Economics and financial managment

excel spreadsheet assignment

Cash Flow Statement

The manufacturing manager for Modern Manufacturing Company is working on a justification for implementing a
“Lean/Just-in-time” manufacturing system. No upfront investment will be needed. No revenue changes are forecasted.
A team of employees will spend their time training employees and making process changes. The salaries and benefits
of the “Just-in-time” staff are shown below for the three years of the project.

A team of employees will spend their time training employees and making process changes. The salaries and benefits
of the “Just-in-time” staff are shown below for the three years of the project. There will not be any change in
other S.G.&A. expenses.

Financial gains are expected to be a reduction in the following areas: cost of good sold, inventory, and accounts
payable. The data is shown below where each year changes from the previous year by the percentages shown.

Determine the present worth of the project to see if the savings justify the costs.

Data Block

Time Span
3
Years

Year
0
1
2
3

JIT Team costs
$300,000
$200,000
$100,000

COGS-Reduction per year
7.5%
annually

COGS at end of year 0
$3,000,000

Inventory Reduction per year
10%
annually

Inventory at end of year 0
$200,000

Accounts Receivable reduction
0%
annually

Accounts Receivable at end of year 0
$150,000

Accounts Payable & reduction
10%
annually

Accounts payable at end of year 0
$100,000

Tax Rate
25%
annually

Interest Expense annually
$250,000
constant every year

MARR
15%

 

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