Red Sunset Co. Manufactures Excel

Red Sunset Co. Manufactures Excel

Please complete the yellow-highlighted cells in the Excel template that you download from the EXPREP portal. Ensure you submit your completed Excel template via the EXPREP portal. Once submitted, the EXPREP portal will display the points you earned for the quantitative parts, excluding interpretation, in the ‘Student Score Report.’ You should refer to the score in points, not the percentage shown on the EXPREP portal web page.

Check tips on how to do your homework-help-services/

HW7-2 (20 points)

Red Sunset Co. manufactures mobile phones and wants to add a new model to its current line of products. The firm has estimated that the new phone’s selling price will be $80 and that variable costs would represent 65% of the sale price. Fixed operating costs are estimated to be $15M and the firm’s marginal tax rate is expected to remain at 35%. The firm also has forecasted that interest expenses associated with the new chip will reach $5M. The firm has 5M of common shares outstanding and forecasts a total preferred dividend payment of $200,000 for the next year. If Red Sunset Co. expects to sell 1M units of the new phone, then:

Red Sunset Co. Manufactures Excel

1. Create an income statement with the information above ((Identify and Access Needed Information 4 pts).,
2. Calculate the operating break-even point in both units and dollars. (Analysis 4 pts),
3. How many units would Red Sunset Co. need to sell in order to achieve earnings, before interest and taxes of $2M? (Identify and Access Needed Information 4 pts),
4. Calculate the degree of operating, financial and combined leverage. (Analysis 4 pts),
5. Use the Goal Seek tool to calculate how much preferred dividends the firm would need to pay to keep a degree of financial leverage of 2 ( Use Information Effectively to Accomplish a Specific Purpose 4 pts).,

Please complete the yellow-highlighted cells in the Excel template that you download from the EXPREP portal. Ensure you submit your completed Excel template via the EXPREP portal. Once submitted, the EXPREP portal will display the points you earned for the quantitative parts, excluding interpretation, in the ‘Student Score Report.’ You should refer to the score in points, not the percentage shown on the EXPREP portal web page.

HW7-2 (20 points)

Red Sunset Co. manufactures mobile phones and wants to add a new model to its current line of products. The firm has estimated that the new phone’s selling price will be $80 and that variable costs would represent 65% of the sale price. Fixed operating costs are estimated to be $15M and the firm’s marginal tax rate is expected to remain at 35%. The firm also has forecasted that interest expenses associated with the new chip will reach $5M. The firm has 5M of common shares outstanding and forecasts a total preferred dividend payment of $200,000 for the next year. If Red Sunset Co. expects to sell 1M units of the new phone, then:

Red Sunset Co. Manufactures Excel

1. Create an income statement with the information above ((Identify and Access Needed Information 4 pts).
2. Calculate the operating break-even point in both units and dollars. (Analysis 4 pts)
3. How many units would Red Sunset Co. need to sell in order to achieve earnings, before interest and taxes of $2M? (Identify and Access Needed Information 4 pts)
4. Calculate the degree of operating, financial, and combined leverage. (Analysis 4 pts)
5. Use the Goal Seek tool to calculate how much preferred dividends the firm would need to pay to keep a degree of financial leverage of 2 ( Use Information Effectively to Accomplish a Specific Purpose 4 pts).