Caledonia Products

The marginal value from the project would be in the incremental cash flow. The earnings would be much less if they were looking at it through the accounting profits. It would be less because of the depreciation would be considered an expense causing a larger expense for Caledonia. Describe factors Caledonia must consider if it were to lease versus buy First Caledonia must figure out if they will have enough cash flow to pay the bill each month. Leasing would give Caledonia the benefit of decreasing costs. The down side of leasing would mean that Caledonia will not be out of the lease until it has been paid off and the company who leased the property will be the owners until that is completed. Buying property means that the item is usually in better condition, better value, and they will own it. Prices are often better when buying than with leasing. Tax expenses may be a downside of owning the property. 2. Incremental Cash Flow Year1 Year2 Year3 Year4 Year5 Operating Cash Flow 5,949,200 9,909,200 11,493,200 6,741,200 3,771,200 Each year results in positive incremental cash flow and the new project appears to be a profitable business option. Accounting profits represent the total cost of doing business. The difference would be that this company requires additional net working capital every year which is not reflected in the incremental costs. 3. Initial Outlay Year 0 New Product Cost of new plant and equipment$(7,900,000) Shipping and installation costs (100,000) Total costs$(8,000,000) Initial working capital $(100,000) Initial cash flow (8,100,000) 4. Free Cash Flow Year0 Year1 Year2 Year3 Year4 Year 5 Project Revenues $21,000,000 $36,000,000 $42,000,000 $24,000,000 $15,600,000 Unit Costs (12,600,000) (21,600,000) (25,200,000) (14,400,000) (10,800,000) Gross Profit 8,400,000 14,400,000 16,800,000 9,600,000 4,800,000 Annual fixed costs (200,000) (200,000) (200,000) (200,000) (200,000) Depreciation (1,580,000) (1,580,000) (1,580,000) (1,580,000) (1,580,000) Net operating income 6,620,000 12,620,000 15,020,000 7,820,000 3,320,000 Taxes (34%) (2,250,800) (4,290,800) (5,106,800) (2,658,800) (1,128,800) NOPAT 4,369,200 8,329,200 9,913,200 5,161,200 2,191,200 Depreciation 1,580,000 1,580,000 1,580,000 1,580,000 1,580,000 Operating cash flow 5,949,200 9,909,200 11,493,200 6,741,200 3,771,200 Year0 Year1 Year2 Year3 Year4 Year5 Net Capital $(100,00) (2,100,000) (3,600,000) (4,200,000) (2,400,000) (1,560,000) CAPEX $(8,000,000) — —- —- — — Free Cash Flow $(8,100,000) 3,849,200 6,309,200 7,293,200 4,341,200 2,211,200 5. 6. 7. Should the project be accepted? Why or why not? Yes. This project should be accepted because the NPV ? 0. and the IRR ? required rate of return. Or No. This project should not be accepted because the NPV and the IRR required rate of return. Caledonia Products The marginal value from the project would be in the incremental cash flow. The earnings would be much less if they were looking at it through the accounting profits. It would be less because of the depreciation would be considered an expense causing a larger expense for Caledonia. Describe factors Caledonia must consider if it were to lease versus buy First Caledonia must figure out if they will have enough cash flow to pay the bill each month. Leasing would give Caledonia the benefit of decreasing costs. The down side of leasing would mean that Caledonia will not be out of the lease until it has been paid off and the company who leased the property will be the owners until that is completed. Buying property means that the item is usually in better condition, better value, and they will own it. Prices are often better when buying than with leasing. Tax expenses may be a downside of owning the property. 2. Incremental Cash Flow Year1 Year2 Year3 Year4 Year5 Operating Cash Flow 5,949,200 9,909,200 11,493,200 6,741,200 3,771,200 Each year results in positive incremental cash flow and the new project appears to be a profitable business option. Accounting profits represent the total cost of doing business. The difference would be that this company requires additional net working capital every year which is not reflected in the incremental costs. 3. Initial Outlay Year 0 New Product Cost of new plant and equipment$(7,900,000) Shipping and installation costs (100,000) Total costs$(8,000,000) Initial working capital $(100,000) Initial cash flow (8,100,000) 4. Free Cash Flow Year0 Year1 Year2 Year3 Year4 Year 5 Project Revenues $21,000,000 $36,000,000 $42,000,000 $24,000,000 $15,600,000 Unit Costs (12,600,000) (21,600,000) (25,200,000) (14,400,000) (10,800,000) Gross Profit 8,400,000 14,400,000 16,800,000 9,600,000 4,800,000 Annual fixed costs (200,000) (200,000) (200,000) (200,000) (200,000) Depreciation (1,580,000) (1,580,000) (1,580,000) (1,580,000) (1,580,000) Net operating income 6,620,000 12,620,000 15,020,000 7,820,000 3,320,000 Taxes (34%) (2,250,800) (4,290,800) (5,106,800) (2,658,800) (1,128,800) NOPAT 4,369,200 8,329,200 9,913,200 5,161,200 2,191,200 Depreciation 1,580,000 1,580,000 1,580,000 1,580,000 1,580,000 Operating cash flow 5,949,200 9,909,200 11,493,200 6,741,200 3,771,200 Year0 Year1 Year2 Year3 Year4 Year5 Net Capital $(100,00) (2,100,000) (3,600,000) (4,200,000) (2,400,000) (1,560,000) CAPEX $(8,000,000) — —- —- — — Free Cash Flow $(8,100,000) 3,849,200 6,309,200 7,293,200 4,341,200 2,211,200 5. 6. 7. Should the project be accepted? Why or why not? Yes. This project should be accepted because the NPV ? 0. and the IRR ? required rate of return. Or No. This project should not be accepted because the NPV and the IRR required rate of return.

