Investment Timing Option: Decision-Tree Analysis Kim Hotels is interested in developing a new hotel in Seoul. The company estimates that the hotel would require an initial investment of $22 million. Kim expects the hotel will produce positive cash flows of $3.74 million a year at the end of each of the next 20 years. The project's cost of capital is 12%.
What is the project's net present value? A negative value should be entered with a negative sign. Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. $ million
In: Finance
Seong Hotels is interested in developing a new hotel is Seoul. The initial investment of the project is $20 million, but cashflows could differ if the government imposes a hotel tax. There is a 60% chance a hotel tax will be imposed and cash flows would be $2 million per year for 20 years. However, there is a 40% chance there will not be a tax imposed so cash flows would be $4 million per year for 20 years. They will not know if the tax will be imposed until next year. What is the project's expected NPV if they wait and implement the project one year from now? Cost of capital is 10%.
In: Finance
This program is broken down into phases for your convenience only. Please turn in only the final phase. Before turning in your program, please make sure that it does something reasonable if the user enters a negative number the first time.
Phase I: Write a program for a theater that will keep track of how many people in each of 5 age categories attended a particular movie. Use the 5 age categories listed below in the sample screen output. The user will enter a number of ages, entering a negative number when there are no more ages to enter. Your program will then report on how many people in each age group attended. Sample screen output:
Enter age of attendee (-1 to quit): 34
Enter age of attendee (-1 to quit): 16
Enter age of attendee (-1 to quit): 68
Enter age of attendee (-1 to quit): 53
Enter age of attendee (-1 to quit): 39
Enter age of attendee (-1 to quit): 23
Enter age of attendee (-1 to quit): 21
Enter age of attendee (-1 to quit): -1
age 0 to 18: 1
age 19 to 30: 2
age 31 to 40: 2
age 41 to 60: 1
over 60: 1 |
Phase II: Modify your program so that, in addition
to the report that the program currently produces, it also gives
the average age of the people in attendance, the age of the oldest
person in attendance, and the age of the youngest person in
attendance. Sample screen output:
Enter age of attendee (-1 to quit): 34
Enter age of attendee (-1 to quit): 16
Enter age of attendee (-1 to quit): 68
Enter age of attendee (-1 to quit): 53
Enter age of attendee (-1 to quit): 39
Enter age of attendee (-1 to quit): 23
Enter age of attendee (-1 to quit): 21
Enter age of attendee (-1 to quit): -1
age 0 to 18: 1
age 19 to 30: 2
age 31 to 40: 2
age 41 to 60: 1
over 60: 1
The average age was 36.
The youngest person in attendance was 16.
The oldest person in attendance was 68. |
Phase III: Modify your program so that it also asks each attendee for a theater concession stand purchase. The attendee must make a selection based on the following choices …
1 - Soft Drink (such as Coca Cola, ICCEE, Mineral Water etc...)
2 - Popcorn
3 - Nachos
4 - Soft drink & Popcorn
5 - Soft drink & Nachos
6 - Organic and Gluten-free snacks
7 – None
The program output should now also provide a theater concession stand sales summary with a count of each category purchased.
Note: Include a validation routine to ensure that a correct choice is input for each attendee.
Check the sample screen output below for the final formatted display of theater statistics.
========================== THEATER STATS PROGRAM ========================== Movie theater snacks available for purchase ========================================== 1 - Soft Drink (such as Coca Cola, ICCEE, Mineral Water etc...) 2 - Popcorn 3 - Nachos 4 - Soft drink & Popcorn 5 - Soft drink & Nachos 6 - Organic and Gluten-free snacks 7 - None ========================================== Enter age of attendee (-1 to quit): 34 Movie theater snack purchased. (Select items 1 - 7):4 -------------------------- Enter age of attendee (-1 to quit): 16 Movie theater snack purchased. (Select items 1 - 7):5 -------------------------- Enter age of attendee (-1 to quit): 68 Movie theater snack purchased. (Select items 1 - 7):12 Invalid selection, please choose from 1 - 7 Movie theater snack purchased. (Select items 1 - 7):6 -------------------------- Enter age of attendee (-1 to quit): 53 Movie theater snack purchased. (Select items 1 - 7):6 -------------------------- Enter age of attendee (-1 to quit): 39 Movie theater snack purchased. (Select items 1 - 7):1 -------------------------- Enter age of attendee (-1 to quit): 23 Movie theater snack purchased. (Select items 1 - 7):2 -------------------------- Enter age of attendee (-1 to quit): 21 Movie theater snack purchased. (Select items 1 - 7):3 -------------------------- Enter age of attendee (-1 to quit): 21 Movie theater snack purchased. (Select items 1 - 7):4 -------------------------- Enter age of attendee (-1 to quit): -1 ================================== THEATER STATS PROGRAM RESULTS ================================== age 0 to 18: 1 age 19 to 30: 3 age 31 to 40: 2 age 41 to 60: 1 over 60: 1 The average age was 34 The youngest person in attendance was 16 The oldest person in attendance was 68 Theater Concession Stand sales ================================== Soft Drink (such as Coca Cola, ICCEE, Mineral Water etc.): 1 Popcorn: 1 Nachos: 1 Soft drink & Popcorn: 2 Soft drink & Nachos: 1 Organic and Gluten-free snacks: 2 Process returned 0 (0x0) execution time : 169.589 s Press any key to continue. |
In: Computer Science
C++...This program is broken down into phases for your convenience only. Please turn in only the final phase. Before turning in your program, please make sure that it does something reasonable if the user enters a negative number the first time.
