USA Accounting Case Problem - Help Needed Please

Joined
Jun 30, 2015
Messages
3
Reaction score
0
Country
United States
Problem:

Real estate (Y ltd) company is interested in purchasing a Steel Company (X ltd)

- Asking Price of X ltd $ 2.5 Million
- Y ltd Operating Income is $1.0 Million
- By combining operations of X Ltd, Y ltd will save:
- $ 75,000 in Admin
- $ 75,000 in Salaries (Overpaid X Ltd managers)
- $ 15,000 in Storage (X ltd storage not needed as Y Ltd has excess room)
- Y Ltd uses approx 5 Million Ft of Steel / Year, in 2015 it is estimated that 10 Million Ft required (within capacity)
- Purchase price evaluation (Use WACC of 9% and 5 years)
- Income Statement for X Ltd is as Follows:

Ft of Steel Producted: 14.75 Million
Ft of Steel Sold: 13.5 Million
Avg Selling Price/Ft: $0.32
Sales: $4,252,500
DL: 1,371,750
DM: 1,888,000
Fixed MOH(includes Storage): 780,000
Marketing/Freight/Customer Service: 315,000
Admin: 300,000


Required:
- Break-even of X Ltd
- Transfer Price using the market price
- Is purchase Price of 2.5 Million reasonable? Discounted Cash flow analysis
 

kirby

VIP Member
Joined
May 12, 2011
Messages
2,453
Reaction score
334
Country
United States
How is having someone do your work for you going to help you to learn?
 
Joined
Jun 30, 2015
Messages
3
Reaction score
0
Country
United States
Not having someone do my work for me? its not an assignment. Its a mock exam that I have but no answers! I need someone to answer so I can compare my numbers. If you can help I can post what I have answered so far.
 

kirby

VIP Member
Joined
May 12, 2011
Messages
2,453
Reaction score
334
Country
United States
Good that it is a mock exam as that will not affect your grade. So best to try this on your own and then compare to the solution the prof will give.
 
Joined
Jun 30, 2015
Messages
3
Reaction score
0
Country
United States
Its not a class, i got this from an external source but has no answer with it. Can anyone help?
 

smallbushelp

VIP Member
Joined
Jun 22, 2015
Messages
191
Reaction score
20
Country
United States
Sorry pal, but that's just too much to ask in a forum like this.
 

kirby

VIP Member
Joined
May 12, 2011
Messages
2,453
Reaction score
334
Country
United States
I mean really, nex2022, there MUST be something better to do with your time than solving random break-even problems! Or are you stranded on some desert island and an old accounting book washed ashore?
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Members online

No members online now.

Forum statistics

Threads
11,668
Messages
27,641
Members
21,482
Latest member
AnnaMiss76cig

Latest Threads

Top