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| ACCT434/436 |
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| Course Project |
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| Elon Motors |
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| Project Template |
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| Elon Motors |
| Data: |
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| Cost of new equipment |
$1,570,000 |
**Please be sure each fact is in the proper number format** **Please be sure you can explain the significance of each fact** |
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| Expected life of equipment in years |
10 |
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| Salvage Value |
$70,000 |
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| Life Production - make sure you understand formula |
30,000 |
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| Annual production or purchase needs |
3,000 |
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| Number of workers needed |
3 |
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| Annual hours to be worked per employee |
2,080 |
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| Earnings per hour for employees |
$25.00 |
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| Health Benefits - % of Wages |
20% |
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| Cost of Direct Materials |
$125.00 |
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| Variable Manufacturing Overhead Costs |
$25.00 |
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| Unit Cost to Purchase Batteries |
$325.00 |
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| Required rate of return |
10% |
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| Tax rate |
30% |
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| Make |
Purchase |
| Cost to Produce |
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| Annual cost of direct material: |
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| Need - Cost direct material |
$375,000 |
formula |
| **Please be sure you can explain each formula and what the subtotal/total numbers mean** |
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| Annual cost of direct labor for new employees: |
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| Wages |
156,000 |
formula |
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| Health benefits |
31,200 |
formula |
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| Total wages and benefits |
187,200 |
formula |
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| Other variable production costs |
| 75,000 |
formula |
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| Total annual production costs |
| $637,200 |
formula |
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| Annual cost to purchase cans |
Annual Cost to Purchase Batteries |
| $975,000 |
formula |
| Part 1 Cash Flows Over the Life of the Project |
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| Before Tax |
Tax |
After Tax |
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| Item |
Amount |
Effect |
Amount |
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| Annual cash savings |
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| Tax savings due to depreciation |
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| Total after-tax annual cash flow |
| Part 2 Payback Period |
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| years |
| Part 3 Accounting Rate of Return |
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| Accounting income as result of decreased costs |
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| Annual cash savings |
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| Less depreciation |
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| Before tax income |
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| Tax at Current Rate |
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| After tax income |
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| Accounting Rate of Return |
| Part 4 Net Present Value |
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| Before Tax |
| After Tax |
PV |
Present |
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| Item |
Year |
Amount |
Tax % |
Amount |
Factor |
Value |
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| Cost of machine |
0 |
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| Annual cash savings |
1-10 |
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| Tax savings due to depreciation |
1-10 |
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| Disposal value |
10 |
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| Net Present Value |
| Part 5 Internal Rate of Return and Modified Internal Rate of Return |
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| After Tax |
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| Item |
Year |
Amount |
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| Cost of machine |
0 |
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| Year 1 inflow |
1 |
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| Year 2 inflow |
2 |
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| Year 3 inflow |
3 |
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| Year 4 inflow |
4 |
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| Year 5 inflow |
5 |
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| Year 6 7nflow |
6 |
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| Year 7 inflow |
7 |
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| Year 8 inflow |
8 |
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| Year 9 inflow |
9 |
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| Year 10 inflow |
10 |
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| Internal Rate of Return |
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| Modified Internal Rate of Return |
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| Net Present Value |
Mocart808
courseprojecttemplatewithfactsmay2024.xlsx
