31. Consider two ways of protecting elephants from poachers in African countries. In one approach, the government sets up enormous national parks that have sufficient habitat for elephants to thrive and forbids all local people to enter the parks or to injure either the elephants or their habitat in any way. In a second approach, the government sets up national parks and designates 10 villages around the edges of the park as official tourist centers that become places where tourists can stay and bases for guided tours inside the national park. Consider the different incentives of local villagers—who often are very poor—in each of these plans. Which plan seems more likely to help the elephant population?

As manager of the Best Drinks Company in Hayward, you would like to sell drinks at a booth during the major celebration in the Hayward’s Central Park. The following table provides information about the drinks that you will be selling: You estimate labor cost to be $600 (2 people, $300 dollars each per day at the booth). Even if nothing is sold, your labor cost will be still $600, so you decide to consider this a fixed cost. Booth rental, $400, is also a fixed cost. Apply the total fixed cost for your break-even analysis, and do not annualize the fixed cost.

Questions What is the break-even volume (in dollars) for selling drinks at the booth? Show your calculations manually or use Excel. How much would you expect to sell at the break-even point? Present and explain your calculations.

What are GASB requirements for bonded debt?

Town Oaks’ residents want to start a fund to improve their local community. Town Oaks, a gated community, has voted to create a neighborhood park with bonded debt. The bonds will be repaid by the residents and the following transactions are related to park debt:

• The community has a tax burden for the park of $5,000,000, which is imposed on January 1, 20X7.

• Payments start at the beginning of the current year and will be paid in 10 equal annual payments.

• 5% interest is due on the unpaid installments.

• Payments and interest on the unpaid payments was collected by December 31, 20X7.

• A small amount of the assessed receivables was reclassified to current in the amount of 20X8 installments.

• The initial principal payment of $500,000 and the interest on the debt was paid to bondholders on January 1, 20X8.

Required:

• Identify the type of fund the city should impose to account for this special assessed debt.

• Prepare journal entries for the city’s transactions.

• Identify how the city should report the fund in their financial statements?

• Identify how the city should report special assessed debt in their financial statements? •

Compare the treatments of special assessed debt from the United States with at least two other countries. Would the same reporting practices be used and why?

E10-8 Recording and Reporting a Bond Issued at a Discount (with Discount Account) LO10-4

Park Corporation is planning to issue bonds with a face value of $610,000 and a coupon rate of 7.5 percent. The bonds mature in 6 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Park uses the effective-interest amortization method and also uses a discount account. Assume an annual market rate of interest of 8.5 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answer to whole dollars.)  

Required:

1. Prepare the journal entry to record the issuance of the bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Prepare the journal entry to record the interest payment on June 30 of this year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

3. What bond payable amount will Park report on its June 30 balance sheet? (Enter all amounts with a positive sign.)

Poco Miller is the RM at the Hampton Inn. Mark is the property’s FOM and Latisha is the DOSM. All three serve on the hotel’s RM committee. The hotel has 200 rooms. Next month the hotel will serve as the host hotel for the Retired Firefighters Association. The Association originally blocked 100 rooms per night for Thursday, Friday, and Saturday nights at a rate of $99.00 per night. All the rooms in their block have been picked up. The current rooms availability forecast for the three days of the meeting is as follows:

The group has requested that Latisha add 30 rooms each night to its block at the originally contracted rate of $99.00. It states that its members will use all of the additional rooms if they are made available, but if not, they will move their remaining 30 attendees down the street to the Comfort Inn. Latisha is in favor of increasing the block and keeping the group together. Mark is opposed. He is convinced he can sell 20 more rooms on Thursday, 40 rooms on Friday, and 30 rooms on Saturday at the normal rack rate of $129.99. Under his plan, he states, “The hotel can maximize its ADR.”

Based on Mark’s estimate of future sales to be made at rack rate, Poco knows the hotel will sell out and maximize its occupancy percentage under Latisha’s plan. Help Poco analyze the data she needs to answers the questions that follow by filling in the chart.

A. What would the hotel’s ADR be under Mark’s plan?
B. What would the hotel’s RevPAR be under Mark’s plan?
C. What would the hotel’s ADR be under Latisha’s plan?
D. What would the hotel’s RevPAR be under Latisha’s plan?
E. Who’s plan would you advise Poco to support? Explain your rationale.

