In: Accounting

*[The following information applies to the questions
displayed below.]*

Falcon Crest Aces (FCA), Inc., is considering the purchase of a
small plane to use in its wing-walking demonstrations and aerial
tour business. Various information about the proposed investment
follows:

Initial investment | $ | 260,000 | |||||

Useful life | $ | 10 | years | ||||

Salvage value | 25,000 | ||||||

Annual net income generated | $ | 5,800 | |||||

FCA's cost of capital | 7 | % | |||||

Assume straight line depreciation method is used.

**3.** Net present value (NPV). (Future Value of
$1, Present Value of $1, Future Value Annuity of $1, Present Value
Annuity of $1.) **(Use appropriate factor(s) from the tables
provided.** **Negative amount should be indicated by a
minus sign. Round the final answer to nearest whole
dollar.****)**

**4.** Recalculate FCA's NPV assuming the cost of
capital is 3% percent. (Future Value of $1, Present Value of $1,
Future Value Annuity of $1, Present Value Annuity of $1.)
**(Use appropriate factor(s) from the tables provided. Round
your final answer to the nearest whole dollar amount.)**

**3.Net present value
(NPV) at 7% = - $41,501 (Negative)**

Annual Cash flow = Net Income + Depreciation

= $5,800 + [($2,60,000 - $25,000)/10]

= $5,800 + $23,500

= $29,300

Net present value (NPV) = Present Vale of cash flows – Estimated costs

= [ $29,300 x (PVAF 7%,10Years) ] + ($25000 x (PVF 7%,10 Years )) -$2,60,000

= [ $29,300 x 7.0236] – [ $25000 x 0.5083] - $2,60,000

= $2,05,791.50 + $12,707.50 - $2,60,000

**= - $41,501 (Negative)**

**4.Net present value
(NPV) at 3% = - = $8,435 (Positive)**

Annual Cash flow = Net Income + Depreciation

= $5,800 + [($2,60,000 - $25,000)/10]

= $5,800 + $23,500

= $29,300

Net present value (NPV) = Present Vale of cash flows – Estimated costs

= [ $29,300 x (PVAF 3%,10Years) ] + ($25000 x (PVF 3%,10 Years )) -$2,60,000

= [ $29,300 x 8.5302] – [ $25000 x 0.744] - $2,60,000

= $2,49,935 - $18,600 - $2,60,000

**= $8,435 (Positive)**

[The following information applies to the questions
displayed below.]
Falcon Crest Aces (FCA), Inc., is considering the purchase of a
small plane to use in its wing-walking demonstrations and aerial
tour business. Various information about the proposed investment
follows:
Initial investment
$
280,000
Useful life
$
10
years
Salvage value
25,000
Annual net income generated
$
6,200
FCA's cost of capital
8
%
Assume straight line depreciation method is used.
Required:
Help FCA evaluate this project by calculating each of...

Required information
[The following information applies to the questions
displayed below.]
Falcon Crest Aces (FCA), Inc., is considering the purchase of a
small plane to use in its wing-walking demonstrations and aerial
tour business. Various information about the proposed investment
follows:
Initial investment
$
270,000
Useful life
$
10
years
Salvage value
25,000
Annual net income generated
$
6,000
FCA's cost of capital
8
%
Assume straight line depreciation method is used.
3. Help FCA evaluate this project by
calculating...

Falcon Crest Aces (FCA), Inc., is considering the purchase of a
small plane to use in its wing-walking demonstrations and aerial
tour business. Various information about the proposed investment
follows:
Initial investment
$
200,000
Useful life
$
10
years
Salvage value
20,000
Annual net income generated
$
4,600
FCA's cost of capital
9
%
Required:
Help FCA evaluate this project by calculating each of the
following:
1. Accounting rate of return. (Round your
answer to 2 decimal places.)
2. Payback...

Falcon Crest Aces (FCA), Inc., is considering the purchase of a
small plane to use in its wing-walking demonstrations and aerial
tour business. Various information about the proposed investment
follows:
Initial investment
$
140,000
Useful life
$
10
years
Salvage value
10,000
Annual net income generated
$
3,400
FCA's cost of capital
6
%
Assume straight line depreciation method is used.
Required:
Help FCA evaluate this project by calculating each of the
following:
1. Accounting rate of return. (Round your...

Falcon Crest Aces (FCA), Inc., is considering the purchase of a
small plane to use in its wing-walking demonstrations and aerial
tour business. Various information about the proposed investment
follows:
Initial investment
$
190,000
Useful life
$
10
years
Salvage value
20,000
Annual net income generated
$
4,400
FCA's cost of capital
6
%
Assume straight line depreciation method is used.
Required:
Help FCA evaluate this project by calculating each of the
following:
1. Accounting rate of return. (Round your...

Falcon Crest Aces (FCA), Inc., is considering the purchase of a
small plane to use in its wing-walking demonstrations and aerial
tour business. Various information about the proposed investment
follows:
Initial investment
$
310,000
Useful life
$
10
years
Salvage value
25,000
Annual net income generated
$
6,800
FCA's cost of capital
7
%
Assume straight line depreciation method is used.
Required:
Help FCA evaluate this project by calculating each of the
following:
1. Accounting rate of return.
3. Help...

Falcon Crest Aces (FCA), Inc., is considering the purchase of a
small plane to use in its wing-walking demonstrations and aerial
tour business. Various information about the proposed investment
follows:
Initial investment
$
210,000
Useful life
$
10
years
Salvage value
20,000
Annual net income generated
$
4,800
FCA's cost of capital
7
%
Assume straight line depreciation method is used.
1. Payback period. (Round your answer
to 2 decimal places.)
2. Net present value (NPV). (Future Value of
$1,...

Falcon Crest Aces (FCA), Inc., is considering the purchase of a
small plane to use in its wing-walking demonstrations and aerial
tour business. Various information about the proposed investment
follows:
Initial investment
$
160,000
Useful life
$
10
years
Salvage value
20,000
Annual net income generated
$
3,800
FCA's cost of capital
10
%
1. Accounting rate of return. (Round
your answer to 2 decimal places.)
2. Payback period. (Round your answer
to 2 decimal places.)
3. Net present value...

Required information
[The following information applies to the questions
displayed below.]
Apple Inc. is the number one online music retailer
through its iTunes music store. Apple sells iTunes gift cards in
$15, $25, and $50 increments. Assume Apple sells $20.1 million in
iTunes gift cards in November, and customers redeem $13.1 million
of the gift cards in December.
Required:
1. & 2. Record the necessary entries in the
Journal Entry Worksheet below. (If no entry is required for
a particular...

Required information
[The following information applies to the questions
displayed below.]
Arndt, Inc. reported the following for 2021 and 2022 ($ in
millions):
2021
2022
Revenues
$
888
$
980
Expenses
760
800
Pretax accounting income (income statement)
$
128
$
180
Taxable income (tax return)
$
116
$
200
Tax rate: 25%
Expenses each year include $30 million from a two-year casualty
insurance policy purchased in 2021 for $60 million. The cost is tax
deductible in 2021.
Expenses include...

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