You are running a small manufacturing process that has projected cash flows of -$13,000 in year one, $4,000 in year 2, $5000 in year 3, -$3,000 in year 4, $6,000 in year 5, and $7,000 in year 6, what is the interest rate that gives a net present value of zero. For information, In year four, you were required to make some upgrades to the process and that forced the negative $3,000. (Hint: Take the cash flow at the end of the year) (Give answer to one decimal place. That is, xx.x%)
In: Finance
Jack started a new accounting practice. He purchased $35,000 of computer equipment and placed the equipment in service in May. (Here is MARCS HY depreciation rates for 5 year property. (Year 1 -20.0%, Year 2 -32.0%, Year 3 -19.2% Year 4 -11.52%, Year 5 -11.52% and Year 6% - 5.76%. Unfortunately, the business was not doing well. In year 3, Jack decided to close the business. He sold the property for $10,500. What is Jack's gain or loss on the sale of the computer equipment?
In: Accounting
Progressive Studios Corporation’s sales in Year 2019 is 800 million dollars. Let’s make the following assumptions on the firm’s performance to forecast its free cash flow in Year 2020:
• Sales grow 25% from Year 2019 to Year 2020.
• Corporate tax rate is 25%.
• COGS is 40% of the sales in Year 2020.
• SG&A is 20% of the sales in Year 2020.
• Depreciation is 10% of the sales in Year 2020.
• Net working capital amounts to 30% of the sales for each year (i.e., NWC for 2019 is 30% sales in 2019, NWC for 2020 is prediced to be 30% sales in 2020).
• Capital expenditure is 5% of the sales in Year 2020.
a. What is the forcasted EBIT of Progressive Studios Corporation in Year 2020? Progressive Studios Corporation’s forecasted EBIT in Year 2020 is $___.(Round to the nearest dollar.)
b. What is Progressive Studios Corporation’s forecasted free cash flow in Year 2020? Progressive Studios Corporation’s forecasted free cash flow in Year 2020 is $___.(Round to the nearest dollar.)
c. Assume that starting from Year 2021 and beyond, Progressive Studios' free cash flow will grow 2% per year. The weighted average cost of capital is 12%. The corporation has debt outstanding of $100 million and cash of $50 million in Year 2019. The number of shares outstanding is 100 million shares. What is the price of Progressive Studios stock will be consistent with the forecast? The price per share of $___ will be consistent with the forecast
In: Finance
Problem 6-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2]
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 | $ | 28 |
| Direct labor | $ | 20 |
| Variable manufacturing overhead | $ | 4 |
| Variable selling and administrative | $ | 3 |
| Fixed costs per year: | ||
| Fixed manufacturing overhead | $ | 210,000 |
| Fixed selling and administrative expenses | $ | 150,000 |
During its first year of operations, Haas produced 60,000 units and sold 60,000 units. During its second year of operations, it produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40,000 units and sold 65,000 units. The selling price of the company’s product is $61 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.
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.
In: Accounting
Problem 7-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO7-1, LO7-2]
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 | $ | 26 |
| Direct labor | $ | 18 |
| Variable manufacturing overhead | $ | 9 |
| Variable selling and administrative | $ | 1 |
| Fixed costs per year: | ||
| Fixed manufacturing overhead | $ | 540,000 |
| Fixed selling and administrative expenses | $ | 120,000 |
During its first year of operations, Haas produced 60,000 units and sold 60,000 units. During its second year of operations, it produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40,000 units and sold 65,000 units. The selling price of the company’s product is $65 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.
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.
In: Accounting
Problem 6-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2]
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.
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.
