A city council has estimated that it has a surplus of $100 Million (M). The council is exploring the following three projects, each of which costs $100 M. a. A bridge which takes five years to build, then yields $50M benefit per year for the next 10 years. The benefits are received at the end of each year. Assume that the costs are spread out evenly over the five years (i.e. year 1 to year 5) and are paid at the end of each year. b. Temporary classrooms for schools yielding $50M benefit per year for five years. The benefits are received at the end of each year. Assume that all costs are paid at the end of year 1. c. Tax breaks per year to a foreign auto manufacturer for a new auto plant yielding $20M benefit per year from the third year for next 5 years. The benefits are received at the end of each year. Assume that all costs (i.e. tax breaks) are paid equally at the end of year 1 and year 2. Assuming the discount rate of 5 percent, calculate the following for each of the projects: Discounted Benefits, Discounted Costs, Net Present Value (NPV) and Benefit Cost Ratio (BCR). Which one of the above projects would you suggest that the City Council can undertake based on the BCR? Explain your answer. You should be able to use Excel for this exercise.

Please post excel screenshot as well as how to calculate each cell.

Comparing Three The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life.Depreciation Methods

Waylander Coatings Company purchased waterproofing equipment on January 6 for $661,800. The equipment was expected to have a useful life of four years, or 8,800 operating hours, and a The estimated value of a fixed asset at the end of its useful life.residual value of $54,600. The equipment was used for 3,300 hours during Year 1, 2,700 hours in Year 2, 1,600 hours in Year 3, and 1,200 hours in Year 4.

Required:

1. Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the A method of depreciation that provides for equal periodic depreciation expense over the estimated life of a fixed asset.straight-line method, (b) the A method of depreciation that provides for depreciation expense based on the expected productive capacity of a fixed asset.units-of-output method, and (c) the A method of depreciation that provides periodic depreciation expense based on the declining book value of a fixed asset over its estimated life.double-declining-balance method. Also determine the total depreciation expense for the four years by each method.

Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.

The spot price of oil is $50 per barrel and the cost of storing a barrel of oil for one year is $3, payable at the end of one year. The risk-free interest rate is 5% per annum with annual compounding. According to the one-year forward price on oil in the market, the convenience benefit of carrying a barrel of oil for one year is estimated to be $2 in terms of the value at the end of one year. This implies that the one-year forward price on oil is $__________ in the market.?

According to the expectations theory, what is the expected one-year treasury security rate (i.e. forward rate, f) three years from today if today’s rates on treasury securities of different maturities are as follows:

One-year US Treasury Note: 4.5%

Two-year US Treasury Note: 4.8%

Three-year US Treasury Note: 5.2%

Four-year US Treasury Note: 5.3%

Five-year US Treasury Note: 5.3%

A machine can be purchased for $270,000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining depreciation is applied, using a five-year life and a zero salvage value. Year 1 Year 2 Year 3 Year 4 Year 5 Net income $ 19,000 $ 28,000 $ 58,000 $ 49,500 $ 103,000 Compute the machine’s payback period (ignore taxes). (Round payback period answer to 3 decimal places.)

The Newton Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 15% a year for the next four years (Year 1, Year 2, Year 3, and Year 4) and then increase at the constant growth rate of 5% per year indefinitely. The company just paid its annual dividend in the amount of $1.50 per share. What is the current value of Newton Co.’s stock if the required rate of return is 8%?

1. Assume that Bon Temps is expected to experience supernormal growth of 30% for the next 3 years, then to return to its long-run constant growth rate of 6%. What is the stock’s value under these conditions? What are its expected dividend yield and its capital gains yield in Year 1? In Year 4? Assume the same rate of return is 16% Dividend: Year 0 = $2 Year 1 = $2.12 Year 2 = $2.2472 Year 3 = $2.382

A machine can be purchased for $269,000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining depreciation is applied using a five-year life and a zero salvage value. Year 1 Year 2 Year 3 Year 4 Year 5 Net income $ 21,000 $ 49,000 $ 68,000 $ 57,000 $ 132,000 Compute the machine’s payback period (ignore taxes). (Round payback period answer to 3 decimal places.)

A machine can be purchased for $283,000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining depreciation is applied, using a five-year life and a zero salvage value.

Compute the machine’s payback period (ignore taxes). (Round payback period answer to 3 decimal places.)
  

Golden Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 22,700 hours. At the end of the year, actual direct labor-hours for the year were 21,500 hours, the actual manufacturing overhead for the year was $557,740, and manufacturing overhead for the year was underapplied by $24,540. The estimated manufacturing overhead at the beginning of the year used in the predetermined overhead rate must have been:

$552,520.

$583,366.

$533,200.

$562,960.