5. You have been asked to appraise a closed Burger King on Hwy. 1 in Virginia Commons. The building was built 5 years ago, but has been vacant for the last 2. Vacant buildings tend to deteriorate faster than occupied buildings. For this reason you estimate the age of the building at 9 years. Fast food restaurants have an expected economic life of 20 years. The building is 2,100 square feet and sits on a lot that is 4,200 square feet. A lot just south of the subject sold recently for $18.50 a square foot. Fast food restaurant construction costs average $210 per square foot. What is your estimate of the value of this property (hint – cost approach)?

A real estate developer is evaluating a 40-unit apartment development. The expected average occupancy is 90%. Cost of land: $1,200,000 Construction: $$4,800,000 Project Life: 25 years Maintenance: $100 per unit per year (regardless of weather a unit is occupied). Annual insurance and property taxes: $400,000 Required return: 12% per year (0.9489% per month) Assume that the building will have NO salvage value at the end of 25 years, BUT the land will appreciate at a rate of 5% per year. Determine the total minimum monthly rent (all units combined) that should be charged, given the required return. (Round your answer to the nearest dollar. Do not enter the $ symbol or use commas.)

The financial statements for Castile Products, Inc., are given below:

Account balances at the beginning of the year were: accounts receivable, $140,000; and inventory, $350,000. All sales were on account. Assets at the beginning of the year totaled $1,050,000, and the stockholders’ equity totaled $655,000.

Required:

Compute the following: (For Requirements 1 to 4, enter your percentage answers rounded to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

1. Gross margin percentage.

2. Net profit margin percentage.

3. Return on total assets.

4. Return on equity.

5. Was financial leverage positive or negative for the year?

COST OF COMMON EQUITY WITH AND WITHOUT FLOTATION

The Evanec Company's next expected dividend, D1, is $3.96; its growth rate is 4%; and its common stock now sells for $37. New stock (external equity) can be sold to net $31.45 per share.

A. What is Evanec's cost of retained earnings, rs? Round your answer to two decimal places. Do not round your intermediate calculations.
rs = %

B. What is Evanec's percentage flotation cost, F? Round your answer to two decimal places.
F = %

C. What is Evanec's cost of new common stock, re? Round your answer to two decimal places. Do not round your intermediate calculations.
re = %

[PLEASE ANSWER IN EXCEL TEMPLATE BELOW (A/B ON SEPARATE PAGES) AND SHOW FORMULAS/SOLVER INFO]

La Quinta Inn is staffing its receptionists in its biggest hotel in San Antonio. Receptionists work 6-hour shifts at the hotel lobby. There are two types of receptionists: those who speak English as a first language and those who are fully bilingual (English and Spanish). The requirements for the number of receptionists depend on the customer arrivals during various hours. The Inn believes that the need for receptionists between the hours of 7 A.M. and 10 P.M. are as follows:

Receptionists begin work either at 7 A.M., 10 A.M., 1 P.M., or 4 P.M. At least half of the receptionists needed in any time period should speak English as the first language. Further, at least one-quarter of the receptionists needed in any time period should be fully bilingual.

A) How many and what type of receptionists should be hired for each shift to meet the language and staffing requirements, so that the total number of receptionists is minimized?

B) What is the optimal hiring plan from a cost perspective if English-speaking receptionists are paid $30 per hour and bilingual receptionists are paid $35 per hour?

Problem 2-16 (Algo) Plantwide Predetermined Overhead Rates; Pricing [LO2-1, LO2-2, LO2-3]

Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates:

During the year, Job 550 was started and completed. The following information is available with respect to this job:

Required:

1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach:

a. Compute the plantwide predetermined overhead rate.

b. Compute the total manufacturing cost of Job 550.

c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?

2. Assume that Landen’s controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach:

a. Compute the plantwide predetermined overhead rate.

b. Compute the total manufacturing cost of Job 550.

c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?

(Round your intermediate calculations to 2 decimal places. Round your Predetermined Overhead Rate answers to 2 decimal places and all other answers to the nearest whole dollar.)

Problem 2-16 Plantwide Predetermined Overhead Rates; Pricing [LO2-1, LO2-2, LO2-3]

Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates:

During the year, Job 550 was started and completed. The following information is available with respect to this job:

Required:

1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach:

a. Compute the plantwide predetermined overhead rate.

b. Compute the total manufacturing cost of Job 550.

c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?

2. Assume that Landen’s controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach:

a. Compute the plantwide predetermined overhead rate.

b. Compute the total manufacturing cost of Job 550.

c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?

(Round your intermediate calculations to 2 decimal places. Round your "Predetermined Overhead Rate" answers to 2 decimal places and all other answers to the nearest whole dollar.)

6b3

Green Landscaping, Inc. is using net present value (NPV) when evaluating projects. Green Landscaping’s cost of capital is 10.30 percent. What is the NPV of a project if the initial costs are $2,106,000 and the project life is estimated as 10 years? The project will produce the same after-tax cash inflows of $512,558 per year at the end of the year.

Round the answer to two decimal places.

Your Answer:

6c3

Find the internal rate of return (IRR) for the following series of future cash flows. The initial outlay is $680,025.

Year 1: 189,200

Year 2: 141,300

Year 3: 192,700

Year 4: 164,900

Year 5: 187,000

Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)

You should use Excel or financial calculator.

There are several industries with low percentages of debt financing. Take a look and identify some with a low percentage of debt financing and do the same with firms that have a high percentage of debt financing (the average according to the data in the link is about 42 percent).

Do not use the banking financial services industries.

• Based on the types of firms that use a small amount of debt and those that use higher amounts of debt, what can you conclude?
• What is it about the firms that use low amounts of debt?
• More debt would lower their cost of capital so what is holding these firms back from taking on more debt?  

You need to think a little. Do not simply say the firms with low debt are all in industry X or industries similar to X; that is obvious. What is the economic intuition? What is the story?