Sandrine Machinery is a Swiss multinational manufacturing company. Currently, Sandrine's financial planners are considering undertaking a 1-year project in the United States. The project's expected dollar-denominated cash flows consist of an initial investment of $2000 and a cash inflow the following year of $2400. Sandrine estimates that its risk-adjusted cost of capital is 15%. Currently, 1 U.S. dollar will buy 0.73 Swiss franc. In addition, 1-year risk-free securities in the United States are yielding 6%, while similar securities in Switzerland are yielding 3%. Do not round intermediate calculations.

If this project was instead undertaken by a similar U.S.-based company with the same risk-adjusted cost of capital, what would be the net present value and rate of return generated by this project? Round your answers to two decimal places.

NPV = $ _____

Rate of return = _____

What is the expected forward exchange rate 1 year from now? Round your answer to two decimal places.

_____ SF per U.S. $

If Sandrine undertakes the project, what is the net present value and rate of return of the project for Sandrine? Do not round intermediate calculations. Round your answers to two decimal places.

NPV = ____Swiss Francs

Rate of return = ____%

Sandrine Machinery is a Swiss multinational manufacturing company. Currently, Sandrine's financial planners are considering undertaking a 1-year project in the United States. The project's expected dollar-denominated cash flows consist of an initial investment of $2000 and a cash inflow the following year of $2400. Sandrine estimates that its risk-adjusted cost of capital is 13%. Currently, 1 U.S. dollar will buy 0.73 Swiss franc. In addition, 1-year risk-free securities in the United States are yielding 6.75%, while similar securities in Switzerland are yielding 3%.

1. If this project was instead undertaken by a similar U.S.-based company with the same risk-adjusted cost of capital, what would be the net present value and rate of return generated by this project? Round your answers to two decimal places.

   NPV = $  

   Rate of return = %

2. What is the expected forward exchange rate 1 year from now? Round your answer to two decimal places.

   SF per U.S. $

3. If Sandrine undertakes the project, what is the net present value and rate of return of the project for Sandrine? Do not round intermediate calculations. Round your answers to two decimal places.

   NPV = Swiss Francs

   Rate of return = %

#5

REVISED PROBLEM 13-42

ACC 650 - Management Accounting

Megatronics Corporation, a massive retailer of electronic products, is organized in four separate divisions.
The four divisional managers are evaluated at year-end, and bonuses are awarded based on ROI.
Last year, the company as a whole produced a 13 percent return on its investment.
During the past week, management of the company’s Northeast Division was approached about the
possibility of buying a competitor that had decided to redirect its retail activities. (If the competitor is
acquired, it will be acquired at its book value.) The data that follow relate to recent performance of the
Northeast Division and the competitor:

Management has determined that in order to upgrade the competitor to Megatronics’ standards, an
additional $275,000 of invested capital would be needed.

REQUIRED:

5. Assume that Megatronics uses residual income to evaluate performance and desires a 12 percent
minimum return on invested capital. Compute the current residual income of the Northeast
Division and the division’s residual income if the competitor is acquired. Will divisional management
be likely to change its attitude toward the acquisition? Why?

Benjamin, Inc., operates an export/import business. The company has considerable dealings with companies in the country of Camerrand. The denomination of all transactions with these companies is alaries (AL), the Camerrand currency. During 2017, Benjamin acquires 22,000 widgets at a price of 8 alaries per widget. It will pay for them when it sells them. Currency exchange rates for 1 AL are as follows:

1. Assume that Benjamin acquired the widgets on December 1, 2017, and made payment on March 1, 2018. What is the effect of the exchange rate fluctuations on reported income in 2017 and in 2018?
2. Assume that Benjamin acquired the widgets on September 1, 2017, and made payment on December 1, 2017. What is the effect of the exchange rate fluctuations on reported income in 2017?
3. Assume that Benjamin acquired the widgets on September 1, 2017, and made payment on March 1, 2018. What is the effect of the exchange rate fluctuations on reported income in 2017 and in 2018?

(Input all amounts as positive values.)

Effect of Exchange Rate Fluctuations

a.2017

2018

b.2017

c.2017

2018

On 3/31/2020, Company ABC released its quarterly report, showing the sales in the first quarter had tumbled 30% as pandemic hit. However, the stock price for company ABC rose by 3% (instead of fell by 3%) after the report is released. Does this mean a failure of the Market Efficient Theory? please write equations and solve step by step

Early the following year (2020), the Company is told that one of its customers declared bankruptcy & cannot pay the $8,000 it owes. The $8,000 was part of the Company’s Accounts Receivable balance at December 31, 2019 (see preceding fact pattern immediately above). Prepare the adjusting journal entry to write off the $8,000 receivable (Remember, the Company uses the Allowance Method).

A company issued financial statements for the year ended March 31, 2020. Three months later, management discovered that net income was overstated (too high) by $10,000.  

1. There was no fraud involved.

2. The accountants at the company were all competent.  

What could have caused the error?

Please answer in two paragraphs with clear explanation and good reasoning.   

A 59 year-old calendar year individual taxpayer purchased an annuity from an insurance company for $100,000 in 2019. The terms of the annuity were that the company would pay him $5,000 a year to T for the rest of T’s life. How much income will he include in his personal income tax return as a result of receiving the $5,000 payment

in 2020?   _____________

In 2050? ______________

The probability that an 80-year-old male in the U.S. will die within one year is approximately 0.069941. If an insurance company sells a one-year, $12,000 life insurance policy to such a person for $425, what is the company's expectation? (Round your answer to two decimal places.)