Cumberland Metal Industries Free Essay, Term Paper and Book Report
Analysis of the Sitation and Assumptions
a) Market Size
· We have chosen to target 50% of the total hammer universe (owned and/or rental).
· 13,000 (50% universe) x 25 weeks of work x 30 hrs per week x 20 ft driven per hour= 195 M ft/yr.
· 195M x 6 (pads per set) / 10,000 feet = 117,000 pads per year.
· Knowing that our maximum production capacity is 6,000 per year, the maximum market penetration is 5% (117,000 x 0.05).
b) Production capacity
· Current production capacity (without any additional investment) is 250 pad per month.
· With additional $50,000 production will increase to 250 more, for a total production capacity of 500pads/month or 6,000 per year.
· One time upfront investment of $50,000 to support an expectancy life of the product.
c) Cash Flows
Our financial objectives when playing with the numbers were to obtain a positive NPV, at least 50% contribution margin to our company and to offer our clients a substantial savings of at least 50%.
We did a 5 year cash flow analysis assuming a lineal demand of 6,000 per year and Interest rate of 12......
Word Count: 670
Page Count: 2.6 (250 words a page / double spaced)
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