A firm utilizes a strategy of capital rationing, which is currently $375,000 and is considering the following two projects: Project A has a cost of $335,000 and the following cash flows: year 1 $140,000; year 2 $150,000; and year 3 $100,000. Project B has a cost of $365,000 and the following cash flows: year 1 $220,000; year 2 $110,000; and year 3 $150,000. Using a 6% cost of capital, what is the internal rate of return of project B?
In: Finance
Starfax, Inc., manufactures a small part that is widely used in various electronic products such as home computers. Operating results for the first three years of activity were as follows (absorption costing basis):
| Year 1 | Year 2 | Year 3 | ||||
| Sales | $ | 1,000,000 | $ | 800,000 | $ | 1,000,000 |
| Cost of goods sold | 780,000 | 540,000 | 832,500 | |||
| Gross margin | 220,000 | 260,000 | 167,500 | |||
| Selling and administrative expenses | 170,000 | 150,000 | 170,000 | |||
| Net operating income (loss) | $ | 50,000 | $ | 110,000 | $ | (2,500) |
|
In the latter part of Year 2, a competitor went out of business and in the process dumped a large number of units on the market. As a result, Starfax’s Sales dropped by 20% during Year 2 even though production increased during the year. Management had expected sales to remain constant at 50,000 units; the increased production was designed to provide the company with a buffer of protection against unexpected spurts in demand. By the start of Year 3, management could see that inventory was excessive and that spurts in demand were unlikely. To reduce the excessive inventories, Starfax cut back production during Year 3, as shown below: |
| Year 1 | Year 2 | Year 3 | |
| Production in units | 50,000 | 60,000 | 40,000 |
| Sales in units | 50,000 | 40,000 | 50,000 |
| Additional information about the company follows: |
| a. |
The company’s plant is highly automated. Variable manufacturing expenses (direct materials, direct labor, and variable manufacturing overhead) total only $3.00 per unit, and fixed manufacturing overhead expenses total $630,000 per year. |
| b. |
Fixed manufacturing overhead costs are applied to units of product on the basis of each year’s production. That is, a new fixed manufacturing overhead rate is computed each year. |
| c. |
Variable selling and administrative expenses were $2 per unit sold in each year. Fixed selling and administrative expenses totaled $70,000 per year. |
| d. | The company uses a FIFO inventory flow assumption. |
|
Starfax’s management can’t understand why profits doubled during Year 2 when sales dropped by 20%, and why a loss was incurred during Year 3 when sales recovered to previous levels. Reconcile the variable costing and absorption costing net operating income for each year.
|
In: Accounting
Create a XSD Schema to validate and provide structure for the XML document below:
<?xml version="1.0" encoding="UTF-8" ?>
<forecast qTime="28/10/20 10:00 PM"
qLocation="Singapore">
<weather yyyymmdd="20200430">
<year>2020</year>
<month>04</month>
<date>30</date>
<comment>Plenty of sunshine</comment>
<code>sunny</code>
<highest>32.6</highest>
<lowest>28.4</lowest>
</weather>
<weather yyyymmdd="20200218">
<year>2020</year>
<month>02</month>
<date>18</date>
<comment>Plenty of sunshine</comment>
<code>sunny</code>
<highest>34.6</highest>
<lowest>30.5</lowest>
</weather>
<weather yyyymmdd="20200710">
<year>2020</year>
<month>07</month>
<date>10</date>
<comment>Partly sunny</comment>
<code>partlySunny</code>
<highest>33.1</highest>
<lowest>29.2</lowest>
</weather>
<weather yyyymmdd="20200616">
<year>2020</year>
<month>06</month>
<date>16</date>
<comment>Considerable clouds</comment>
<code>cloudy</code>
<highest>30.5</highest>
<lowest>25.4</lowest>
</weather>
<weather yyyymmdd="20200612">
<year>2020</year>
<month>06</month>
<date>12</date>
<comment>Cloudy with a thunderstorm</comment>
<code>thunderstorm</code>
<highest>29.1</highest>
<lowest>23.2</lowest>
</weather>
<weather yyyymmdd="20200421">
<year>2020</year>
<month>04</month>
<date>21</date>
<comment>Plenty of sunshine</comment>
<code>sunny</code>
<highest>32.2</highest>
<lowest>29.8</lowest>
</weather>
