DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $550,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $165,000. The old machine is being depreciated by $110,000 per year for each year of its remaining life.

The new machine has a purchase price of $900,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total, annual pre-tax savings of $175,000 will be realized if the new machine is installed. The company's marginal tax rate is 35% and the project cost of capital is 15%.

1. What is the initial net cash flow if the new machine is purchased and the old one is replaced? Round your answer to the nearest dollar. Cash outflow, if any, should be indicated by a minus sign.

2. Calculate the annual depreciation allowances for both machines, and compute the change in the annual depreciation expense if the replacement is made. Do not round intermediate calculations. Round your answers to the nearest dollar. Negative values, if any, should be indicated by a minus sign.

   Year	Depreciation Allowance, New	Depreciation Allowance, Old	Change in Depreciation
   1	$	$	$
   2	$	$	$
   3	$	$	$
   4	$	$	$
   5	$	$	$

3. What are the incremental net cash flows in Years 1 through 5? Do not round intermediate calculations. Round your answers to the nearest dollar. Cash outflows, if any, should be indicated by a minus sign.

   CF1	$
   CF2	$
   CF3	$
   CF4	$
   CF5	$

4. Should the firm purchase the new machine? Support your answer. Do not round intermediate calculations. Round your answer to the nearest dollar. Negative value, if any, should be indicated by a minus sign.

   NPV: $  

   The firm (-Select-should or should not) purchase the new machine.

5. In general, how would each of the following factors affect the investment decision, and how should each be treated?

   1. The expected life of the existing machine decreases.

      If the expected life of the old machine decreases, the new machine will look (-Select-better or worse) as cash flows attributable to the new machine would (-Select-decrease or increase)

   2. The cost of capital is not constant but is increasing as DeYoung adds more projects into its capital budget for the year.

      The (-Select-higher or lower) capital cost should be used in the analysis.

DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $550,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $165,000. The old machine is being depreciated by $110,000 per year for each year of its remaining life.

The new machine has a purchase price of $700,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total, annual pre-tax savings of $200,000 will be realized if the new machine is installed. The company's marginal tax rate is 35% and the project cost of capital is 12%.

1. What is the initial net cash flow if the new machine is purchased and the old one is replaced? Round your answer to the nearest dollar. Cash outflow, if any, should be indicated by a minus sign.

   $  

2. Calculate the annual depreciation allowances for both machines, and compute the change in the annual depreciation expense if the replacement is made. Do not round intermediate calculations. Round your answers to the nearest dollar. Negative values, if any, should be indicated by a minus sign.

   Year	Depreciation Allowance, New	Depreciation Allowance, Old	Change in Depreciation
   1	$	$	$
   2	$	$	$
   3	$	$	$
   4	$	$	$
   5	$	$	$

3. What are the incremental net cash flows in Years 1 through 5? Do not round intermediate calculations. Round your answers to the nearest dollar. Cash outflows, if any, should be indicated by a minus sign.

   CF1	$
   CF2	$
   CF3	$
   CF4	$
   CF5	$

4. Should the firm purchase the new machine? Support your answer. Do not round intermediate calculations. Round your answer to the nearest dollar. Negative value, if any, should be indicated by a minus sign.

   NPV: $  

   The firm (-Select-should or should not) purchase the new machine.

5. In general, how would each of the following factors affect the investment decision, and how should each be treated?

   1. The expected life of the existing machine decreases.

      If the expected life of the old machine decreases, the new machine will look (-Select-better or worse) as cash flows attributable to the new machine would (-Select-decrease or increase)

   2. The cost of capital is not constant but is increasing as DeYoung adds more projects into its capital budget for the year.

      The (-Select-higher or lower) capital cost should be used in the analysis.

Course：Business Law

Frontier Entertainment Pty Ltd is a company that trades under the name “Concert Connections” (CC). In January of 2019, CC negotiated and arranged for three international acts to tour Australia in 2020 and 2021. The three artists, their Australian concert locations and dates were as follows:

1. Taylor Swifty Sydney / Melbourne / Adelaide Brisbane / Perth / Hobart November – December 2020

2. Ed Shearer Brisbane / Perth / Hobart January – February 2021

3. Lady Gaggle Sydney / Canberra / Darwin August – September 2021

In April of 2020, those consumer concert goers who purchased tickets to one or more of the Taylor Swifty concerts received notice from CC that due to the COVID- 19 pandemic, Taylor’s arranged concerts had been cancelled. The notification further stated that CC would be cancelling all ticket purchase contracts and retaining the full $550.00 ticket purchase price previously paid by concert goers in accordance with Clause 10 of the contract entered when the ticket(s) were originally purchased. Clause 11 of the same contract also states that in the event of CC exercising its rights in relation to clause 10, ticket purchasers are prohibited from taking any legal action for recovery of their money previously paid.

Samuel purchased 5 tickets for his family to attend the Taylor Swifty concert in Sydney on 02 November 2020. Samuel comes to see you and says that despite CC’c clearly expressed contractual right to retain his $2,700.00, their refusal not to refund him his money is unfair. Samuel wants to know if the Australian Consumer Law (ACL) can assist his cause.

