Question

In: Finance

Klingon Widgets, Inc., purchased new cloaking machinery four years ago for $4 million. The machinery can...

Klingon Widgets, Inc., purchased new cloaking machinery four years ago for $4 million. The machinery can be sold to the Romulans today for $3.6 million. Klingon’s current balance sheet shows net fixed assets of $2 million, current liabilities of $700,000, and net working capital of $216,000. If all the current assets and current liabilities were liquidated today, the company would receive $1.03 million cash.

a.	What is the book value of Klingon’s total assets today?

b. What is the sum of the market value of NWC and the market value of fixed assets?

Expert Solution

a.Formula for calculating the net working capital:

Net Working Capital= Current Assets- Current Liabilities

$216,000= Current Assets- $700,000

Current Assets= $216,000 + $700,000

= $916,000

Book value of total assets= Current Assets + Net fixed assets

= $916,000 + $2,000,000

= $2,916,000

b.Market value of net working capital= $1,030,000

Market value of fixed assets= $3,600,000

Therefore, the sum of net working capital and fixed assets:

= $1,030,000 + $3,600,000

= $4,630,000.

In case of any query, kindly comment on the solution.

jeff jeffy answered 6 months ago

Klingon Cruisers, Inc., purchased new cloaking machinery four years ago for $4 million. The machinery can...

Klingon Cruisers, Inc., purchased new cloaking machinery four years ago for $4 million. The machinery can be sold to the Romulans today for $3.6 million. Klingon's current balance sheet shows net fixed assets of $2 million, current liabilities of $700,000, and net working capital of $216,000. If all the current accounts were liquidated today, the company would receive $1.03 million cash. a. What is the book value of Klingon's assets today? (Do not round intermediate calculations and enter your answer...

Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $4.0 million. The machinery can...

Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $4.0 million. The machinery can be sold to the Romulans today for $6.2 million. Klingon’s current balance sheet shows net fixed assets of $2.8 million, current liabilities of $710,000, and net working capital of $130,000. If all the current accounts were liquidated today, the company would receive $825,000 cash. a. What is the book value of Klingon’s total assets today? (Do not round intermediate calculations and enter your answer...

Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $6.5 million. The machinery can...

Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $6.5 million. The machinery can be sold to the Romulans today for $4.15 million. Klingon's current balance sheet shows net fixed assets of $2.8 million, current liabilities of $2 million, and net working capital of $470,000. If all the current assets were liquidated today, the company would receive $2.05 million cash What is the book value of Klingon's assets today? a. $ 4.15 Mil b. $ 5.27 Mil c....

Klingon Cruisers, Inc., purchased new cloaking machinery five years ago for $10 million. The machinery can...

Klingon Cruisers, Inc., purchased new cloaking machinery five years ago for $10 million. The machinery can be sold to the Romulans today for $9.1 million. Klingon's current balance sheet shows net fixed assets of $8 million, current liabilities of $780,000, and net working capital of $220,000. If all the current accounts were liquidated today, the company would receive $1.02 million cash. a. What is the book value of Klingon's assets today? (Do not round intermediate calculations and enter your answer...

Klingon Widget Inc. purchased new cloaking machinery three years ago for 6 million dollars. The machinery...

Klingon Widget Inc. purchased new cloaking machinery three years ago for 6 million dollars. The machinery can be sold to the Romulans today for 4.8 million dollars. Klingons current balance sheet shows net fixed assets of 3.3 million dollars, current liabilities of 850,000 dollars, and net working capital of 220,000 dollars. If all the current accounts were liquidated today, the company would recieve 1.05 million dollars cash. What is the book value of Klingons total assets today? What is the...

3). Market values and book values-Klingon Cruisers, Inc., purchased new cloaking machinery three years ago for$9.6...

3). Market values and book values-Klingon Cruisers, Inc., purchased new cloaking machinery three years ago for$9.6 million. The machinery can be sold to the Romanulans today for $6.4 million. Klingon's current balance sheet shows net fixed assets of $4.9 million, current liabilities of $2.2 million, and net workimg capital of $850,000. If all current accounts were liquidated today, the company would receive $2.7 million cash. What is the book value of Klingon's assets today? what is the sum of NWC...

Q1.ABC Company purchased a new machinery two years ago for $61724. Today, it is selling this...

Q1.ABC Company purchased a new machinery two years ago for $61724. Today, it is selling this machinery for $21938. What is the after-tax salvage value if the tax rate is 36 percent? The MACRS allowance percentages are as follows, commencing with year one: 20.00, 32.00, 19.20, 11.52, 11.52, and 5.76 percent. Q2.ABC Company purchased $85737 of equipment 4 years ago. The equipment is 7-year MACRS property. The firm is selling this equipment today for $52564. What is the After-tax Salvage...

Charles and Ann live in a house that they purchased four years ago. It is a...

Charles and Ann live in a house that they purchased four years ago. It is a large Victorian-era home with 12 rooms and cost them $250,000 at the time Charles has life insurance three times his salary (salary - $81,000) from the college, and Ann has life insurance through her employer for twice her salary(salary - $40,000). Charles and Ann each purchased five-year term individual insurance policies from a local insurance broker when they purchased the house, with a face...

A new piece of Machinery was purchased for $200,000. The machinery has an economic life of...

A new piece of Machinery was purchased for $200,000. The machinery has an economic life of 4 years and falls under Class 8 with a CCA of 20%. The machinery is expected to have a salvage value of $25,000 after 4 years of use. The firms tax rate is 28%, and its overall WACC is 10%. Using the declining balance method, calculate the PV of the CCA tax shield.

A four-year insurance policy in the amount of $20,000 was purchased two years ago. What is...

A four-year insurance policy in the amount of $20,000 was purchased two years ago. What is the adjusting entry to record insurance expense for the current year? A.) DEBIT: Insurance Expense for $20,000; CREDIT: Prepaid Insurance for $20,000 B.) DEBIT: Insurance Expense for $5,000; CREDIT: Prepaid Insurance for $5,000 C.) DEBIT: Prepaid Insurance for $20,000; CREDIT: Insurance Expense for $20,000 D.) DEBIT: Prepaid Insurance for $5,000; CREDIT: Insurance Expense for $5,000