This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Goodweek Tire, Inc., has recently developed a new tire, the SuperTread, and must decide whether to ... (Read 94 times)

rmenurse

  • Hero Member
  • *****
  • Posts: 513
on: Apr 25, 2021
Goodweek Tire, Inc., has recently developed a new tire, the SuperTread, and must decide whether to make the investment. The research and development costs so far total $10 million. Market research (costing $5 million) shows that there is significant demand for a SuperTread type tire. 
The SuperTread will be produced and sold for the next two years. Goodweek Tire must initially invest $120 million in production equipment. This equipment can be sold for $51,428,571 at the end of two years. The equipment is classified as 15-year property for depreciation purposes.
The SuperTread is expected to sell for $45 per tire. The variable cost for each SuperTread is $15. Analysts expect automobile manufacturers to build five million new cars this year and for production to grow 2.5% in the following year. Each new car needs four tires. Goodweek Tire expects the SuperTread to capture 10 percent of the market. Assume that revenues and expenses occur at the end of each of the two years of production.
Working capital is equal to 15% of sales. Investments in working capital are made at the beginning of each year. Assume a tax rate of 40%. At the end of the terminal year, the working capital is liquidated. What are the terminal year cash flows? 

MACRS Depreciation Rates
Year10-Year15-Year
110.00%5.00%
218.00%9.50%
314.40%8.55%

◦ $30,540,000
◦ $44,377,500
◦ $95,806,071
◦ $105,928,048
◦ $127,195,000
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
Buy Test-Bank


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by rmenurse on Apr 25, 2021

nothere

  • Sr. Member
  • ****
  • Posts: 324
Reply #1 on: Apr 25, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
Answer Preview
Only 64% of students answer this correctly


rmenurse

  • Member
  • Posts: 513
Reply 2 on: Apr 25, 2021
Gracias!

kusterl

  • Member
  • Posts: 315
Reply 3 on: Yesterday
:D TYSM

« previous next »
 

Did you know?

In women, pharmacodynamic differences include increased sensitivity to (and increased effectiveness of) beta-blockers, opioids, selective serotonin reuptake inhibitors, and typical antipsychotics.

Did you know?

The Babylonians wrote numbers in a system that used 60 as the base value rather than the number 10. They did not have a symbol for "zero."

Did you know?

Serum cholesterol testing in adults is recommended every 1 to 5 years. People with diabetes and a family history of high cholesterol should be tested even more frequently.

Did you know?

Thyroid conditions cause a higher risk of fibromyalgia and chronic fatigue syndrome.

Did you know?

Vital signs (blood pressure, temperature, pulse rate, respiration rate) should be taken before any drug administration. Patients should be informed not to use tobacco or caffeine at least 30 minutes before their appointment.

Crop plants developed by selective breeding of the wild mustard plant. Crop plants developed by selective breeding of the wild mustard plant.
Linear alopecia developed in this man from daily wearing of his military uniform cap Linear alopecia developed in this man from daily wearing of his military uniform cap
Blocked at every turn by congressional Republicans who hated him, President Obama turned to techniqu Blocked at every turn by congressional Republicans who hated him, President Obama turned to techniqu
Per capita consumption of power is high in the developed world and highest in the United States Per capita consumption of power is high in the developed world and highest in the United States
The medulla and the midbrain are largely developed at birth The medulla and the midbrain are largely developed at birth
Recently discovered members of the deep pelagic community Recently discovered members of the deep pelagic community
Video: B cells and antibodies

For a complete list of videos, visit our video library