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Buffy the Vampire Slayer is creating her own slaying company. All the trademarks cost her $150,000...
Buffy the Vampire Slayer is creating her own slaying company. All the trademarks cost her $150,000 today but she’s sure it’ll pick up soon. Best case scenario, next year she’ll be earning $75,000 and then $50,000 in years 2 and 3, followed by $90,000 in years 4 and 5. These numbers are, of course, dependent on vampire slaying needs in the community. There is a worst case scenario where she only earns $35,000 in the first 3 years then $40,000 in the next 2. The most likely outcome though is earning $45,000 in the first year, $50,000 in year 2, $60,000 in year 3, then $50,000 in year 4, and $45,000 in year 5. If the relevant interest rate was 15%, would you recommend the project? Why or why not?
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jeff jeffy answered 1 year agoRelated Solutions
Buffy the Vampire Slayer is creating her own slaying company. All the trademarks cost her $150,000...
Buffy the Vampire Slayer is creating her own slaying company.
All the trademarks cost her $150,000 today but she’s sure it’ll
pick up soon. Best case scenario, next year she’ll be earning
$75,000 and then $50,000 in years 2 and 3, followed by $90,000 in
years 4 and 5. These numbers are, of course, dependent on vampire
slaying needs in the community. There is a worst case scenario
where she only earns $35,000 in the first 3 years then $40,000...
Riley Company promises to pay Janet Anderson or her estate $150,000 per year for the next...
Riley Company promises to pay Janet Anderson or her estate $150,000
per year for the next 10 years, even if she leaves the company or
passes away to try to induce her to stay with the company. Riley
Company wants to properly record this transaction as deferred
compensation but is unsure how to record the cost. In addition,
Riley Company purchased a whole life insurance policy for Janet,
naming the company as the beneficiary. Riley Company wants to
determine if...
On July 1, Andrew Company purchased equipment at a cost of $150,000 that has a depreciable...
On July 1, Andrew Company purchased equipment at a cost of
$150,000 that has a depreciable cost of $120,000 and an estimated
useful life of 3 years or 60,000 hours.
Required:
Using straight-line depreciation, prepare the journal entry to
record depreciation expense for (a) the first year, (b) the second
year, and (c) the last year on December 31. Refer to the Chart of
Accounts for exact wording of account titles.
CHART OF ACCOUNTS
Andrew Company
General Ledger
ASSETS
110...
1. Your company is analyzing the possible purchase of new equipment at a cost of $150,000....
1. Your company is analyzing the possible purchase of new
equipment at a cost of $150,000. Assume straight-line depreciation
and a 3-year depreciable life. It is estimated the equipment would
save:$120,000 in Year 1$120,000 in Year 2$120,000 in Year 3$120,000
in Year 4Project operating costs are expected to be $40,000 each
year. The firm’s income tax rate is 21 percent, and its required
rate of return or cost of capital is 12 percent. Calculate the Net
Present Value (NPV) of...
The Olney Company purchased a machine 3 years ago at a cost of $150,000. It had...
The Olney Company purchased a
machine 3 years ago at a cost of $150,000. It had an expected life
of 10 years at the time of purchase and an expected salvage value
of $5,000. The existing machine costs $54,000
year to run and generates $1,000,000 a year in revenue with a gross
profit margin of 20%. The old machine can be sold today
for $55,000 and the expectation is that it can be sold for $7,500
in 7 years.
A...
The GetWellStayWell Company just purchased some equipment that cost $150,000. The asset is in the MACRS...
The GetWellStayWell Company just purchased some equipment that
cost $150,000. The asset is in the MACRS 3-year class for
depreciation. So the depreciation rates will be .33, .45, .15, and
.07 for years 1 through 4, respectively.
However it is expected that the asset will be sold in three years.
The tax rate for the company is 21%. What is the after-tax salvage
value at the end of YEAR 3 if the company receives: a) (4 pts)
$20,000 (at the...
QUESTION #5: X Company is considering buying a new machine that will cost $150,000 and that...
QUESTION #5:
X Company is considering buying a new machine that will cost
$150,000 and that will generate annual cash inflows of $31,470 for
6 years.
What is the approximate internal rate of return?
Howarth Manufacturing Company purchased a lathe on June 30, 2014, at a cost of $150,000. The...
Howarth Manufacturing Company purchased a lathe on June 30,
2014, at a cost of $150,000. The residual value of the lathe was
estimated to be $15,000 at the end of a five-year life. The lathe
was sold on March 31, 2018, for $45,000. Howarth uses the
straight-line depreciation method for all of its plant and
equipment. Partial-year depreciation is calculated based on the
number of months the asset is in service.
Required:
1. Prepare a schedule to calculate the gain...
Laura Moore has recently left her job as a Graphic Designer to open her own Company;...
Laura Moore has recently left her job as a Graphic Designer to
open her own Company; a Graphic Design Agency dedicated to the
creation and design of apps for mobile devices. Laura has decided
to be self-employed.
To do so, she will have her business premises, which belongs to
her father, in downtown Barcelona and she will have to hire:
A visual designer
A developer
An administrative assistant
1. To hire the administrative assistant, Marta has decided to
offer an...
Laura Moore has recently left her job as a Graphic Designer to open her own Company;...
Laura Moore has recently left her job as a Graphic Designer to
open her own Company; a Graphic Design Agency dedicated to the
creation and design of apps for mobile devices. Laura has decided
to be self-employed. To do so, she will have her business premises,
which belongs to her father, in downtown Barcelona and she will
have to hire: A visual designer A developer An administrative
assistant 1. To hire the administrative assistant, Marta has
decided to offer an...
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