...In determining whether Polymold should invest in the CAD/CAM computer, forecasts should be made including the purchase and with out the purchase. Comparisons in the forecast should focus on the net present value, return on investment, earnings per share, and internal rate return of the purchase of the CAD/CAM to the forecasts of the company without the purchase of the computer. Once the forecasts have been made, the main variables of differentiation in the income statement will focus around the sales, inventory, cost of goods sold, and depreciation. The most promising aspect of technology investment is the increase in sales brought on by the efficient and effective method of production. The costs of goods sold would decline, as the efficiency of the production would increase with the system. Depreciation would also increase, as the CAD/CAM would be depreciated over some time. Due to the heavy cost and useful lifespan of the system, the system should depreciated in order to make the most of the tax benefits created by the acquisition. The firm may use straight line or MACRS. The main differentiation in the balance sheet will be accounts receivable, inventory, and total assets. Accounts receivable will increase as a result of the volume of sales increase. The production and sales increase will consist of purchases on credit, which will inflate the accounts receivables. The increase in sales and production will inflate inventory as the market creation will expand and meet economies...
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...EVALUATING INFORMATION TRANSFER IN PRODUCT DEVELOPMENT by MARK DAMIAN MORELLI Bachelor of Mechanical Engineering Georgia Institute of Technology (1987) Submitted to the Sloan School of Management in Partial Fulfillment of the Requirements of the Degree of Master of Science in Management at the Massachusetts Institute of Technology June 1993 @ Massachusetts Institute of Technology (1993) ALL RIGHTS RESERVED AkA& Signature of Author _ MIT Sloan School of Management May 21, 1993 ~ Certified by ..., ,.,' . tJ: ~DE teven sociate Professor esis Supervisor . ~q Accepted by . . pplnger , Jeffrey A. Barks Associate Dean, Master's and Bachelor's Progranls Dewey MASSACHusms (I' \NSTITUTE " JUM 231993 LlBRAHI~ Evaluating Information Transfer in Product Development by MARK DAMIAN MORELLI Submitted to the Alfred P. Sloan School of Management on May 21, 1993, in partial fulfillment of the requirements of the Degree of Master of Science in Management ABSTRACf In an attempt to build better products faster, companies have employed simultaneous engineering, which requires the aggressive overlapping of product development tasks. In doing so, the complexity of product development projects has been dramatically increased, along with the risks of failure. Since product development projects represent a stream of information that results in new or revised products. nlore efficient methods to enhance this...
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...Polymold Division The Polymold Division case is answering whether or not the CAD/CAM is a good investment. We are looking to answer how it benefits the company, financially. Mr. Martin, the Polymold Division manager felt that sales would continue to decline if Polymold did not invest in the new computer-aided designing and manufacturing system and it would lose market share on its remaining products to its more technologically advanced computers. Mr. Martin feared the marketplace. Polymold manufactured high-quality precision molds with interchangeable parts. When forecasting Polymold Division’s financial statements there are some assumptions that need to be taken into account before projecting the numbers. One of the assumptions is that the 5.1% market share would drop to 4.2% if the company does not purchase the CAD/CAM investment. If they do purchase the CAD/CAM, sales would increase to 7.3%, but could vary from 6.3-7.7%. We are assuming a 50% tax rate, the rate that Mr. Martin for his projections. The last assumption states that you will assume that cost of goods sold will be 73% of sales and will increase up to 77% by 1988. With these assumptions, we can then analyze one really important piece of information that was given, sales. The financial statements are dependent on sales and growth. Exhibit 3 illustrates Polymold’s sales in 1982 ($10.8 million) as well as a forecast of sales and average growth rate from 1983-1987. This information allows you to create a projected...
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...A Fin ncial nalysis Syllabus C Spring ourse Objectives 1998 Contents This course is designed to provide you with Instructor's Role an opportunity to develop your analytical and decision making skills. The class requires you Case to integrate the various areas of finance into a Procedures decision framework. As such it is expected that you will be a very active partner in the educaCalendar tional process. Lectures as a vehicle will be minimal. Instead student presentations, student Presentation Days discussion sessions, and group work will make up the majority of your experience. Writing Reports The course also requires you to grapple with the difficulty of decision making under conditions of uncertainty. It is expected that you How Am I Graded ? will be faced with ambiguous situations which will require you to make numerous judgements. Enrichment Assignments These situations will require a combination of financial theory and practice. It is unlikely that these assignments will result in clear and unambiguous solutions. You will be required to draw on your previous experiences from a variety of areas in order to successfully complete the class requirements. A particularly important goal in this class is to obtain an understanding and appreciation of the valuation process in markets, under conditions of risk or uncertainty. The essence of finance, in the final sense, is an understanding of how various decisions influence firm value. Course Prerequisite For most of you this...
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