1) You are considering an investment that will pay you $12,000 the first year, $13,000 the second year, $17,000 the third year, $19,000 the fourth year, $23,000 the fifth year, and $28,000 the sixth year (all payments are at the end of each year). What is the maximum you would be willing to pay for this investment if your opportunity cost is 11%?
Solve this question assuming that payments will be received at the beginning of each year rather than the end of each year. Please solve using Excel
In: Finance
Exact Photo Service purchased a new color printer at the
beginning of Year 1 for $39,700. The printer is expected to have a
four-year useful life and a $3,700 salvage value. The expected
print production is estimated at $1,770,500 pages. Actual print
production for the four years was as follows:
| Year 1 | 550,700 | ||
| Year 2 | 477,500 | ||
| Year 3 | 375,300 | ||
| Year 4 | 390,000 | ||
| Total | 1,793,500 | ||
The printer was sold at the end of Year 4 for $4,100.
b. Compute the depreciation expense for each of the four years, using units-of-production depreciation.
Depreciation Expense
Year 1
Year 2
Year 3
Year 4
Total accumulated depreciation$0
Exact Photo Service purchased a new color printer at the
beginning of Year 1 for $39,700. The printer is expected to have a
four-year useful life and a $3,700 salvage value. The expected
print production is estimated at $1,770,500 pages. Actual print
production for the four years was as follows:
| Year 1 | 550,700 | ||
| Year 2 | 477,500 | ||
| Year 3 | 375,300 | ||
| Year 4 | 390,000 | ||
| Total | 1,793,500 | ||
The printer was sold at the end of Year 4 for $4,100.
c. Calculate the amount of gain or loss from the sale of the asset under each of the depreciation methods.
DDB =
Units-of-production=
In: Accounting
Bay Properties is considering starting a commercial real estate division. It has prepared the following four-year forecast of free cash flows for this division:
|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
|
|
Free cash flow |
−$124,000 |
$11,000 |
$98,000 |
$248,000 |
Assume cash flows after year 4 will grow at
3%
per year, forever. If the cost of capital for this division is
14%,
what is the continuation value in year 4 for cash flows after year 4? What is the value today of this division?
What is the continuation value in year 4 for cash flows after year 4?
The continuation value is
$nothing.
(Round to the nearest dollar.)
In: Finance
The monthly market basket for consumers consists of pizza, t-shirts, and rent.
The table below shows market basket quantities and prices for the base year (Year 1) and in the following two years.
|
Product |
Base Year (Year 1) Quantity |
Price in the Base Year |
Price in Year 2 |
Price in Year 3 |
|
Pizza |
10 |
$3.00 |
$3.75 |
$4.05 |
|
T-Shirts |
4 |
$25.00 |
$22.50 |
$26.25 |
|
Rent |
1 |
$400.00 |
$440.00 |
$520.00 |
The inflation rate between Year 1 and Year 2 is
nothing%.
(Round
both answers to one decimal
place.)
The inflation rate between Year 2 and Year 3 is
nothing%.
In: Economics
Paul's Pizzeria as signed a new five year lease for 1,000 SF of restaurant space in a shopping center in Granada Hills. The base rent on the lease is $3.00/SF, NNN with 3% annual rent increases to account for inflation. However, the lease has a percentage lease clause, that states the lessee will pay an additional 3% of gross annual sales over $1,200,000. Gross sales for the tenant are estimated to be as follows:
Year 1 - $ 1,200,000
Year 2 - $ 1,100,000
Year 3 - $ 1,400,000
Year 4 - $ 1,090,000
Year 5 - $ 1,500,000
What are the estimated annual lease payments for:
Year 1 ?
Year 2 ?
Year 3 ?
Year 4?
Year 5 ?
In: Finance
The monthly market basket for consumers consists of pizza, t-shirts, and rent. The table below shows market basket quantities and prices for the base year (Year 1) and in the following two years. Product Base Year (Year 1) Quantity Price in the Base Year Price in Year 2 Price in Year 3 Pizza 20 $3.50 $4.38 $4.55 T-Shirts 3 $20.00 $18.00 $20.00 Rent 1 $350.00 $385.00 $437.50 The inflation rate between Year 1 and Year 2 is nothing%. (Round both answers to one decimal place.) The inflation rate between Year 2 and Year 3 is nothing%.
