An investment that Kevin is considering offers the following cash flows.

Year 1 Initial investment of $10,000

Year 2 Inflow of $2,000

Year 3 Inflow of $1,500

Year 4 Additional investment of $5,000

Year 5 Inflow of $1,200

Year 6 Inflow of $2,200

Year 7 Inflow of 1,500

Year 8 Inflow of $1,000

Year 9 Inflow of $1,200

Year 10 Sale proceeds of $17,000

5. What is the internal rate of return (IRR) that this investment offers if all cash flows occur at the end of each period?

a. 10.10%

b. 10.87%

c. 9.24%

d. 9.74%.

Rosie Dry Cleaning was started on January 1, Year 1. It experienced the following events during its first two years of operation:

Events Affecting Year 1

1. Provided $29,810 of cleaning services on account.
2. Collected $23,848 cash from accounts receivable.
3. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account.

Events Affecting Year 2

1. Wrote off a $224 account receivable that was determined to be uncollectible.
2. Provided $34,788 of cleaning services on account.
3. Collected $30,787 cash from accounts receivable.
4. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account.

Required
a. Record the events for Year 1 and Year 2 in T-accounts.
b. Determine the following amounts:

1. (1) Net income for Year 1.
2. (2) Net cash flow from operating activities for Year 1.
3. (3) Balance of accounts receivable at the end of Year 1.
4. (4) Net realizable value of accounts receivable at the end of Year 1.
   

c. Repeat Requirements b for the Year 2 accounting period.

Determine the following amounts: (Round your intermediate calculations to nearest whole dollar.)
(1) Net income for Year 1.
(2) Net cash flow from operating activities for Year 1.
(3) Balance of accounts receivable at the end of Year 1.
(4) Net realizable value of accounts receivable at the end of Year 1.

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Repeat Requirements b for the Year 2 accounting period. (Round your intermediate calculations to nearest whole dollar.)

Brock Florist Company buys a new delivery truck for ​$30,000. It is classified as a​ light-duty truck. the tax rate is 0.2 a. Calculate the depreciation schedule using a​ five-year life and MACRS depreciation. b. Calculate the remaining book value at the end of year 4 and the termination value​ (aka. cost recovery or after tax salvage​ value) for the delivery truck if the truck can be sold at the end of year 4 ​for$4,000. a. Year 1: Year 2: Year 3: Year 4: Year 5: Year 6: b. Calculate the remaining book value at the end of year 4 and the termination value​ (aka. cost recovery or after tax salvage​ value) at the end of year 4 for the delivery truck. Remaining book value at the end of year 4 is ​$5,184​(Round to the nearest​ dollar.) The termination value​ (cost recovery or after tax salvage​ value) at the endo of year 4 is ​$4,237  ​(Round to the nearest​ dollar.)

“Fourth quarter U.S. online sales grew 26.2 percent as compared to the same period in the previous year. Full year results show U.S. online sales year-over-year growth was 32.2%. Overall, full year total company sales, including both online and store sales, increased 9.5% year-over-year.”

Which of the following would NOT explain what this is about?

A tractor for over-the-road hauling is purchased for $80,000.00. It is expected to be of use to the company for 6 years, after which it will be salvaged for $3,600.00. Calculate the depreciation deduction and the unrecovered investment during each year of the tractors life.

a. Use straight-line depreciation. Provide depreciation and book value for year 6.
Depreciation for year 6 =? $

book value for year 6 =? $

b. Use declining-balance depreciation, with a rate that ensures the book value equals the salvage value. Provide depreciation and book value for year 6.
Depreciation for year 6 =? $

book value for year 6 = ?$

c. Use double declining balance depreciation. Provide depreciation and book value for year 6.
Depreciation for year 6 = ?$

book value for year 6 =? $

d. Use double declining balance, switching to straight-line depreciation. Provide depreciation and book value for year 6.
Depreciation for year 6 =? $

book value for year 6 =? $

Brock Florist Company buys a new delivery truck for $28,000. It is classified as a​ light-duty truck. the tax rate is 0.25

a. Calculate the depreciation schedule using a​ five-year life and MACRS depreciation.

b. Calculate the remaining book value at the end of year 4 and the termination value​ (aka. cost recovery or after tax salvage​ value) for the delivery truck if the truck can be sold at the end of year 4

​for$4 comma 0004,000.

a.  Calculate the depreciation schedule using a​ five-year life and MACRS depreciation.​ (Round to the nearest​ dollar.)

b. Calculate the remaining book value at the end of year 4 and the termination value​ (aka. cost recovery or after tax salvage​ value) at the end of year 4 for the delivery truck.

Remaining book value at the end of year 4 is $4,839​(Round to the nearest​ dollar.)

1. Construct a table showing the first-year costs, annual costs, and the annual benefits for the following investment proposal:

Costs:

• Initial investment (software, hardware, implementation) $180,000, incurred in year zero.
• Software maintenance (starting in year two) $30,000 per year, increasing at a rate of 3% per year thereafter

Benefits:

• Labor savings $140,000 per year, starting in year two
• Equipment savings $55,000, year one only.
• Increased clinic revenue, $50,000 per year, starting in year one.
• All yearly savings increase at the rate of inflation, assumed to be 3% per year.

Calculate the Net Present Value of this proposed investment at the end of the five-year planning cycle using a discount rate of 5%. Show your work. Assume that one-time costs are incurred in year zero, and annual costs and savings are incurred in years 1 through 5.

Determine the payback period in years for a project that costs $45,000 and would yield after-tax cash flows of $9,000 the first year, $11,000 the second year, $14,000 the third year, $16,000 the fourth year, $20,000 the fifth year, and $26,000 the sixth year.

Comparing Three Depreciation Methods

Waylander Coatings Company purchased waterproofing equipment on January 6 for $540,600. The equipment was expected to have a useful life of four years, or 8,000 operating hours, and a residual value of $44,600. The equipment was used for 3,000 hours during Year 1, 2,500 hours in Year 2, 1,400 hours in Year 3, and 1,100 hours in Year 4.

Required:

1. Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) the units-of-output method, and (c) the double-declining-balance method. Also, determine the total depreciation expense for the four years by each method.

Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.

2. What method yields the highest depreciation expense for Year 1?

3. What method yields the most depreciation over the four-year life of the equipment?