Third Estate Paper Essay Example | Topics and Well Written Essays - 1000 words

Third Estate Paper - Essay Example The first estate comprised religious leaders and the clergy who were the smallest minority, but wielded a great deal of powers and influence in the country. The clergy is known to have owned up to one fifth of the land in France, and had great influence on the monarch. These were exempted from paying taxes and were assigned a number of workers in the churches. The second estate was the ruling class who had immense control and effect upon the third estate and worked to ensure that the rights of members of the third estate were infringed upon to avoid any form of opposition. Because of the unfair treatment members of the third estate received from the first and second estates, there arose revolutionists among them and through the works of the likes of Sieyes, they revolted against the political system, bringing the caste system down, leading to the declaration of human rights, and since the a just and fair society. 2.0. Discussion. The events elaborated in this paper took place before the French revolution in the years preceding 1788. The political situation at this time was dominated by the first and second classes, which were the Catholic Church and the monarch respectively. The knowledge prevailing at this time was that the clergy and nobility were ordained by God and that no one had the right to question whatever they did as they were ‘holy’ and only answerable to God. Noble authority was guided by four characteristics: that it was holy, paternal, absolute, and ruled with a reason. It was, then to be revered by everyone (Hibbert 283). This was the period preceding the fall of the Roman Empire and the rise of the Catholic Church. The church was so influential that the papacy dictated every aspect of human life including ethical, moral, religious, and political organization of the society. The church, therefore, grew alongside secular powers, with the two depending on each other mutually for their existence. The persons of this time were largely cl assified into three groups: those who fought (the nobility), those who prayed (the church), and those who labored (the peasantry). The greatest concern for the three groups was power and influence. The church and nobility attained this by instilling ideologies of fear among the third estate that they were a special select by God and that serving them amounted to serving God. For a long tie, they managed to scare the people of the lower class until the time of the Investiture Controversy that saw the second class question the powers and authority of the church. They overthrew the church and took its place in the first estate. The third class, o the other hand, was busy looking for ways it could overthrow the nobility to form a nation of their own where there would be equality among all (Bienvenu 351). In the late 16th century, relations between the king and Estate Generals began to deteriorate, leading to the epoch events where Estate Generals began to break off form the main kingdom power. These further led to the onset of the French Revolution characterized by weeks and months of civil unrest, especially by members of the third estate. The revolution was brought to an end after the first and second estates agreed to include representatives from the third estate in the governing body and reforms

Gender Roles Essay Example | Topics and Well Written Essays - 250 words - 2

Gender Roles - Essay Example The approach evaluates the society at a macro-level while focusing on social structures such as gender roles that shape the society as a whole. It addresses the society as a whole by considering by considering its constituent elements such as traditions, norms, institutions, and customs. Herbert Spenser popularized the analogy that presents parts of the society, for example, gender, as organs that function together for the human body to be normal (Magar). Gender roles from a functionalist perspective were articulated in early 1950s. The theory suggests that differences in gender roles are an efficient way of creating divisions in labor. The division, therefore, aims at maximizing the use of resources, as well as, the efficiency of the society’s system. The perspective views the predefined roles as complementary. Men will provide for the families while women manage homes. Gender, therefore, contributes to the society’s stability, in the same way, as other social institutions (Magar). The functional prerequisites refer to the basic needs such as shelter and clothing that people require to live beyond the poverty line. In a similar way, the functional prerequisite also refers to factors that help maintain society order. Gender roles maintain social order by ensuring that the basic needs people need in the society are available