year project life. The actual market value of these assets at the end of year 3 is expected to be $10,000. NWC requirements at the beginning of each year will be approximately 25 percent of the projected sales during the coming year. The tax rate is 34 percent and the required return on the project is 15 percent. What change in NWC occurs at the end of year 1?

• A)$11,550
• B)$14,875
• C)$17,500
• D)$23,167

Comprehend the various types of inventory systems and their advantages in improving product availability and reducing inventory costs.

Identify the role of technology, including RFID and point-of-sale (POS) systems, in facilitating efficient supply chain management.

Recognize the importance and challenges of managing the supply chain in the retail industry, including distribution center advantages and just-in-time (JIT) inventory management costs.

Analyze how supply chain management strategies, such as JIT and QR systems, can align deliveries with actual sales, especially in fast-changing markets like fashion.

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Definitions:

Tonsils Removed

A medical procedure, known as a tonsillectomy, involving the surgical removal of the tonsils, typically due to recurrent infection or breathing issues.

Bimodal

Characterized by having two distinct peaks or modes in a distribution of data.

Skewed

Describes a distribution that is asymmetrical with a tail that extends more pronouncedly to one side than the other, either to the right or left.

Gymnasts

Athletes who perform sequences of movements requiring flexibility, strength, and coordination, primarily on apparatus such as rings, bars, and mats.