Question Details

ACCT 505
COURSE PROJECT
		ACCT505		
		Part B		
		Capital Budgeting problem	Clark Paints, Inc.	
				
Data:				
		Cost of new equipment	$200,000	
		Expected life of equipment in years	5	
		Disposal value in 5 years	$40,000	
		Life production - number of cans	5,500,000	
		Annual production or purchase needs	1,100,000	
		Initial training costs	0	
		Number of workers needed	3	
		Annual hours to be worked per employee	2,000	
		Earnings per hour for employees	$12.00	
		Annual health benefits per employee	$2,500	
		Other annual benefits per employee-% of wages	18%	
		Cost of raw materials per can	$0.25	
		Other variable production costs per can	$0.05	
		Costs to purchase cans - per can	$0.45	
		Required rate of return	10%	
		Tax rate	35%