Phase I: Write a program for a theater that will keep track of how many people in each of 5 age categories attended a particular movie. Use the 5 age categories listed below in the sample screen output. The user will enter a number of ages, entering a negative number when there are no more ages to enter. Your program will then report on how many people in each age group attended. Sample screen output:
Enter age of attendee (-1 to quit): 34
Enter age of attendee (-1 to quit): 16
Enter age of attendee (-1 to quit): 68
Enter age of attendee (-1 to quit): 53
Enter age of attendee (-1 to quit): 39
Enter age of attendee (-1 to quit): 23
Enter age of attendee (-1 to quit): 21
Enter age of attendee (-1 to quit): -1
age 0 to 18: 1
age 19 to 30: 2
age 31 to 40: 2
age 41 to 60: 1
over 60: 1 |
Phase II: Modify your program so that, in addition
to the report that the program currently produces, it also gives
the average age of the people in attendance, the age of the oldest
person in attendance, and the age of the youngest person in
attendance. Sample screen output:
Enter age of attendee (-1 to quit): 34
Enter age of attendee (-1 to quit): 16
Enter age of attendee (-1 to quit): 68
Enter age of attendee (-1 to quit): 53
Enter age of attendee (-1 to quit): 39
Enter age of attendee (-1 to quit): 23
Enter age of attendee (-1 to quit): 21
Enter age of attendee (-1 to quit): -1
age 0 to 18: 1
age 19 to 30: 2
age 31 to 40: 2
age 41 to 60: 1
over 60: 1
The average age was 36.
The youngest person in attendance was 16.
The oldest person in attendance was 68. |
Phase III: Modify your program so that it also asks each attendee for a theater concession stand purchase. The attendee must make a selection based on the following choices …
1 - Soft Drink (such as Coca Cola, ICCEE, Mineral Water etc...)
2 - Popcorn
3 - Nachos
4 - Soft drink & Popcorn
5 - Soft drink & Nachos
6 - Organic and Gluten-free snacks
7 – None
The program output should now also provide a theater concession stand sales summary with a count of each category purchased.
Note: Include a validation routine to ensure that a correct choice is input for each attendee.
Check the sample screen output below for the final formatted display of theater statistics.
========================== THEATER STATS PROGRAM ========================== Movie theater snacks available for purchase ========================================== 1 - Soft Drink (such as Coca Cola, ICCEE, Mineral Water etc...) 2 - Popcorn 3 - Nachos 4 - Soft drink & Popcorn 5 - Soft drink & Nachos 6 - Organic and Gluten-free snacks 7 - None ========================================== Enter age of attendee (-1 to quit): 34 Movie theater snack purchased. (Select items 1 - 7):4 -------------------------- Enter age of attendee (-1 to quit): 16 Movie theater snack purchased. (Select items 1 - 7):5 -------------------------- Enter age of attendee (-1 to quit): 68 Movie theater snack purchased. (Select items 1 - 7):12 Invalid selection, please choose from 1 - 7 Movie theater snack purchased. (Select items 1 - 7):6 -------------------------- Enter age of attendee (-1 to quit): 53 Movie theater snack purchased. (Select items 1 - 7):6 -------------------------- Enter age of attendee (-1 to quit): 39 Movie theater snack purchased. (Select items 1 - 7):1 -------------------------- Enter age of attendee (-1 to quit): 23 Movie theater snack purchased. (Select items 1 - 7):2 -------------------------- Enter age of attendee (-1 to quit): 21 Movie theater snack purchased. (Select items 1 - 7):3 -------------------------- Enter age of attendee (-1 to quit): 21 Movie theater snack purchased. (Select items 1 - 7):4 -------------------------- Enter age of attendee (-1 to quit): -1 ================================== THEATER STATS PROGRAM RESULTS ================================== age 0 to 18: 1 age 19 to 30: 3 age 31 to 40: 2 age 41 to 60: 1 over 60: 1 The average age was 34 The youngest person in attendance was 16 The oldest person in attendance was 68 Theater Concession Stand sales ================================== Soft Drink (such as Coca Cola, ICCEE, Mineral Water etc.): 1 Popcorn: 1 Nachos: 1 Soft drink & Popcorn: 2 Soft drink & Nachos: 1 Organic and Gluten-free snacks: 2 Process returned 0 (0x0) execution time : 169.589 s Press any key to continue. |
In: Computer Science
Fatima Hopkins, the CEO of Central Adventures, is having difficulties with all three of her top management level employees. With one manager making questionable decisions, another threatening to leave, and the third likely ‘in the red’, Fatima is hoping there is a simple answer to all her difficulties. She is asking you (her accountant) for some advice on how to proceed.