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 | $26 | |
| Direct labor | $18 | |
| Variable manufacturing overhead | $6 | |
| Variable selling and administrative | $3 | |
| Fixed costs per year: | ||
| Fixed manufacturing overhead | $ | 390,000 |
| Fixed selling and administrative expenses | $ | 150,000 |
|
During its first year of operations, Haas produced 60,000 units and sold 60,000 units. During its second year of operations, it produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40,000 units and sold 65,000 units. The selling price of the company’s product is $62 per unit. |
Required:
| 1. | Compute the company’s break-even point in units sold. |
| 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. |
| 3. | Assume the company uses absorption costing: |
| a. |
Compute the unit product cost for year 1, year 2, and year 3. (Round your intermediate and final answers to 2 decimal places.) |
| b. |
Prepare an income statement for year 1, year 2, and year 3. (Round your intermediate calculations to 2 decimal places.) |
In: Accounting
1.
a. Dividends Per Share
Seacrest Company has 15,000 shares of cumulative preferred 3% stock, $150 par and 50,000 shares of $5 par common stock. The following amounts were distributed as dividends:
| Year 1 | $135,000 |
| Year 2 | 54,000 |
| Year 3 | 202,500 |
Determine the dividends per share for preferred and common stock for each year. Round all answers to two decimal places. If an answer is zero, enter '0'.
| Year 1 | Year 2 | Year 3 | |
| Preferred stock (Dividends per share) | $ | $ | $ |
| Common stock (Dividends per share) | $ | $ | $ |
b. Dividends Per Share
Imaging Inc., a developer of radiology equipment, has stock outstanding as follows: 21,000 shares of cumulative preferred 1% stock, $110 par, and 70,000 shares of $20 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $15,540; second year, $40,660; third year, $75,040; fourth year, $142,100.
Compute the dividends per share on each class of stock for each of the four years. Round all answers to two decimal places. If no dividends are paid in a given year, enter "0".
| 1st Year | 2nd Year | 3rd Year | 4th Year | |
| Preferred stock (dividend per share) | $ | $ | $ | $ |
| Common stock (dividend per share) | $ | $ | $ | $ |
In: Accounting
The U.S. multinational manufacturing firm, Greenwich Industries, is debating whether to invest in a 2-year project in Japan. The project’s expected cash flows consist of an initial investment of ¥1 million with cash inflows of ¥ 400,000 in Year 1 and ¥ 800,000 in Year 2. The risk-adjusted cost of capital for this project is 11%. The current exchange rate is 115 yen per dollar.
Risk-free interest rates in the United States and Japan are:
U.S. government bond rates:
• 1-year bond 2.4%
• 2-year bond 3.0%
Japan government bond rates:
• 1-year bond 0.15%
• 2-year bond 0.35%
Which of the following answers is CORRECT about the expected future exchange rates 1 year from now and 2 years from now?
|
117.58 dollar per yen for one year rate and 121.15 dollar per yen for two year rate |
||
|
0.008891 dollar per yen for one year rate and 0.009161 dollar per yen for two year rate |
||
|
0.008891 yen per dollar for one year rate and 0.009161 yen per dollar for two year rate |
||
|
117.58 yen per dollar for one year rate and 121.15 yen per dollar for two year rate |
Refer to Greenwich Industries in question 19. If Greenwich undertakes the project, what is the net present value of the project in U.S. dollars?
|
$ 432.7 |
||
|
$ 454.5 |
||
|
$ 456.5 |
||
|
$ 462.5 |
||
|
$ 470.5 |
In: Finance
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 | $ | 21 |
| Direct labor | $ | 13 |
| Variable manufacturing overhead | $ | 4 |
| Variable selling and administrative | $ | 2 |
| Fixed costs per year: | ||
| Fixed manufacturing overhead | $ | 330,000 |
| Fixed selling and administrative expenses | $ | 150,000 |
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 $52 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 and Prepare an income statement for Year 1, Year 2, and Year 3.
3. Assume the company uses absorption costing:
a. Compute the unit product cost for Year 1, Year 2, and Year 3 (Round your intermediate calculations and final answers to 2 decimal places.) and Prepare an income statement for Year 1, Year 2, and Year 3.
In: Accounting