Chat with us, powered by LiveChat Based on the attached excel sheet? Do you recommend the acceptance of this proposal? Why or why not? Prepare a two-page minimum, double-spaced Word paper elaborating on and supporting you | Wridemy

Based on the attached excel sheet? Do you recommend the acceptance of this proposal? Why or why not? Prepare a two-page minimum, double-spaced Word paper elaborating on and supporting you

Based on the attached excel sheet? Do you recommend the acceptance of this proposal? Why or why not? Prepare a two-page minimum, double-spaced Word paper elaborating on and supporting you

Based on the attached excel sheet 

Do you recommend the acceptance of this proposal? Why or why not?

Prepare a two-page minimum, double-spaced Word paper elaborating on and supporting your answer. Be sure to follow APA formatting, as applicable.

ELON MOTORS

ACCT434/436
Course Project
Elon Motors
Project Template
Elon Motors
Data:
Cost of new equipment $1,570,000
Expected life of equipment in years 12
Salvage Value $70,000
Life Production 36,000
Annual production or purchase needs 300
Number of workers needed 3
Annual hours to be worked per employee 2,080
Earnings per hour for employees $25.00
Health Benefits – % of Wages 20%
Cost of Direct Materials $125.00
Variable Manufacturing Overhead Costs $25.00
Unit Cost to Purchase Batteries $325.00
Required rate of return 10%
Tax rate 30%
Make Purchase
Cost to Produce
Annual cost of direct material:
Need – Cost direct material for of 2,500 Batteries $375,000
Annual cost of direct labor for new employees:
Wages 156,000
Health benefits 31,200
Total wages and benefits 187,200
Other variable production costs 75,000
125,000
Total annual production costs $762,200
Annual cost to purchase cans Annual Cost to Purchase Batteries $975,000
Part 1 Cash Flows Over the Life of the Project
Before Tax Tax After Tax
Item Amount Effect Amount
Annual cash savings $337,800 30% $101,340
Tax savings due to depreciation 125,000 30% $37,500
Total after-tax annual cash flow $138,840
Part 2 Payback Period years
Cost of new equipment 1,570,000
divide: annual cashflow 236,460 6.64
Part 3 Accounting Rate of Return
Accounting income as result of decreased costs
Annual cash savings $236,460
Less depreciation 125,000
Before tax income 111,460
Tax at Current Rate 33,438
After tax income $78,022
Accounting Rate of Return 4.97%
Part 4 Net Present Value
Before Tax After Tax PV Present
Item Year Amount Tax % Amount Factor Value
Cost of machine 0 $1,570,000 1.000 $1,570,000
Annual cash savings 1-10 $281,500 30% 84,450 5.678 1,342,640
Tax savings due to depreciation 1-10 $104,167 83% 31,250 5.678 212,928
Disposal value 10 $58,333 83% 17,500 0.2655 13,010
Net Present Value $3,138,578
Part 5 Internal Rate of Return and Modified Internal Rate of Return
After Tax
Item Year Amount
Cost of machine 0 $ 1,570,000
Year 1 inflow 1 $ 236,460
Year 2 inflow 2 $ 236,460
Year 3 inflow 3 $ 236,460
Year 4 inflow 4 $ 236,460
Year 5 inflow 5 $ 236,460
Year 6 7nflow 6 $ 236,460
Year 7 inflow 7 $ 236,460
Year 8 inflow 8 $ 236,460
Year 9 inflow 9 $ 236,460
Year 10 inflow 10 $ 236,460
Internal Rate of Return
Modified Internal Rate of Return 10.36%
Net Present Value $3,138,578

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