Marian runs a store selling decorative breathing masks. For obvious reasons, she has recently seen a sharp uptick in business and wants to increase her production capacity. To accomplish this, she wants to buy a new industrial sewing machine, which will allow her to increase her yearly EBIT by $15,000 per year for the next 4 years. The sewing machine costs $36,000, but if she makes this purchase, she will borrow $28,000 for 4 years at 6.5% to help pay the purchase price. Her tax rate is 36%, and her cost of levered equity is 15%.

1: What is the NPV of buying the new sewing machine if Marian pays cash? (10 points)

1: Using the FTE method, what is the NPV of buying the new sewing machine if Marian takes out the loan? (15 points)

Marian runs a store selling decorative breathing masks. For obvious reasons, she has recently seen a sharp uptick in business and wants to increase her production capacity. To accomplish this, she wants to buy a new industrial sewing machine, which will allow her to increase her yearly EBIT by $15,000 per year for the next 4 years. The sewing machine costs $36,000, but if she makes this purchase, she will borrow $28,000 for 4 years at 6.5% to help pay the purchase price. Her tax rate is 36%, and her cost of levered equity is 15%.

2A. What is the NPV of buying the new sewing machine if Marian pays cash?

2B. Using the FTE method, what is the NPV of buying the new sewing machine if Marian takes out the loan?

Marian runs a store selling decorative breathing masks. For obvious reasons, she has recently seen a sharp uptick in business and wants to increase her production capacity. To accomplish this, she wants to buy a new industrial sewing machine, which will allow her to increase her yearly EBIT by $15,000 per year for the next 4 years. The sewing machine costs $36,000, but if she makes this purchase, she will borrow $28,000 for 4 years at 6.5% to help pay the purchase price. Her tax rate is 36%, and her cost of levered equity is 15%.

2A. What is the NPV of buying the new sewing machine if Marian pays cash?

2B. Using the FTE method, what is the NPV of buying the new sewing machine if Marian takes out the loan?

West Coast Tours runs boat tours along the west coast of British Columbia. On March 5, 2020, it purchased, with cash, a cruising boat for $846,000, having a useful life of 10 years or 12,900 hours, with a residual value of $201,000. The company’s year-end is December 31.

Required:
Calculate depreciation expense for the fiscal years 2020, 2021, and 2022 by completing a schedule. (Note: Depreciation is calculated to the nearest month. Assume actual hours of service were: 2020, 750; 2021, 1,810; 2022, 1,565.)

Emma runs a business selling scarves. She purchases the scarves directly from scarf makers in Cambodia and sells them in makers markets in Victoria. The following transactions have taken place during the 2019/20 income year. Please advise Emma as to the tax consequences of each of these transactions (from (a)-(d)), referring where appropriate to legislation in your answer:

(a) Emma purchased $3,000 of scarves on 5 July 2019 from a scarf maker in Cambodia. The scarves were loaded onto a ship the next day and under the terms of the contract, Emma was to take ownership and control of the scarves once they were loaded on that ship. Half of the scarves were delivered to Emma on 8 August. The rest of the scarves were delivered directly to a customer in Indonesia on 10 August. The customer had purchased the scarves from Emma on 20 July.

(b) At 30 June 2020, Emma had 30 scarves in stock. The pieces had cost her $3 each.

(c) Emma took 10 scarves out of her stock to give as gifts to friends and family at Christmas time. The scarves cost $30 and had a market selling value of $300.

(d) Emma gave 8 scarves to a creditor in satisfaction of a $210 debt. The scarves cost Emma $24 and have a market selling value of $240.

A county's real property tax year runs from January 1 to December 31. Dolton sells the real property to Nova on September 30, 2017. Nova owns the real property from September 30 through December 31. The tax for the real property tax year, January 1 through December 31, is $6,890.

Round any division to four decimal places and use in subsequent calculations. Round your final answers to the nearest dollar. Assume 365 days in a year.

The portion of the real property tax treated as imposed upon Dolton, the seller, is $ , and the amount of the tax is treated as imposed upon Nova, the purchaser is $.

Leila runs a firm in a perfectly competitive market with many other firms. Her short-run cost function is given by C(q) = q2 + 25q + 144 such that MC(q) = 2q + 25. Answer the following questions.

a. How much is Leila’s fixed cost of running the firm?

b. If the market price is $75, how much profit will Leila make?

c. Below which price will Leila need to shut down in the short-run?

d. How much output will Leila produce in the long-run? What will the market price be in the longrun?

please include steps or explanations

#1: Prepare a depreciation schedule:

Z Company's fiscal year runs July 1st to June 30th. The company purchased a new machine which was installed and operational at the beginning of the second quarter in October. Machine purchase price of $145,800 with an additional installation cost of $10,000, and has an estimated useful life of four years from installation and estimated salvage value of $5,600.

Required:

1. Prepare a depreciation schedule showing Net Book value (beginning and ending), depreciation expense, and accumulated depreciation for the asset. Hint: pay attention to dates of acquisition and fiscal year.

Prepare one schedule for each method:

a. Straight-line

b. Double-declining balance

2. Z Company receives an offer of $45,000 for the machine at the end of the third fiscal year.

a. What factors should Z Company consider in determining whether to sell or keep the machine?

b. Assume the machine is sold. Prepare the appropriate journal entry showing sale of the machine and disposition of asset under each depreciation schedule.

Ultrasonic is a profit‐maximizing electronics company that runs a small flat panel TV division. Each week, Ultrasonic sells 2,500 TVs at the equilibrium market price of $1,000 each. Weekly fixed costs at the flat panel TV division are $500,000 and the division has weekly losses for $250,000.

a. Find Ultrasonic’s weekly revenues, weekly total costs and weekly variable costs.

b. In a diagram, draw an ATC, an AVC and a MC curve consistent with the data above.

c. In the short run, should Ultrasonic keep its flat panel TV division open or should it shut it down? Why?

d. According to a recently published market analysis, flat panel TVs prices will remain in the ballpark of $1,000 for years. What should the company do with its flat panel TV division?

e. Suppose weekly fixed cost at the division were $100,000 (instead of $500,000), would your answers to part B and C be different? Briefly explain.

ABC Theater runs multiple shows each month. Each of the 5 theaters has 100 seats. The selling price for each ticket is $10, no matter which show or time of day. Adults, Seniors and Children admissions are all $10 each.

Given the following financial data:

• ABC Theaters pays $8,000 rent for the theater equipment each month
• ABC Theaters owns the building and records depreciation of $1,500 each month
• The management has determined that there is a variable cost of $2 per admission that accounts for maintenance and supplies.
• The movie house managers salary is $36,000 per year or $3,000 per month. The manager also receives a $1 bonus for each paid admission to the theater
• Finally, the ABC Theaters wants to achieve a $10,000 profit at the end of each month.

* Compute the number of ticket admissions required to be sold each month to achieve break even, including the profit goal of $10,000 each month.

* If ABC Theater had an exceptional month and sold 4,000 tickets at their normal price, how much extra profit would they earn beyond their monthly goal of $10,000; assuming the same data as above?