The following table shows the forecasted operating results for Halong Cruises, Inc., from the purchase of a new luxury yacht. The company has a cost of capital of 12%.

a. What are the cash flows in each year of operations?

Year 0:

Year 1:

Year 2:

Year 3:

Year 4:

b. What is the net present value of the new yacht?

Dividends Per Share

Windborn Company has 20,000 shares of cumulative preferred 2% stock, $150 par and 50,000 shares of $15 par common stock. The following amounts were distributed as dividends:

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'.

The following information relates to a company’s accounts receivable: accounts receivable balance at the beginning of the year, $410,000; allowance for uncollectible accounts at the beginning of the year, $30,000 (credit balance); credit sales during the year, $1,500,000; accounts receivable written off during the year, $21,000; cash collections from customers, $1,400,000. Assuming the company estimates that future bad debts will equal 8% of the year-end balance in accounts receivable. 1. Calculate the year-end balance in the allowance for uncollectible accounts. 2. Calculate bad debt expense for the year.

1. Ending balance_____________________

2. Bad Debt balance___________________

Applebee sells speakers with a 6 month manufacturer’s warranty. At the time of purchase, customers also have an opportunity to buy an extended 1 year warranty. In Year 1 Applebee sold $40,000 of speakers and $12,000 of extended warranties. All sales are credit sales and sales occurred evenly during the year. Applebee is a calendar year entity that records AJE’s and produces financial statements only at year-end.

Make a summary JE to record Year 1 sales.

Make the related AJE needed at the end of Year 1.

Please show all work for calculations. Thank you.   

Telstar Communications is going to purchase an asset for $420,000 that will produce $200,000 per year for the next four years in earnings before depreciation and taxes. The asset will be depreciated using the three-year MACRS depreciation schedule in Table 12–12. (This represents four years of depreciation based on the half-year convention.) The firm is in a 30 percent tax bracket. Fill in the schedule below for the next four years.

Earnings before depreciation and taxes year 1 year 2 year 3 year 4

depreciation

earnings before taxes

taxes

earnings after taxes

depreciation

cash flow

Worldwide trousers is considering an expansion of their existing business. The incremental after-tax cash flows to the project are:

Year 0: $-25,500

Year 1: $5,500

Year 2: $7,500

Year 3: $8,500

Year 4: $10,000

The unlettered cost of equity is 10%. The corporate tax rate is 40%.

A. Calculate the NPV of the project if it is all equity financed.

B. Worldwide plans to issue a 4-year loan for $12,000 at an interest rate of 8% to partially finance the project. All principal will be repaid in one lump-sum at the end of the fourth year. Calculate the adjusted present value of the investment project.

7)    On January 1, Tiger Corp. paid $66,000 cash for machinery that was expected to last for 11 years.

1. Is the machinery a current asset or a long-term asset? Why?

2. Give Tiger’s journal entry to record the purchase of the machinery.

3. Give Tiger’s journal entry to record depreciation expense on the machinery for the first year.

4. Give Tiger’s journal entry to record depreciation expense on the machinery for the second year.

5. What is the balance in accumulated depreciation at the end of the first year? At the end of the second year?

6. What is the net (book) value of the machinery at the end of the first year? At the end of the second year? At the end of the 11th year?

Telstar Communications is going to purchase an asset for $760,000 that will produce $370,000 per year for the next four years in earnings before depreciation and taxes. The asset will be depreciated using the three-year MACRS depreciation schedule in Table 12–12. (This represents four years of depreciation based on the half-year convention.) The firm is in a 30 percent tax bracket.

Fill in the schedule below for the next four years.

Dividends Per Share

Sandpiper Company has 30,000 shares of cumulative preferred 3% stock, $150 par and 50,000 shares of $20 par common stock. The following amounts were distributed as dividends:

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'.