Conch Republic Electronics Case
Conch Republic Electronics is a mid-sized electronics manufacturer located in Key West, Florida. The company president is Shelly Gouts, who inherited the company. The company originally repaired radios and other household appliances when it was founded over 70 years ago. Over the years, the company has expanded, and it is now a reputable manufacturer of various specialty electroanic items. Jay McCanless, a recent MBA graduate, has been hired by the company in its finance department.
percent corporate tax rate and a 12 percent required return.
Shelly has asked Jay to prepare a report that answers the following aquestions:
1. What is the payback period of the project?
2. What is the profitability index of the project?
3. What is the IRR of the project?
4. What is the NPV of the project?
5. How sensitive is the NPV to changes in the price of the new PDA?
6. How sensitive is the NPV to changes in the quantity sold?
7. Should Conch Republic produce the new PDA?
Conch Republic Electronics Case
Conch Republic Electronics is a mid-sized electronics manufacturer located in Key West, Florida. The company president is Shelly Gouts, who inherited the company. The company originally repaired radios and other household appliances when it was founded over 70 years ago. Over the years, the company has expanded, and it is now a reputable manufacturer of various specialty electroanic items. Jay McCanless, a recent MBA graduate, has been hired by the company in its finance department.
One of the major revenue-producing items manufactured by Conch Republic is a Personal Digital Assistant (PDA). Conch Republic currently has one PDA model on the market and sales have been excellent. The PDA is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffet music. However, as with any electronic item, technology changes rapidly, and the current PDA has limited features in comparison with newer models. Conch Republic spent $750,000 to develop a prototype for a new PDA that has all the features of the existing one, but adds new features such as cell phone capability. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new PDA.
Conch Republic can manufacture the new PDA for $86 each in variable costs. Fixed costs for the operation are estimated to run $3 million per year. The estimated sales volume is 70,000, 80,000, 100,000, 85,000, and 75,000 per each year for the next five years, respectively. The unit price of the new PDA will be $250. The necessary equipment can be purchased for $15 million and will be depreciated on a 7-year MACRS schedule. It is believed the value of the equipment in five years will be $3 million.
As previously stated，Conch Republic currently manufactures a PDA. Production of the existing model expected to be terminated in two years。 If conch republic dose not introduce the new PDA, sales will be 80,000 units and 60,000 units for the next two years, respectively. The price of the existing PDA is $240 per unit, with variable costs of $68 each and fix costs of $1,800,000 per year. If Conch Republic does introduce the new PDA, sales of the existing PDA will fall by 15,000 units per year, and the price of the existing units will have to be lowered to $220 each. Net working capital for the PDAs will be 20 percent of sales and will occur with the timing of the cash flows for the year, for example, there is no initial outlay for NWC, but Changes in NWC will first occur in Year 1 with the first year's sales. Conch Republic has a 35 percent corporate tax rate and a 12 percent required return.
Shelly has asked Jay to prepare a report that answers the following aquestions:
1. What is the payback period of the project?
2. What is the profitability index of the project?
3. What is the IRR of the project?
4. What is the NPV of the project?
5. How sensitive is the NPV to changes in the price of the new PDA?
6. How sensitive is the NPV to changes in the quantity sold?
7. Should Conch Republic produce the new PDA?
【翻译】
Conch Republic电子公司案例
Conch Republic电子公司是一家位于佛罗里达州Key West的中型电子产品制造商。公司总裁是Shelly Couts，他继承了这家公司。公司在70年前创立时，原来是修理收音机和其他家用设备的。多年以来，公司扩张到制造领域，目前是一家有声望的多种电子产品的制造商。Jay Mc Canless是一位刚毕业的MBA，他受雇于公司的财务部门。
Conch Republic公司生产的主要收入来源项目之一是个人数字助理（PDA）。Conch Republic公司目前在市场上有一个PDA型号，销售非常成功。PDA是一个独特的项目，它被配以一系列热情的色彩，并且预先设置演唱Jimmy Buffett的音乐。但是，与其他电子产品项目一样，技术变革十分迅速，目前的PDA比起更新的型号而言，其特点有限。Conch Republic公司花了750 000美元开发一个新PDA的母版，它具备了现有PDA的全部特点，还增添了蜂窝电话兼容等新的特点。该公司又花费了200 000美元用于市场调研，以便确定新PDA的预计销售数据。
Conch Republic公司能够以86美元的单位变动成本生产新PDA。该业务每年的固定成本预计为300万美元。接下来5年的预计销售量分别为70 000、80 000、100 000、85 000和75 000台。新PDA的单价将为250美元。所需的设备可以花1 500万美元购买，采用7年期MACRS表折旧。相信设备在5年后的价值将为300万美元。
如上所述，Conch Republic公司目前生产一种PDA。现有型号的生产预计在2年后终止。如果ConchRepublic公司不引入新PDA，接下来2年的销量分别为80 000台和60 000台。现有PDA的价格是每台240美元，单位变动成本为68美元，每年的固定成本为1 800 000美元。如果Conch Republic公司引入新PDA，现有PDA的销量将会每年下降15 000台，现有PDA的每台价格将不得不降低到220元。PDA的净营运资本将占销售收入的20%，随着年度现金流量的时间发生；例如，起初不需要NWC，但是NWC的变动将会随着第一年的销售收入在第1年首次发生。Conch Republic公司的税率为35%，必要报酬率为12%。
Shelly要求Jay准备一份报告，回答下列问题：
1. 这个项目的回收期是多长？
2. 这个项目的获利能力指数是多少？
3. 这个项目的IRR是多少？
4. 这个项目的NPV是多少？
5. NPV对于新PDA价格变动的敏感程度有多大？
6. NPV对于销售数量的敏感程度有多大？
7. Conch Republic公司应该生产新PDA吗？
（EXCEL表格分析）
EXCEL表格答案下载地址
http://www.rayfile.com/files/062a87ee-df1f-11de-af37-0014221b798a/
http://cachefile21.rayfile.com/zh-cn/download/22c067d822ff7886ade676a308f7c1a3/Conch%20Republic%20Electronics%20Case%20keys.xls
Conch Republic Electronics is a mid-sized electronics manufacturer located in Key West, Florida. The company president is Shelly Gouts, who inherited the company. The company originally repaired radios and other household appliances when it was founded over 70 years ago. Over the years, the company has expanded, and it is now a reputable manufacturer of various specialty electroanic items. Jay McCanless, a recent MBA graduate, has been hired by the company in its finance department.