<weather yyyymmdd="20200628">
<year>2020</year>
<month>06</month>
<date>28</date>
<comment>A morning shower, then rain</comment>
<code>rain</code>
<highest>30.2</highest>
<lowest>22.7</lowest>
</weather>
<weather>
<weather yyyymmdd="20200502">
<year>2020</year>
<month>05</month>
<date>02</date>
<comment>Cloudy with a thunderstorm</comment>
<code>thunderstorm</code>
<highest>28.1</highest>
<lowest>26.9</lowest>
</weather>
<weather yyyymmdd="20200428">
<year>2020</year>
<month>04</month>
<date>28</date>
<comment>A morning shower</comment>
<code>rain</code>
<highest>28.8</highest>
<lowest>22.2</lowest>
</weather>
<weather yyyymmdd="20200410">
<year>2020</year>
<month>04</month>
<date>10</date>
<comment>Partly sunny</comment>
<code>partlySunny</code>
<highest>33.7</highest>
<lowest>29.3</lowest>
</weather>
<weather yyyymmdd="20200730">
<year>2020</year>
<month>07</month>
<date>30</date>
<comment>Plenty of sunshine</comment>
<code>sunny</code>
<highest>32.3</highest>
<lowest>28.4</lowest>
</weather>
<weather yyyymmdd="20200706">
<year>2020</year>
<month>07</month>
<date>06</date>
<comment>Plenty of sunshine</comment>
<code>sunny</code>
<highest>34.5</highest>
<lowest>30.6</lowest>
</weather>
</forecast>
In: Computer Science
which if the following information is displayed in the p-40 budget exhibit? Select all that apply:
A. Specific quantities of end items funded each
year
B. Initial spares cost
C. unit costs
D. funding information for the past year, current year, the budget
year and 4 out-years beyond the budget year
In: Finance
Which one of the following best fits the description of a private placement?
A. 3-year commercial bank loan B. 10-year loan from an insurance company C. 2-year direct business loan D. 3-year loan to a firm by its original founder E. 20-year bonds sold in the public markets
In: Finance
Which one of the following best fits the description of private placement?
a) 3- year commercial bank loan
b) 3-year loan to a firm by its original founder
c) 10-year loan from an insurance company
d) 20-year bonds sold in the public markets
e) 2-year direct business loan
In: Finance
Use a financial calculator or an Excel spreadsheet to estimate the IRR for each of the following investments:
The Yield for Investment A:
The Yield for Investment B:
| A | B | |
| Initial Investment | 6,400 | 9,535 |
| Year 1 | $1,822.65 | $2,200 |
| Year 2 | $1,822.65 | $2,500 |
| Year 3 | $1,822.65 | $3,100 |
| Year 4 | $1,822.65 | $3,600 |
| Year 5 | $1,822.65 | $4,100 |
In: Finance
A project is projected to cost $2,000,000 to undertake. It will generate positive cash inflows as follows: Year 1 - $400,000; Year 2 – 500,000; Year 3 - $650,000; Year 4 – 750,000; Year 5 – 800,000. What is the project’s Profitability Index?
Select one:
a. 1.22
b. 1.20
c. 1.16
d. 1.14
e. 1.12
In: Accounting
Which one would you rather have:
a) The future value of $5,000 per year for 10 years to be given to you in year 10 (that is 10 years from now) when the interest rate is 6%?
b) The present value of $12,500 per year from year 11 to year 35 when the interest rate is 6%?
In: Finance
Listed below are several transactions that took place during the
second and third years of operations for RPG Company.
| Year 2 | Year 3 | |||||
| Amounts billed to customers for services rendered | $ | 290,000 | $ | 390,000 | ||
| Cash collected from credit customers | 200,000 | 340,000 | ||||
| Cash disbursements: | ||||||
| Payment of rent | 74,000 | 0 | ||||
| Salaries paid to employees for services rendered during the year | 134,000 | 154,000 | ||||
| Travel and entertainment | 24,000 | 34,000 | ||||
| Advertising | 12,000 | 29,000 | ||||
In addition, you learn that the company incurred advertising costs
of $19,000 in year 2, owed the advertising agency $4,400 at the end
of year 1, and there were no liabilities at the end of year 3.
Also, there were no anticipated bad debts on receivables, and the
rent payment was for a two-year period, year 2 and year 3.
Required:
1. Calculate accrual net income for both
years.
2. Determine the amount due the advertising agency
that would be shown as a liability on RPG’s balance sheet at the
end of year 2.
In: Accounting