Central Adventures owns and operates three amusement parks in Michigan: Funland, Waterworld, and Treetops. Central Adventures has a decentralized organizational structure, where each park is run as an investment center. Park managers meet with the CEO at least once annually to review their performance, where each park manager’s performance is measured by their park’s return on investment (ROI). The park manager then receives a bonus equal to 10% of their base salary for every ROI percentage point above the cost of capital.
Fatima’s first difficulty is with the Funland park. Funland is an outdoor theme park, with twelve roller coaster rides and several other attractions. This park has first opened 1965, and most of the rides have been in operation for 20+ years. Attendance at this park has been relatively stable over the past ten years. The park manager of Funland, Janet Lieberman, recently shared with Fatima a proposal to replace one of their older rides with a new roller coaster, a hybrid steel and wood roller coaster with a 90 degree, 200 foot drop and three inversions. The proposal indicated that the ride would cost $8,000,000 with an estimated life of 20 years. In addition, this new style of coaster would require additional maintenance and insurance, costing $125,000 each year. However, it projected that this new attraction would boost attendance, earning the park an additional $1,190,000 per year in revenues. Janet ultimately decided not to invest in this new attraction. Fatima (doing a quick mental calculation) saw that the investment had a payback period of eight years—much shorter than the life of the roller coaster—and is perplexed at Janet’s decision.
The second dilemma concerns the Waterworld park. Waterworld is an indoor water park, operating year-round. Run by park manager David Copperfield, Waterworld was built in 2016 and has increased attendance by 20% every year since. David recently sent you an email complaining that, based on the current bonus payout schedule, Janet Lieberman’s bonus last year was significantly higher than his. He points to the increasing attendance, and says that his park is being punished for having opened so recently (his park assets are much more recent than the roller coasters at Funland). He currently has an employment offer from another company at the same base pay rate, which he says he will accept if his performance is not appropriately acknowledged. Fatima needs to look at the relative performance across parks to determine how to proceed with David.
Central Treetops includes a high ropes course and has a series of ziplines that criss-cross over the Chippewa River. For many years, it was a popular venue for corporate team-building activities, so it is equipped with a main indoor facility with cafeteria and overnight guest rooms. This park has lost popularity in recent years, and has been ‘in the red’ for the past two years. If the park is not profitable this year, you will need to decide whether to close it - permanently. Included in the ‘Fixed COGS’ for Treetops is a $86,000 mortgage payment on the land and buildings for the park, which would still need to be paid by Central Adventures if the park is closed. Incidentally, you recently had a conversation with the regional head of the YMCA, who would like to open a summer camp in the central Michigan region. If you decided to close Treetops, you are fairly certain that you could lease that land to the YMCA for $250,000 annually.
A partial report of this year’s financial results for Central Adventures shows the following:
|
Funland |
Waterworld |
Treetops |
|
|
Sales |
$59,460,690 |
$10,913,500 |
$1,965,600 |
|
Fixed COGS |
$10,351,870 |
$4,284,530 |
$170,430 |
|
Variable COGS |
$39,757,310 |
$2,220,695 |
$746,928 |
|
Selling and administrative costs |
$3,259,520 |
$944,620 |
$231,900 |
|
Average operating assets |
$21,014,000 |
$13,452,000 |
$420,000 |
|
# of tickets sold |
1,564,755 |
419,750 |
30,240 |
|
# of employees |
540 |
200 |
32 |
The ‘Selling and administrative costs’ are all incurred directly by each park, and are determined at the beginning of each year (that is, they do not change with the number of tickets sold). In addition to the information above, there are $2,542,920 in corporate costs, which are currently allocated evenly between the three parks. These costs are primarily due to employee benefits costs, which are billed at the corporate level. If the Treetops park is closed, the allocated corporate costs would decrease by $12,000. Central Adventures has a cost of capital of 12 percent (and Fatima uses the cost of capital as their required rate of return) and are subject to 18% income taxes.