I just started this job 2 weeks ago as the CEO’s personal assistant. He is married 3x and is a very charismatic man, the CEO of a self-built multi-million empire. After a few days, he suddenly asked me if he could take me out to diner in London, if I book my flights and hotel he will afterwards reimburse me. [1] It was then, she relates, that she knew he wanted to sleep with her. In her words, she’s “totally not interested, but wants to preserve the job by not rejecting him.” So she made an excuse to get out of it and her post continues: “He then bothered me for hours about giving him good reasons why I couldn’t go. Then he said OK, next week we will go to Milan! He is a very powerful man, and I just get nervous of him. But I really do not want to lose my job. What should I do?” [

2] Make the case that Chourok C is not ethically free to go to Milan with him in order to advance her career, regardless of whether she’s attracted to him or not. The poster called Skater Boi proposes an aggressive solution: “Get a voice recorder and record what he says: blackmail if he tries to fire you.”

5. The poster called Skater Boi proposes an aggressive solution: “Get a voice recorder and record what he says: blackmail if he tries to fire you.”

I am thinking about going into the hotel business through acquiring 12 hotels spread throughout the Rocky Mountain region. I have projected out the costs of hiring managers to run the hotels, as well as the other many costs of operating them. Based on this, I have a good handle on the cash flows the project will generate, and I now need to estimate the cost of equity I will use to discount these cash flows.

Unfortunately, I am out of time, and so I need you, my brilliant financial protege, to give me an estimate of a reasonable cost of equity for this project. Obviously, I don't have the 10 million needed to acquire the hotels myself and will need to attract additional equity financing from outside investors. So when I meet with these investors, I need a logical estimate and explanation for what the cost of equity is that they should be earning. So don't just give me a number, you have to tell me why you pick what you do.

Obviously, they could invest in many other hotel chains and management companies, many of which are publicly traded. So your best approach is to look at the cost of equity for these pure-plays (the ticker for Hilton is HLT, but I would rely on estimates from more than one company so look up their competitors) and make adjustments based on our situation. For instance, consider the following differences:

Are your pure-play firms more or less risky based on geographic dispersion relative to us?

Are your pure-play firms more or less risky based on easier access to additional capital?

Am I or these pure-plays more likely to achieve operating efficiency (higher profit margins) over the next four or five years?

There are certainly other considerations you might come up with that I am missing right now, so feel free to include them as well. But make adjustments to your estimates to fit my situation. Then write up your conclusions in a professional sounding report that is no longer than one page. Put any additional tables in an appendix.

(The 12 hotels are not relevant. They only give you the industry that you are researching. If you want to value a company, you have to figure out what companies in that same industry are selling for, or what kind of discount rate investors expect for firms in that industry. So you have to look at other firms in the same industry. So you will look up hotel firms, and calculate their cost of equity. And then you will make adjustments to their costs based on the subject firm with 12 hotels. So think about this logically. Would you rather invest in Hilton, with thousands of hotels, or this company with 12? Which is less risky? Which has more growth potential? These are the kinds of issues you would think about when estimating the cost of equity using the pure play approach. But no, this is not based on an actual firm, so there won't be stuff on the internet about it. )

A model of a plane is built to a scale of 1/14 and is tested in a wind tunnel.

If the plane is designed to travel at 800 km/h at an altitude of 5 km, determine the required density of the air in the wind tunnel so that the Reynolds and Mach numbers are the same. Assume the temperature is the same in both cases and the speed of sound in air at this temperature is 340 m/s. ρp = 0.7364 kg/m3 at an altitude of 5 km.

A major issue of contention at many colleges concerns the cost of meals that is rebated when a student does not sign up for the meal plan. The administration usually says that it should rebate only the marginal cost of the food alone, which is calculated at, say, $1.25 per meal. Students say that the marginal cost should include more costs, such as the saved space from fewer students using the facilities and the reduced labor expenses on food preparation. This can raise the marginal cost to $6.00.

• Who is correct, the administration, or the students?
• How might your answer differ if this argument were being conducted in the planning stage before the dining hall is built
• If you accept the $1.25 figure of a person not eating, how could you justify using a higher figure of about $6.00 for the cost of feeding a guest at the dining hall, as many schools do?

A major issue of contention at many colleges concerns the cost of meals that is rebated when a student does not sign up for the meal plan. The administration usually says that it should rebate only the marginal cost of the food alone, which it calculated at, say, $1.25 per meal. Students say that the marginal cost should include more costs, such as the saved space from fewer students using the facilities and the reduced labor expenses on food preparation. This can raise the marginal cost to $6.00.

• Who is correct, the administration or the students?
• How might your answer differ if this argument were being conducted in the planning stage before the dining hall is built
• If you accept the $1.25 figure of a person not eating, how could you justify using a higher figure of about $6.00 for the cost of feeding a guest at the dining hall, as many schools do?