Question
In: Accounting
During the past year, Cindy McGill planted a new vineyard on 150 acres of land that...
During the past year, Cindy McGill planted a new vineyard on 150
acres of land that she leases for $31,860 a year. She has asked
you, as her accountant, to assist her in determining the value of
her vineyard operation.
The vineyard will bear no grapes for the first 5 years (1–5). In
the next 5 years (6–10), Cindy estimates that the vines will bear
grapes that can be sold for $63,530 each year. For the next 20
years (11–30), she expects the harvest will provide annual revenues
of $110,730. But during the last 10 years (31–40) of the vineyard’s
life, she estimates that revenues will decline to $72,510 per
year.
During the first 5 years, the annual cost of pruning, fertilizing,
and caring for the vineyard is estimated at $9,670; during the
years of production, 6–40, these costs will rise to $11,010 per
year. The relevant market rate of interest for the entire period is
4%. Assume that all receipts and payments are made at the end of
each year.
Click here to view factor tables
Button has offered to buy Cindy’s vineyard business by assuming the
40-year lease. On the basis of the current value of the business,
what is the minimum price Cindy should accept? (Round
factor values to 5 decimal places, e.g. 1.25124 and final answer to
0 decimal places, e.g. 458,581.)
| Minimum price at which Cindy should accept the business |
Solutions
ekkarill92 answered 2 years agoRelated Solutions
During the past year, Cindy McGill planted a new vineyard on 150 acres of land that...
During the past year, Cindy McGill planted a new vineyard on 150
acres of land that she leases for $31,840 a year. She has asked
you, as her accountant, to assist her in determining the value of
her vineyard operation.
The vineyard will bear no grapes for the first 5 years (1–5). In
the next 5 years (6–10), Cindy estimates that the vines will bear
grapes that can be sold for $64,820 each year. For the next 20
years (11–30),...
During the past year, Julia McGill planted a new vineyard on 150 acres of land that...
During the past year, Julia McGill planted a new vineyard on 150
acres of land that she leases for $30,090 a year. She has asked
you, as her accountant, to assist her in determining the value of
her vineyard operation. The vineyard will bear no grapes for the
first 5 years (1–5). In the next 5 years (6–10), Julia estimates
that the vines will bear grapes that can be sold for $61,290 each
year. For the next 20 years (11–30),...
During the past year, Julia McGill planted a new vineyard on 150 acres of land that...
During the past year, Julia McGill planted a new vineyard on 150
acres of land that she leases for $30,920 a year. She has asked
you, as her accountant, to assist her in determining the value of
her vineyard operation. The vineyard will bear no grapes for the
first 5 years (1–5). In the next 5 years (6–10), Julia estimates
that the vines will bear grapes that can be sold for $64,360 each
year. For the next 20 years (11–30),...
During the past year, Stacy McGill planted a new vineyard on 150 acres of land that...
During the past year, Stacy McGill planted a new vineyard on 150
acres of land that she leases for $30,000 a year. She has asked
you, as her accountant, to assist her in determining the value of
her vineyard operation. The vineyard will bear no grapes for the
first 5 years (1–5). In the next 5 years (6–10), Stacy estimates
that the vines will bear grapes that can be sold for $60,000 each
year. For the next 20 years (11–30),...
The following data set provides information on acres harvested and planted by year and value in...
The following data set provides information on acres harvested
and planted by year and value in the US. Year ASPARAGUS - ACRES
HARVESTED ASPARAGUS - ACRES PLANTED 2015 21,700 23,500 2014 23,800
25,800 2013 24,500 26,800 2012 25,300 27,800 2011 26,800 28,400
2010 28,000 29,200 2009 29,200 30,700 2008 32,200 33,700 2007
38,600 40,900 2006 43,200 44,700 2005 49,300 51,700 2004 61,500
66,000 2003 58,000 62,000 2002 66,000 70,500 2001 70,150 75,150
2000 77,400 82,800 1999 75,890 79,590 1998 74,430...
A farmer has 150 acres of land suitable for cultivating Crops A and B. The cost...
A farmer has 150 acres of land suitable for cultivating Crops
A and B. The cost of cultivating Crop A
is $40/acre, and the cost of cultivating Crop B is
$60/acre. The farmer has a maximum of $7400 available for land
cultivation. Each acre of Crop A requires 20 labor-hours,
and each acre of Crop B requires 25 labor-hours. The
farmer has a maximum of 3300 labor-hours available. He has also
decided that he will cultivate at least 80 acres...
During 2020, Waldo Inc. sold 10 acres of prime commercial zoned land to a builder for...
During 2020, Waldo Inc. sold 10 acres of prime commercial zoned
land to a builder for $5,000,000. The builder gave Waldo a
$1,000,000 down payment and will pay the remaining balance of
$4,000,000 to Waldo in 202 Waldo purchased the land in 2011 for
$2,000,000. Using the installment method,
how much profit will Waldo report for
2020?
$600,000
$1,000,000
$3,000,000
Using the same information as in the preceding question, how
much profit will Waldo report for 2020
using the cost...
Farmer Brown planted com and wheat on his 1120 acres of land. The cost of planting and harvesting corn (which includes seed, planting, fertilizer, machinery, labor and other costs) is $270 per acre
Farmer Brown planted com and wheat on his 1120 acres of land. The cost of planting and harvesting corn (which includes seed, planting, fertilizer, machinery, labor and other costs) is $270 per acre. The cost of planting and harvesting what is $140 por acre. If Farmer Brown's total cost was $237,400, how many acres of com did he plant? Farmer Brown planted _______ acres of com
During the year, Sloan Inc. began a project to construct new corporate headquarters. Sloan purchased land...
During the year, Sloan Inc. began a project to construct new
corporate headquarters. Sloan purchased land with an existing
building for $750,000. The land was valued at $700,000 and the
building at $50,000. Sloan planned to demolish the building and
construct a new office building on the site.
1.
Classify as land and do not depreciate.
2.
Classify as building and depreciate.
3.
Expense.
4.
Capitalized
5.
Expensed as a period cost
Purchase of land for $700,000
Interest of $147,000...
A company paid $150 in dividends and $500 in interest over the past year. The company...
A company paid $150 in dividends and $500 in interest over the
past year. The company increased retained earnings by $400 and had
accounts payable of $690. Sales for the year were $16,000 and the
tax rate was 30 percent. What was the company's EBIT?
Group of answer choices
$1,050
$1,286
$4,800
$3,750
$1,740
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