Fatima needs to evaluate this year’s performance results before she can make any decisions. Is David’s complaint about the performance evaluation metrics valid? Is that also affecting management decisions in the form of Janet’s rejection of the proposed new rollercoaster? And is the company better off without Treetops? She sets off to the company accountant’s office to help get some answers.
a. Create a segmented income statement for Central Adventures.
b. Calculate the current annual ROI, residual income and EVA for the three parks.
c. why it was/was not in Central Adventure’s overall best interest for Funland to reject the new rollercoaster.
d. is David Copperfield’s (the Waterworld park manager) complaint valid? Explain why it is (or is not valid), and what further information would be necessary.
e. why should they close/ not close treetops.
f. what should you recommend she do to improve the evaluation of park manager performance measurement at Central Adventures.
In: Accounting
PRACTICAL QUESTION
Tiger Construction Ltd signs a contract on 1 May 2018 to build a theme park. The construction is scheduled to commence on 1 July 2018 and the estimated date of completion is 30 June 2021. The total contract price is $5m and the cost of the park is initially estimated at $4.5m. The following data relates to the construction period:
|
For the year ended 30 June |
|||
|
2019 |
2020 |
2021 |
|
|
$ |
$ |
$ |
|
|
Costs to date |
1,700,000 |
3,000,000 |
4,800,000 |
|
Estimated costs to complete |
2,800,000 |
1,700,000 |
- |
|
Progress billings to date |
1,400,000 |
2,600,000 |
5,000,000 |
|
Cash received to date |
1,200,000 |
2,200,000 |
5,000,000 |
Assume that cost (an input measure) is used as the basis for assessing progress on the construction contract.
Required
Determine the percentage of completion for 2019, 2020 and 2021.
|
2019 |
2020 |
2021 |
|
|
$ |
$ |
$ |
|
|
Costs to date (A) |
|||
|
Estimated costs to complete (B) |
|||
|
Estimated total cost (A+B=C) |
|||
|
Percent of completion (POC=A/C) |
Calculate revenue and gross profit for 2019, 2020 and 2021.
|
2019 |
2020 |
2021 |
|||||
|
$ |
$ |
$ |
|||||
|
Contract Price |
|||||||
|
Contact Price x POC |
|||||||
|
Less Revenue recognised in previous years |
|||||||
|
= Revenue recognised for the year |
|||||||
|
Less Costs for the year |
|||||||
|
= Gross profit for the year |
|||||||
Using the percentage of completion method, provide the journal entries for 2019, 2020 and 2021.
|
2019 $m |
2020 $m |
2021 $m |
|||
|
(i) |
To record costs incurred: |
||||
|
(ii) |
To record billings to customers: |
||||
|
(iii) |
To record cash collections: |
||||
|
(iv) |
To record periodic income recognised: |
||||
In: Accounting
PRACTICAL QUESTION
Tiger Construction Ltd signs a contract on 1 May 2018 to build a theme park. The construction is scheduled to commence on 1 July 2018 and the estimated date of completion is 30 June 2021. The total contract price is $5m and the cost of the park is initially estimated at $4.5m. The following data relates to the construction period:
|
For the year ended 30 June |
|||
|
2019 |
2020 |
2021 |
|
|
$ |
$ |
$ |
|
|
Costs to date |
1,700,000 |
3,000,000 |
4,800,000 |
|
Estimated costs to complete |
2,800,000 |
1,700,000 |
- |
|
Progress billings to date |
1,400,000 |
2,600,000 |
5,000,000 |
|
Cash received to date |
1,200,000 |
2,200,000 |
5,000,000 |
Assume that cost (an input measure) is used as the basis for assessing progress on the construction contract.
