Problem 12-26 Simple Rate of Return; Payback [LO12-1, LO12-6]

Sharkey’s Fun Center contains a number of electronic games as well as a miniature golf course and various rides located outside the building. Paul Sharkey, the owner, would like to construct a water slide on one portion of his property. Mr. Sharkey gathered the following information about the slide:

1. Water slide equipment could be purchased and installed at a cost of $540,000. According to the manufacturer, the slide would be usable for 12 years after which it would have no salvage value.
2. Mr. Sharkey would use straight-line depreciation on the slide equipment.
3. To make room for the water slide, several rides would be dismantled and sold. These rides are fully depreciated, but they could be sold for $85,000 to an amusement park in a nearby city.
4. Mr. Sharkey concluded that about 50,000 more people would use the water slide each year than have been using the rides. The admission price would be $5.10 per person (the same price the Fun Center has been charging for the old rides).
5. Based on experience at other water slides, Mr. Sharkey estimates that annual incremental operating expenses for the slide would be: salaries, $96,000; insurance, $5,900; utilities, $14,700; and maintenance, $11,500.

Required:

1. Prepare an income statement showing the expected net operating income each year from the water slide.

2-a. Compute the simple rate of return expected from the water slide.

2-b. Based on the above computation, would the water slide be constructed if Mr. Sharkey requires a simple rate of return of at least 14% on all investments?

3. If Mr. Sharkey accepts any project with a payback period of five years or less, would the water slide be constructed?

Bussines Law:

1. A is Trading and Tourism Company.
2. B is the owner of a Building

A interred with B in to an investment Contract where A will take the building as investment which is owned by B and will turn to Hotel. It was agreed that A prior to invest will take the approval from B on the plans and drawings. A sent the plans and the drawing to B for his approval. It was agreed that within a week if there were no answers from any of the parties on the correspondences of the other for any approval, therefore, it would mean that approval has been granted. A has started to do all the changes according to the plans and the drawings after a week from sending the plans. After a month A has received the reply from B with changes made in the plans and drawings. A has ignored the reply and continue the changes according to his plans. B was not happy and has demanded A to stop the work in the building and deliver the building at the same conditions he received it. A has replied to B that he has invested in the building according to the contract and if he wants the building back he has to pay the cost of his investments and the remedies of the damages that he has incurred. B has refused his demands and asked A to pay for all the repairs and damages caused to his building.

You have been contacted as a mediator between the A and B Please answer the following:

1. What kind of relation between A and B?
2. Identify the responsibility for both parties and their civil rights.
3. What is the real problem between the two parties?
4. Does B have the right to stop work in the building and does A have the right to ignore B’s changes in the plans?
5. What action A should take to make B accept the plans and drawings and to finish the work?
6. In your conclusion, you should provide a good solution for A and B to continue to work together without going to litigation.

Systems analysis project 10: can you answer the 4 questions at the task section, thank you.
Personal Trainer, Inc. owns and operates fitness centers in a dozen Midwestern cities. The centers have done well, and the company is planning an international expansion by opening a new “supercenter” in the Toronto area. Personal Trainer’s president, Cassia Umi, hired an IT consultant, Susan Park, to help develop an information system for the new facility. During the project, Susan will work closely with Gray Lewis, who will manage the new operation.
Background
Susan and Gray finished their work on user interface, input, and output design. They developed a user-centered design that would be flexible and easy to learn. Now Susan turned her attention to the architecture for the new system. Susan wanted to consider their own organization and culture, enterprise resource planning, total cost of ownership, scalability, Web integration, legacy systems, processing methods, security issues, and corporate portal. She also needed to select a network plan, or topology, that would dictate the physical cabling and network connections, or consider a wireless network. When all these tasks were completed, she would submit a system design specification for approval.
Tasks:
1. What would be the advantages of selecting an Internet-based architecture for the Personal Trainer’s system?

2. If Personal Trainer wants to increase its Internet marketing efforts, what advice could you offer? Perform research to find out more about the topic of Web-based marketing before you answer Gray.

3. What software and hardware infrastructure will be necessary to ensure Personal Trainer can process point of sale transactions?