In: Economics
Exact Photo Service purchased a new color printer at the
beginning of Year 1 for $39,700. The printer is expected to have a
four-year useful life and a $3,700 salvage value. The expected
print production is estimated at $1,770,500 pages. Actual print
production for the four years was as follows:
| Year 1 | 550,700 | ||
| Year 2 | 477,500 | ||
| Year 3 | 375,300 | ||
| Year 4 | 390,000 | ||
| Total | 1,793,500 | ||
The printer was sold at the end of Year 4 for $4,100.
Required
a. Compute the depreciation expense for each of the four
years, using double-declining-balance depreciation.
epreciation Expense
Year 1
Year 2
Year 3
Year 4
Total accumulated depreciation$0
In: Accounting
Haas Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations:
| Variable costs per unit: | ||
| Manufacturing: | ||
| Direct materials | $ | 20 |
| Direct labor | $ | 12 |
| Variable manufacturing overhead | $ | 7 |
| Variable selling and administrative | $ | 3 |
| Fixed costs per year: | ||
| Fixed manufacturing overhead | $ | 110,000 |
| Fixed selling and administrative expenses | $ | 50,000 |
During its first year of operations, Haas produced 40,000 units and sold 40,000 units. During its second year of operations, it produced 55,000 units and sold 30,000 units. In its third year, Haas produced 20,000 units and sold 45,000 units. The selling price of the company’s product is $46 per unit.
Required:
1. Compute the company’s break-even point in unit sales.
2. Assume the company uses variable costing:
a. Compute the unit product cost for Year 1, Year 2, and Year 3.
b. Prepare an income statement for Year 1, Year 2, and Year 3. Assume the company uses variable costing.
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3. Assume the company uses absorption costing:
a. Compute the unit product cost for Year 1, Year 2, and Year 3.
b. Prepare an income statement for Year 1, Year 2, and Year 3. Assume the company uses absorption costing. (Round your intermediate calculations to 2 decimal places.)
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In: Accounting
The following data come from the financial statements of Naina Company for 20X8. Dividends declared and paid during the year.............................................................................................. $95 Decrease in total assets during the year....................................................................................................... 370 Depreciation expense for the year................................................................................................................. 35 Increase in interest payable during the year................................................................................................. 11 Total cash received from operating activities during the year.................................................................... 124 Increase in accumulated depreciation during the year................................................................................ 32 Increase in cash during the year..................................................................................................................... 15 Net LOSS for the year...................................................................................................................................... 190 Decrease in total liabilities during the year................................................................................................. 170 Interest expense for the year.......................................................................................................................... 55 Cash paid for insurance during the year....................................................................................................... 85 Cash paid to repurchase shares of stock during the year........................................................................... 0 What was the amount of cash received through the issuance of new shares of stock by Naina Company during the year 20X8? Write the dollar amount of your answer. (Do not write the dollar sign.)
In: Accounting
A German car will cost $45,000 and have fuel usage of
21mpg for the first 5 years, and decrease
by 1% thereafter to year 8. Repair cost will start at $1000 in year
1 and increase by 4% per year.
It will have a salvage value of $7000 at the end of year 8.
Insurance cost will be $850 the first year,
increasing by 2% per year thereafter.
The American car will cost $35,000 and have fuel usage of 20mpg for
the first 3 years, and will
decrease by 3% per year thereafter. Repair cost will be $800 in
year 1, increasing by 4% per year
thereafter. Being an American, the graduate will price the pride of
owning an American car at $0.4
for every 20 miles driven, increasing by 2% per year. Insurance
cost will be $800 per year
increasing by 2.2% per year. The car can be sold for $5500 at the
end of year 8.
If the graduate anticipates driving 150000 miles by the end of year
8 and the average interest rate
is expected to remain at 5% per year, which car is economically
affordable based on present worth
analysis? Assume fuel cost will be $3 per gallon in year 1 and
increase by an average of 2% per
year. Show all your workings.
In: Accounting