Financial Assignment
Autor: fionattse • December 17, 2015 • Dissertation • 1,654 Words (7 Pages) • 758 Views
Industry | Year 1 | Year 2 | Year3 |
Weak(probability 50%) | 3,000 units | 4,000 units | 3,000 units |
Strong(probability 50%) | 5,000 units | 6,000 units | 7,000 units |
- If new machinery was to introduce to be used.
Expected units in year 1= ( 3,000* 0.5) +(5,000*0.5)=4,000 units
Expected units in year 2= ( 4,000* 0.5) +(6,000*0.5)=5,000 units
Expected units in year 3= ( 3,000* 0.5) +(7,000*0.5)=5,000 units
The new machinery will reduce the labour hours required to produce a turbine from 5 hours to 2 hours, so for per unit they can save 3 labour hour.
Total labour hours saved for each year:
Year 1= 4,000 units * 3 labour hours/ units= 12,000 hours
Year 2= 5,000 units * 3 labour hours/ units= 15,000 hours
Year 3= 5,000 units * 3 labour hours/ units= 15,000 hours
Total annual cost saving for each year:
Year 1= 12,000 hours*$ 7=$ 84,000
Year 2= 15,000 hours*$ 8=$ 120,000
Year 3= 15,000 hours*$ 9=$ 135,000
Year 1 | Year 2 | Year 3 | |
Production volumes(units) | 4,000 | 5,000 | 5,000 |
Labour hours saved per unit | 3 | 3 | 3 |
Employees hourly rate($/hours) | 7 | 8 | 9 |
Total annual cost saving ($) | 84,000 | 120,000 | 135,000 |
cost of capital | Year 1 | Year 2 | Year 3 | |
Net Book value | $200,000 | $150,000 | $112,500 | $84,375 |
capital allowance(25%) | $50,000 | $37,500 | $28,125 |
b)
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