Advise Samuel

Many people consider their smart phone to be essential! Communication, news, Internet, entertainment, photos, and just keeping current are all conveniently possible with a smart phone. However, the battery better be charged or the phone is useless. Battery life of course depends on the frequency, duration, and type of use. One study involving heavy use of the phones showed the mean of the battery life to be 11.75 hours with a standard deviation of 2.4 hours. Then the battery needs to be recharged. Assume the battery life between charges is normally distributed. (a) Find the probability that with heavy use, the battery life exceeds 12 hours. (Round your answer to four decimal places.) (b) You are planning your recharging schedule so that the probability your phone will die is no more than 5%. After how many hours should you plan to recharge your phone? (Round your answer to the nearest tenth of an hour.) hours

Many people consider their smart phone to be essential! Communication, news, Internet, entertainment, photos, and just keeping current are all conveniently possible with a smart phone. However, the battery better be charged or the phone is useless. Battery life of course depends on the frequency, duration, and type of use. One study involving heavy use of the phones showed the mean of the battery life to be 10.75 hours with a standard deviation of 2.2 hours. Then the battery needs to be recharged. Assume the battery life between charges is normally distributed.

(a) Find the probability that with heavy use, the battery life exceeds 11 hours. (Round your answer to four decimal places.)


(b) You are planning your recharging schedule so that the probability your phone will die is no more than 5%. After how many hours should you plan to recharge your phone? (Round your answer to the nearest tenth of an hour.)
hours

You started Max Inc., a seed stage web-oriented entertainment venture, with 10,000 shares. You do not expect to make a profit until year 4 when your net income is expected to be $4 million. An investor wants to invest $1.5 million in your venture. You and the investor agree that the required return on this investment is 40% and that the investor will exit at the end of year 4. Meanwhile, the common stock of TDC, a comparable firm, currently trades in the over the counter market at $10 per share. TDC’s net income for the most recent year was $300,000 and the firm has 150,000 shares of common stock outstanding. However, two years after this deal, it turns out that the venture needs an additional investment of $1 million. Another investor is willing to invest $1 million in your venture provided you give her 30% return. Calculate the percentage of ownership dilution suffered by the first-round investor after the second investment.                                                                                           

Replacement Analysis

DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $450,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $135,000. The old machine is being depreciated by $90,000 per year for each year of its remaining life.

The new machine has a purchase price of $850,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total, annual pre-tax savings of $200,000 will be realized if the new machine is installed. The company's marginal tax rate is 35% and the project cost of capital is 14%.

1. What is the initial net cash flow if the new machine is purchased and the old one is replaced? Round your answer to the nearest dollar. Cash outflow, if any, should be indicated by a minus sign.

   $  

2. Calculate the annual depreciation allowances for both machines, and compute the change in the annual depreciation expense if the replacement is made. Do not round intermediate calculations. Round your answers to the nearest dollar. Negative values, if any, should be indicated by a minus sign.

   Year	Depreciation Allowance, New	Depreciation Allowance, Old	Change in Depreciation
   1	$	$	$
   2	$	$	$
   3	$	$	$
   4	$	$	$
   5	$	$	$

3. What are the incremental net cash flows in Years 1 through 5? Do not round intermediate calculations. Round your answers to the nearest dollar. Cash outflows, if any, should be indicated by a minus sign.

   CF1	$
   CF2	$
   CF3	$
   CF4	$
   CF5	$

4. Should the firm purchase the new machine? Support your answer. Do not round intermediate calculations. Round your answer to the nearest dollar. Negative value, if any, should be indicated by a minus sign.

   NPV: $  

   The firm -Select-(should / should not ) purchase the new machine.

5. In general, how would each of the following factors affect the investment decision, and how should each be treated?

   1. The expected life of the existing machine decreases.

      If the expected life of the old machine decreases, the new machine will look -Select-(better/worse) as cash flows attributable to the new machine would -Select-(decrease/increase) .

   2. The cost of capital is not constant but is increasing as DeYoung adds more projects into its capital budget for the year.

      The -Select-(higher/lower) capital cost should be used in the analysis.

Home Entertainment Online (HEO) operates an online streaming service. The company offers both a movie and a music subscription service. HEO reports revenues for the movie service separately from the music service.

Required:

Classify each of the following cost items (A–G) as:

1. Direct or indirect (D or I) costs with respect to the total number of movie subscriptions sold
2. Variable or fixed (V or F) costs with respect to how the total costs of the movie service change as the total number of subscriptions sold changes. (If in doubt, select on the basis of whether the total costs will change substantially if there is a large change in the total number of subscriptions sold.).
3. Provide comments as to why you classified the cost as D or I or V or F

You will have two answers (D or I; V or F) for each of the following items:

DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $800,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $270,000. The old machine is being depreciated by $160,000 per year for each year of its remaining life.

The new machine has a purchase price of $1,185,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total, an annual savings of $255,000 will be realized if the new machine is installed. The company's marginal tax rate is 35% and the project cost of capital is 13%.

What is the initial net cash flow if the new machine is purchased and the old one is replaced? Round your answer to the nearest dollar.

What are the incremental net cash flows in Years 1 through 5? Do not round intermediate calculations. Round your answers to the nearest dollar.

Support your answer. Do not round intermediate calculations. Round your answer to the nearest dollar.

Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable manufacturer and sells them at the retail level. The televisions sell, on average, for $2,290 each. The average cost of a television from the manufacturer is $1,400. Home Entertainment has always kept careful accounting records, and the costs that it incurs in a typical month are as follows: Costs Cost Formula Selling: Advertising $ 1,400 per month Delivery of televisions $ 42 per television sold Sales salaries and commissions $ 3,090 per month, plus 10% of sales Utilities $ 550 per month Depreciation of sales facilities $ 3,170 per month Administrative: Executive salaries $ 8,600 per month Depreciation of office equipment $ 960 per month Clerical $ 1,790 per month, plus $41 per television sold Insurance $ 710 per month During April, the company sold and delivered 190 televisions. Required: 1. Prepare an income statement for April using the traditional format with costs organized by function. 2. Prepare an income statement for April, this time using the contribution format with costs organized by behaviour. Show costs and revenues on both a total and a per unit basis down through contribution margin.