One of the major revenue-producing items manufactured by Conch Republic is a Personal Digital Assistant (PDA). Conch Republic currently has one PDA model on the market and sales have been excellent. The PDA is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffet music. However, as with any electronic item, technology changes rapidly, and the current PDA has limited features in comparison with newer models. Conch Republic spent $750,000 to develop a prototype for a new PDA that has all the features of the existing one, but adds new features such as cell phone capability. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new PDA.
Conch Republic can manufacture the new PDA for $86 each in variable costs. Fixed costs for the operation are estimated to run $3 million per year. The estimated sales volume is 70,000, 80,000, 100,000, 85,000, and 75,000 per each year for the next five years, respectively. The unit price of the new PDA will be $250. The necessary equipment can be purchased for $15 million and will be depreciated on a 7-year MACRS schedule. It is believed the value of the equipment in five years will be $3 million.
As previously stated，Conch Republic currently manufactures a PDA. Production of the existing model expected to be terminated in two years。 If conch republic dose not introduce the new PDA, sales will be 80,000 units and 60,000 units for the next two years, respectively. The price of the existing PDA is $240 per unit, with variable costs of $68 each and fix costs of $1,800,000 per year. If Conch Republic does introduce the new PDA, sales of the existing PDA will fall by 15,000 units per year, and the price of the existing units will have to be lowered to $220 each. Net working capital for the PDAs will be 20 percent of sales and will occur with the timing of the cash flows for the year, for example, there is no initial outlay for NWC, but Changes in NWC will first occur in Year 1 with the first year's sales. Conch Republic has a 35 percent corporate tax rate and a 12 percent required return.
Shelly has asked Jay to prepare a report that answers the following aquestions:
1. What is the payback period of the project?
2. What is the profitability index of the project?
3. What is the IRR of the project?
4. What is the NPV of the project?
5. How sensitive is the NPV to changes in the price of the new PDA?
6. How sensitive is the NPV to changes in the quantity sold?
7. Should Conch Republic produce the new PDA?
【翻译】
Conch Republic电子公司案例
Conch Republic电子公司是一家位于佛罗里达州Key West的中型电子产品制造商。公司总裁是Shelly Couts，他继承了这家公司。公司在70年前创立时，原来是修理收音机和其他家用设备的。多年以来，公司扩张到制造领域，目前是一家有声望的多种电子产品的制造商。Jay Mc Canless是一位刚毕业的MBA，他受雇于公司的财务部门。
Conch Republic公司生产的主要收入来源项目之一是个人数字助理（PDA）。Conch Republic公司目前在市场上有一个PDA型号，销售非常成功。PDA是一个独特的项目，它被配以一系列热情的色彩，并且预先设置演唱Jimmy Buffett的音乐。但是，与其他电子产品项目一样，技术变革十分迅速，目前的PDA比起更新的型号而言，其特点有限。Conch Republic公司花了750 000美元开发一个新PDA的母版，它具备了现有PDA的全部特点，还增添了蜂窝电话兼容等新的特点。该公司又花费了200 000美元用于市场调研，以便确定新PDA的预计销售数据。
Conch Republic公司能够以86美元的单位变动成本生产新PDA。该业务每年的固定成本预计为300万美元。接下来5年的预计销售量分别为70 000、80 000、100 000、85 000和75 000台。新PDA的单价将为250美元。所需的设备可以花1 500万美元购买，采用7年期MACRS表折旧。相信设备在5年后的价值将为300万美元。
如上所述，Conch Republic公司目前生产一种PDA。现有型号的生产预计在2年后终止。如果ConchRepublic公司不引入新PDA，接下来2年的销量分别为80 000台和60 000台。现有PDA的价格是每台240美元，单位变动成本为68美元，每年的固定成本为1 800 000美元。如果Conch Republic公司引入新PDA，现有PDA的销量将会每年下降15 000台，现有PDA的每台价格将不得不降低到220元。PDA的净营运资本将占销售收入的20%，随着年度现金流量的时间发生；例如，起初不需要NWC，但是NWC的变动将会随着第一年的销售收入在第1年首次发生。Conch Republic公司的税率为35%，必要报酬率为12%。
Shelly要求Jay准备一份报告，回答下列问题：
1. 这个项目的回收期是多长？
2. 这个项目的获利能力指数是多少？
3. 这个项目的IRR是多少？
4. 这个项目的NPV是多少？
5. NPV对于新PDA价格变动的敏感程度有多大？
6. NPV对于销售数量的敏感程度有多大？
7. Conch Republic公司应该生产新PDA吗？
（EXCEL表格分析）
EXCEL表格答案下载地址
http://www.rayfile.com/files/062a87ee-df1f-11de-af37-0014221b798a/
http://cachefile21.rayfile.com/zh-cn/download/22c067d822ff7886ade676a308f7c1a3/Conch%20Republic%20Electronics%20Case%20keys.xls
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