Following is the seven-year forecast for a new venture called Johnson Transformers:

(all amounts in $000)

Beginning after year 2026 the annual growth in EBIT is expected to be 1.5%, a rate that is projected to be constant over Johnson Transformers remaining life as an enterprise. Beginning in 2026 Johnson's Transformers capital expenditures and depreciation are expected to offset each other (capex - depreciation = 0) and year to year changes in working capital are expected to be zero (working capital levels remain constant year over year). For discounting purposes consider 2020 as year 1. Assume a tax rate is 21% and a cost of capital of 7.75%

Determine the NPV of Johnson Transformers Free Cash Flow for the years 2020 -2026. HINT: Remember to account for loss carry-forwards when determining income taxes.

Complete the required tasks utilizing excel and label everything. All work must be shown

On January 1, 2021, Hobart Mfg. Co. purchased a drill press at a cost of $680,000. The drill press is expected to last 6 years and has a residual value of $80,000. During its 6-year life, the equipment is expected to produce 300,000 units of product. Units actually produced over the 6-year useful life is as follows:

                  2021                        65,000 units

                  2022                        60,000 units

                  2023                        52,000 units

                  2024                        47,000 units

                  2025                        40,000 units

                  2026                        38,000 units

Required:

*** Round double declining rate to 4 decimal points

*** Round all numbers in the deprecation schedules to the nearest whole dollar

Janice acquired an apartment building on June 4, 2020, for $1,600,000. The value of the land is $300,000. Assume Janice sold the apartment building on November 29, 2026.

If required, round your answers to the nearest dollar.

Click here to access the depreciation table to use for this problem.

a. How is the property classified for MACRS?

b. What is the life of the asset for MACRS?

c. Determine Janice's cost recovery deduction for 2020 and 2026.
2020: $
2026: $

On April 30, 2019, Leo purchased and placed in service a new car that cost $78,600. The business use percentage for the car is always 100%. He does not take the additional first-year depreciation or any § 179.

If required, round your answers to the nearest dollar.

Click here to access the depreciation table of the textbook. Click here to access the limits for certain automobiles.

a. What MACRS convention applies to the new car?

b. Is the automobile considered "listed property"?

c. Leo's cost recovery deduction in 2019 is $ and for 2020 is $.

BUFFALO Ltd. had earnings per share of $5 as at December 31, 2015, but paid no dividends. Earnings were expected to grow at 15.2 percent per year for the following five years. BUFFALO Ltd. will start paying dividends for the first time on December 31, 2020, distributing 50 percent of its earnings to shareholders. Earnings growth will be 6 percent per year for the next six years (that is, from January 1, 2021 through to December 31, 2026). Starting on December 31, 2026, BUFFALO Ltd. will begin to pay out 80 percent of its earnings in dividends and earnings growth will stabilize at 2 percent per year in perpetuity. The required rate of return on BUFFALO stock is 10 percent. What should be the current share price of BUFFALO?

Problem 1

Larry has a hot pot of water initially at 95 degrees celsius and in just 5 minutes it cools to 80 degrees celsius while he is watching TV in a room of temperature 21 degrees celsius. Use Newton's law of cooling to determine when the temperature of the pot will reach 50 degrees celsius.

Problem 2

After 1 year from 2015, a country's cumulative exports were estimated to be $8 million. Economist in that country are now trying to estimate the country's cumulative exports in year 2026, if the country's cumulative exports grow in proportion to its average size over the last t years, plus a fixed growth rate of 10.

Can you help these economists to figure out the country's cumulative exports in year 2026 by first finding the general formula for the country's cumulative exports y(t) (in millions of dollars)? (Assume that the constant of proportionality is equal to 1)

JT Inc

Following is the seven-year forecast for a new venture called JT Inc: (all amounts in $000)

Beginning after year 2026 the annual growth in EBIT is expected to be 1.5%, a rate that is projected to be constant over JT Inc remaining life as an enterprise.   Beginning in 2026 JT Inc capital expenditures and depreciation are expected to offset each other (capex - depreciation = 0) and year to year changes in working capital are expected to be zero (working capital levels remain constant year over year). For discounting purposes consider 2020 as year 1.

Assume a tax rate is 21% and a cost of capital of 7.75%

Determine the NPV of JT Inc Free Cash Flow for the years 2020 -2026. HINT: Remember to account for loss carry-forwards when determining income taxes.

The Parker Piano Company purchased a Delivery Truck on January 1, 2025 for $50,000 which included all costs to get the asset ready for use. The truck has an anticipated life of 100,000 miles or 4 years. The estimated residual value at the end of the assets service life is expected to be $2,000. For assets of this type, the company utilizes the straight-line depreciation method.

1. Record the purchase of the asset.

2. Complete the depreciation table below.

3. Record the entry for December 31, 2025 to record the depreciation for the year.

4. Suppose the company sells the van on December 31, 2027 for $18,000 cash. Provide the journal entry to record the sale.

5. Assume the company chooses to use the units-of-production method. Based on the information below, complete the depreciation schedule.

On 2/25/2016 JNJ issued a bond with coupon of 2.45%, face value of $2 Billion, with maturity set for 3/1/2026. (a) Based on JNJ’s 10-K for fiscal 2016 (12-month period ending on 1/1/2017), what was the amount raised by JNJ when the bonds were issued? (b) Were these bonds issued at a discount or premium? (c) How much was the discount or premium? (From here on by the term “JNJ’s bonds” I mean these bonds only.)

Johnson Transformers Inc.

Following is the seven-year forecast for a new venture called Johnson Transformers: (all amounts in $000)

Beginning after year 2026 the annual growth in EBIT is expected to be 1.5%, a rate that is projected to be constant over Johnson Transformers remaining life as an enterprise.   Beginning in 2026 Johnson's Transformers capital expenditures and depreciation are expected to offset each other (capex - depreciation = 0) and year to year changes in working capital are expected to be zero (working capital levels remain constant year over year). For discounting purposes consider 2020 as year 1.

Assume a tax rate is 21% and a cost of capital of 7.75%

Question 1: Determine the NPV of Johnson Transformers Free Cash Flow for the years 2020 -2026. HINT: Remember to account for loss carry-forwards when determining income taxes. The answer to this question was determined in Excel. Your answer may deviate slightly depending upon differences in truncation and rounding. Answers below are in $000.

Answer: $2105

Calculate the fair market value (NPV) for Johnson Transformers. For this problem assume that the Net Present Value of Johnson Transformers free cash flow for the period 2020 - 2026 is $3000 (NOTE its not $3000 but make this assumption in case the answer you determined in the first question was incorrect. Assume no underlying changes to any of the data in the problem. DO NOT USE YOUR ANSWER FROM THE QUESTION ABOVE. All ANSWERS ARE IN $000

A bond that settles on June 7, 2016, matures on July 1, 2036, and may be called at any time after July 1, 2026, at a price of 170. The coupon rate on the bond is 6 percent and the price is 187.00. What are the yield to maturity and yield to call on this bond? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

yield to maturity and yield to call?