4. Prepare an outline for a system design specification and describe the contents of each section

Ahmad, Bong and Cathy are the directors of Alpha Sdn Bhd (“Alpha”), a private limited company situated in Bandar Sunway. The company is involved in the leisure and hospitality business covering theme parks, gaming, hotels, seaside resorts and entertainment for over 50 years. Each of the directors holds 15% of the company’s share capital. Answer the following separate and independent questions:

a. Beta Bhd (“Beta”) is a public limited company. The company wishes to enter into a contract with “Alpha” for the supply of iron and steel to be used for Alpha’s theme parks. The Board of Directors of “Alpha” had a meeting last month to decide on the matter. They decided that the company will proceed with the contract with “Beta”. However, recently, after entering and completing the contract, they discovered that the Managing Director of “Beta” is Bakar, who is a good friend of Bong.

b. Recently, “Alpha” contracted to buy a piece of land from Ahmad which was to be converted to a water theme park. The market value of the land is RM 600,000. “Alpha” bought the property at RM 550,000.
Advise the Board of Directors of “Alpha” on the legal issues arising in the above questions.

Internal Rate of Return Method for a Service Company

The Riverton Company, announced a $608,580 million expansion of lodging properties, ski lifts, and terrain in Park City, Utah. Assume that this investment is estimated to produce $98,000 million in equal annual cash flows for each of the first eight years of the project life.

a. Determine the expected internal rate of return of this project for eight years, using the present value of an annuity of $1 table above.
%

Exchange vs Nonexchange Transactions

Classify each transaction below as exchange or nonexchange. If it is a nonexchange transaction, classify it in one of the four categories of nonexchange transactions. Explain your answer.

1. Merchant collects state cigarette tax on sale of a pack of cigarettes.

2. State reimburses schools for costs related to special education of handicapped children. The school must verify eligibility of the children.

3. State fines for hunting illegally on protected state wildlife preserve.

4. City property taxes are paid by owner.

5. Hotel tax is collected at checkout.

6. Donor provides $300,000 to a city homeless shelter and specifies $100,000 may be spent each year.

7. County landfill collects fee from citizen dumping trash.

8. Income tax is withheld from an employee's paycheck.

9. A business donates cash for scholarships to a public university and specifies the scholarships must be for study abroad.

10. A corporation makes a grant to a public university to conduct research on genetics coding, and the university agrees to give the corporation all patent rights on results of the genetic coding research.

Nakheel is one of the world’s leading property developers, based in Dubai, United Arab Emirates. Nakheel has a portfolio of projects in Dubai across the residential, retail, hospitality and leisure sectors. Master developments include Palm Jumeirah, The World trade Center, Deira Islands, Jumeirah Islands, Jumeirah Village, Jumeirah Park, Jumeirah Heights, The Gardens, Discovery Gardens, Al Furjan, Warsan Village, Dragon City, International City, Jebel Ali Gardens and Nad Al Sheba. In the first quarter of 2017, Nakheel announced its highest annual net profits in the company’s history: AED4.96 billion in 2016 – a 13 per cent increase on the 2015 net profit of AED4.38 billion. Nakheel generated a net profit of AED955 million for the last quarter of 2016 – up 22 per cent on the AED781 million posted for the same period in 2015. All these happened even when real estate market is on lower side.

Explain how mangers take decision under turbulent conditions (risk and uncertainty) which lead to better utilization of resources

Question #1: For each of the following transactions, prepare the necessary journal entry.؟

a. The city collects $1 million of taxes for an independent fire district located within the city. Journal entry:

b. The city spends $1.2 million on street maintenance using the proceeds of a city gas tax dedicated for road and highway maintenance and improvements. Journal entry:

c. The city receives a bequest of $1.5 million. The donor’s will, requires that the principal amount be invested in perpetuity and that the earnings on the investment be used to maintain a city park to be renamed for the donor. Journal entry:

d. The city collects water and sewer fees of $4.2 million. Journal entry:

e. The city pays $4 million to a contractor for work on a new bridge. Journal entry:

f. The city receives $1.3 million to invest on behalf of the county. Journal entry:

g. The city pays its police officers wages of $325,000. Journal entry:

h. The city pays $2.2 million in bond interest on its general obligation debt. Journal entry:

I desperately need to solve the accounting entries separately

2. Good uses of credit

Although you should strive to keep your debt to a level appropriate for your financial situation, there are several good uses of credit. Which of the following are good uses of credit? Check all that apply.

__ Obtaining a mortgage to purchase a home.

__ Obtaining a student loan to finance your education.

__ Using credit to pay for unexpected expenses such as emergency medical services or automobile repairs.

__ Using a credit card to protect yourself against seller rip-offs and frauds.

__ Taking advantage of free-credit promotions such as a reduced interest rate or a “same-as-cash” plan.

__ Using one credit card to make payments on another credit card.

__ Using a loan to open a business.

__ Using a credit card to pay for groceries or gasoline when you cannot afford to pay the balance in full each month.

__ Using a credit card for convenience, but only if the balance is paid in full each month.

__ Purchasing an overly expensive or otherwise unaffordable vehicle.

__ Using a credit card for hotel or car rental reservations.