Required
Determine the percentage of completion for 2019, 2020 and 2021.
|
2019 |
2020 |
2021 |
|
|
$ |
$ |
$ |
|
|
Costs to date (A) |
|||
|
Estimated costs to complete (B) |
|||
|
Estimated total cost (A+B=C) |
|||
|
Percent of completion (POC=A/C) |
Calculate revenue and gross profit for 2019, 2020 and 2021.
|
2019 |
2020 |
2021 |
|||||
|
$ |
$ |
$ |
|||||
|
Contract Price |
|||||||
|
Contact Price x POC |
|||||||
|
LessRevenue recognised in previous years |
|||||||
|
= Revenue recognised for the year |
|||||||
|
Less Costs for the year |
|||||||
|
= Gross profit for the year |
|||||||
Using the percentage of completion method, provide the journal entries for 2019, 2020 and 2021.
|
2019 $m |
2020 $m |
2021 $m |
|||
|
(i) |
To record costs incurred: |
||||
|
(ii) |
To record billings to customers: |
||||
|
(iii) |
To record cash collections: |
||||
|
(iv) |
To record periodic income recognised: |
||||
In: Accounting
PRACTICAL QUESTION
Tiger Construction Ltd signs a contract on 1 May 2018 to build a theme park. The construction is scheduled to commence on 1 July 2018 and the estimated date of completion is 30 June 2021. The total contract price is $5m and the cost of the park is initially estimated at $4.5m. The following data relates to the construction period:
|
For the year ended 30 June |
|||
|
2019 |
2020 |
2021 |
|
|
$ |
$ |
$ |
|
|
Costs to date |
1,700,000 |
3,000,000 |
4,800,000 |
|
Estimated costs to complete |
2,800,000 |
1,700,000 |
- |
|
Progress billings to date |
1,400,000 |
2,600,000 |
5,000,000 |
|
Cash received to date |
1,200,000 |
2,200,000 |
5,000,000 |
Assume that cost (an input measure) is used as the basis for assessing progress on the construction contract.
Required
Determine the percentage of completion for 2019, 2020 and 2021.
|
2019 |
2020 |
2021 |
|
|
$ |
$ |
$ |
|
|
Costs to date (A) |
|||
|
Estimated costs to complete (B) |
|||
|
Estimated total cost (A+B=C) |
|||
|
Percent of completion (POC=A/C) |
Calculate revenue and gross profit for 2019, 2020 and 2021.
|
2019 |
2020 |
2021 |
|||||
|
$ |
$ |
$ |
|||||
|
Contract Price |
|||||||
|
Contact Price x POC |
|||||||
|
LessRevenue recognised in previous years |
|||||||
|
= Revenue recognised for the year |
|||||||
|
Less Costs for the year |
|||||||
|
= Gross profit for the year |
|||||||
Using the percentage of completion method, provide the journal entries for 2019, 2020 and 2021.
|
2019 $m |
2020 $m |
2021 $m |
|||
|
(i) |
To record costs incurred: |
||||
|
(ii) |
To record billings to customers: |
||||
|
(iii) |
To record cash collections: |
||||
|
(iv) |
To record periodic income recognised: |
||||
In: Accounting
(Replacement chains) Destination Hotels currently owns an older hotel on the best beachfront property on Hilton Head Island, and it is considering either remodeling the hotel or tearing it down and building a new convention hotel, but because both hotels would occupy the same physical location, the company can only choose one project-that is, these are mutually exclusive projects. Both of these projects have the same initial outlay of $ 1,800,000. The first project, since it is a remodel of an existing hotel, has an expected life of 9 years and will provide free cash flows of $ 400,000 at the end of each year for all 9 years. In addition, this project can be repeated at the end of 9 years at the same cost and with the same set of future cash flows. The proposed new convention hotel has an expected life of 18 years and will produce cash flows of $ 280,000 per year. The required rate of return on both of these projects is 9 percent. Calculate the NPV using replacement chains to compare these two projects.
In: Finance
Consider the following hypothetical scenario: The city council has just approved the construction of an amusement park in your town. You are responsible for studying the impact of the new amusement park on the local economy and the surrounding community. Write a paper of approximately 500 words that addresses all of the questions below. Include the graphs, where indicated: o Question 1: You know that the amusement park will increase the traffic flow in the streets around the amusement park. There are both businesses and neighborhoods adjacent to the increased traffic flow. The cost to the community is estimated to be $6 per person. What kind of externality is this? Why? o Graph the market for amusement park business, labeling the demand curve, the social-value curve, the market equilibrium level of output, and the socially optimal level of output. What is the per-unit amount of the externality? o Question 2. You know that the amusement park will have events in the evening. This will increase both foot traffic and street traffic at night. You believe this will improve the safety of the surrounding businesses, with an estimated benefit of $2 per park attendee. What kind of externality is this? Why? o Question 3 Create a new graph illustrating the market for amusement park business for these two externalities together. Label the demand curve, the social-value curve, the market equilibrium level of output, and the final socially optimal level of output. What is the per-unit amount when both externalities are considered? Discuss both government and private solutions that would result in an socially optimal outcome.
In: Economics