Your company is considering three independent projects. Given the following cash flow information, calculate the payback period for each. If your company requires a three-year payback before an investment can be accepted, which project(s) would be accepted?

Project D Project E Project F

Cost 205,000.00 179,000.00 110,000.00

Inflow year 1 53,000.00 51,000.00 25,000.00

Inflow year 2 50,000.00 87,000.00 55,000.00

Inflow year 3 48,000.00 41,000.00 21,000.00

Inflow year 4 30,000.00 52,000.00 9,000.00

Inflow year 5 24,000.00 40,000.00 35,000.00

Payback Period EXACT 5 YEARS EXACT 3 YEARS EXACT 4 YEARS PROJECT E

Refer to the Solved Example 9.1 on pg. 259 of your text...THE BELOW IS JUST AN EXAMPLE FROM THE BOOK OF HOW THE QUESTION NEEDS TO BE ANSWERED.

shows the calculations of the present value of each of the future cash flows discounted at 6%. We can now determine how long it will take to recover the initial investment for the two copy machines in current dollars.

For Copier A,

Year 1: ? $5,000.00 + $2,358.49 = ? $2,641.51 remaining cost to recover Year 2: ? $2,641.51 + $2,224.99 = ? $416.52 remaining cost to recover Year 3: ? $416.52 + $2,099.05 = $1,682.53; the cost is fully recovered by the end of year 3.

For Copier B,

Year 1: ? $5,000.00 + $1,415.09 = ? $3,584.91 remaining cost to recover Year 2: ? $3,584.91 + $2,224.99 = ? $1,359.92 remaining cost to recover Year 3: ? $1,359.92 + $2,938.67 = $1,578.75; the cost is fully recovered by the end of year 3.

Calculations Year 1 Year 2 Year 3 Year 4 Year 5 (THESE NEED TO BE SHOWN IN EXCEL) HOW THE ANSWER WAS OBTAINED

Formulas Year 1 Year 2 Year 3 Year 4 Year 5 (THESE NEED TO BE SHOWN IN EXCEL) THE FORMULAS USED TO GET THE ANSWER

Gibson Manufacturing pays its production managers a bonus based on the company’s profitability. During the two most recent years, the company maintained the same cost structure to manufacture its products.

(Assume that selling and administrative expenses are associated with goods sold.)

Gibson sells its products for $109.50 per unit.

Required

a Prepare income statements based on absorption costing for Year 2 and Year 3.

b Since Gibson sold the same number of units in Year 2 and Year 3, why did net income increase in Year 3?

4. Determine the costs of ending inventory for Year 3.

5. Prepare income statements based on variable costing for Year 2 and Year 3.

A, Year 2

A, Year 3

B:

D.

E. Year 2

E. Year 3

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.)