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Conch Republic Electronics Mini Case Analysis

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Please help me develop a paper by providing a case analysis for the attached mini case. Use the questions at the end of the case for guidance, but remember you may add to your explanations. Please provide 2-3 pages in standard Case Analysis format. Also, please cite and list all references used.

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Solution Summary

This solution provides analysis of the Conch Republic Electronics mini case analysis. The solution presents an analysis of all the costs associated with the project, and gives the inputs required to compute payback period, profitability index, IRR and NPV of the project.

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Capital Investment Mini case study.

Conch Republic Electronics
Spent $750.00 to develop a prototype (or Model) for a new PDA
Spent an additional $200,000 for marketing study to determine the expected sales.
Can manufacture the new PDA with variable cost for $86.00 each.
Fixed Costs for the operation are estimated at $3 million per year.
Unit Price $250.00 each
Necessary equipment to produce the PDA will cost $15 million, with depreciation for 7 years MACRS schedule.
It is believed that this equipment after 5 years will be worth $3 million.
NWC will be 20% of Sales
Changes in NWC will occur in Year 1, with the first year sales.
There is no initial outlay for NWC.
Conch Republic Corporate Tax Rate is 35% and has a 12% required return.
Estimated Sales Volumes:
NWC 20%
Year Est.Sales of Sales
1 70,000 14,000
2 80,000 16,000
3 100,000 20,000
4 85,000 17,000
5 75,000 15,000

Prepare pro forma financial statement and Project cash flows.
Calculate NPV, IRR, Payback period, PI

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