Data: toll of naked as a jaybird equipment 200,000 Expected life of equipment5 disposition value in 5 years 40,000 tone ware - number of cans 5,500,000 one-year production or grease ones palms necessitate 1,100,000 Number of workers needed 3 one-year hours to be worked per employee 2,000 allowance per hour for employees 12.00 annual health benefits per employee 2,500 different yearly benefits per employee - % of wages18% Cost of raw materials per can0.25 Other variable production costs per can0.05 cost to corrupt cans - per can0.45 Required rate of return12% revenue income rate35% Cost to vex:Make barter for annual cost of direct materials: learn of 1,100,000 cans per year 330,000 Annual cost of direct labor for new employees Wages 72,000 health Benefits 7,500 Other Benefits 12,960 innate wages and benefits 92,460 Total annual production costs 422,460 Annual cost to bribe cans 495,000 straggle 1: Cash flows over the life of the discover Before tax revenueTax EffectAfter Tax Item Annual hard currency savings (make vs buy) 72,540 0.
65 47,151 Tax savings due to come apart and tear 32,000 0.35 11,200 Total annual cash flow 58,351 Part 2: Payback period $200,000 / $58,3513.4years Part 3: Annual rate of return Accounting income as result of reduced costs Annual cash savings (before tax effect) 72,540 forgetful Depreciation (32,000) Before tax income 40,540 Tax at 35% rate (14,189) After tax Income 26,351 $26,351 / $200,00013.18% Part 4: strait Present ValueBefore taxAfter tax12% PVPre sent ItemYearamountTax % totFactorValue Co! st of Machine0...
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