1. You take out a $20,000, ten-year loan. Equal payments are to be made at the end of each year at an interest rate of 10%. Calculate the appropriate loan table, showing the breakdown in each year between principal and interest.
| Cost | 20,000 | |||
| Payment | $3,254.91 | |||
| Interest | 10% | |||
| Years | 10 | |||
| Division of payment between: | ||||
| Year |
Principal at beginning of year |
Payment at end of year |
Interest | Principal |
| 1 | ||||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| 7 | ||||
| 8 | ||||
| 9 | ||||
| 10 | ||||
| 0.00 | ||||
In: Finance
Suppose that annual income from a rental property is expected to start at $1800 per year and decrease at a uniform amount of $73 each year after the first year for the 13 year expected life of the property. The investment cost is $8800 and i is %11 per year. What is the present equivalent of the rental income? Assume that the investment occurs at time zero (now) and that the annual income is first received at the end of first year. PLEASE DEF?NE NET ANSWER W?TH BOL
In: Accounting
[The following information applies to the questions displayed below.] Russell Corporation sold a parcel of land valued at $517,500. Its basis in the land was $382,950. For the land, Russell received $72,750 in cash in year 0 and a note providing that Russell will receive $265,000 in year 1 and $179,750 in year 2 from the buyer. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)
b. What is Russell’s recognized gain in year 0, year 1, and year 2?
In: Accounting
Copy of Given the following information and options, calculate the optimal life of the project. Assume the cost of capital is 10% p.a. Maximum life is five years and replacement of like with like..
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Net Cash Flows ($) | (10,000) | 2,200 | 3,000 | 3,500 | 2,500 | 2,000 |
| Retirement Values ($) | 6,000 | 5,000 | 4,800 | 3,000 | 1,000 |
Kindly please explain the formula used and the way to approach this type of question.
Thanks
In: Finance
A farm purchased a new tractor for $30,000. They estimated the tractor would have a useful life of 5 years and would have a salvage value of $5,000. The farm uses the straight-line method and the half-year convention. The farm sold the tractor during year 3 for $19,000.
1. Compute the amount of depreciation expense to be taken in years 1, 2 and 3
Year 1
Year 2
Year 3
2. Prepare a journal entry to record the sale of the tractor in year 3.
In: Accounting
Actuaries use various parameters when evaluating the cost of a life insurance policy. The variance of the life spans of a population is one of the parameters used for the evaluation. Each year, the actuaries at a particular insurance company randomly sample 30 people who died during the year (with the samples chosen independently from year to year) to see whether the variance of life spans has changed. The life span data from this year and from last year are summarized below:
| Current Year | Last Year |
|---|---|
=x176.2 | =x276.6 |
=s2162.4 | =s2246.2 |
(The first row gives the sample means, and the second row gives
the sample variances.)
Assuming that life spans are approximately normally distributed for
each of the populations of people who died this year and people who
died last year, construct a 99%confidence interval for σ^2/ σ^2 the
ratio of the variance of the life span for the current year to the
variance of the life span for last year. Then complete the table
below.
Carry your intermediate computations to at least three decimal places. Write your final responses to at least two decimal places. (If necessary, consult a list of formulas.)
| What is the lower limit of the 99% confidence interval? | |
| What is the upper limit of the 99% confidence interval? |
In: Statistics and Probability
"A firm is considering purchasing a new milling machine and has
collected the following information for its income statement and
cash flow statement. However, this income statement was calculated
as if there is no inflation! All dollars are expressed in constant
(year-0) dollars. Recalculate the income and cash flow statement by
assuming there is a general (average) inflation of 4.8% applied to
revenue, O&M, and salvage value.
- The firm will pay back the loan in 2 years, and the annual loan
payment is $12,815.
- The tax rate is 30%.
- The revenue for year 1 is $30,000 and $22,000 for year 2.
- O&M for year 1 is $9,000 and $11,900 for year 2.
- The interest paid on the debt is $1726 for year 1 and $894 for
year 2.
- The taxable income is $10,843 for year 1 and $1,981 for year
2.
- The income taxes are $3,253 for year 1 and $594 for year 2.
- The milling machine costs $59,000.
- The salvage value at the end of year 2 is $47,000.
Calculate the IRR of the cash flow based on actual dollars. Express
your answer as a percentage between 0 and 100.
You should calculate the depreciation based on the information
given in the problem, but do not refer to the MACRS table. You will
also need to calculate the amount that is borrowed and that goes to
the principal on the debt in years 1 and 2."
In: Finance
1. If a taxpayer has gains and losses from an activity, are they better off classifying the activity as a hobby or as a business? Explain why.
Mr. D works full-time as a systems analyst for a consulting firm. In addition, he sells plants that he raises himself in a greenhouse attached to his residence. During the past 5 years, the results from raising and selling the plants have been as follows: Year Net Profit (Loss) from Scenario 1:
|
Scenario 1 |
|
|
Year 1 |
(2,000) |
|
Year 2 |
(1,200) |
|
Year 3 |
1,000 |
|
Year 4 |
2,500 |
|
Total Years 1-4 |
300 |
|
Year 5 |
(500) |
2. Please create a scenario (Scenario 2) where the cumulative profits in years 1-4 are still $300 but the taxpayer would be in a better position regarding year 5 losses.
|
Scenario 1 |
Scenario 2 |
|
|
Year 1 |
(2,000) |
|
|
Year 2 |
(1,200) |
|
|
Year 3 |
1,000 |
|
|
Year 4 |
2,500 |
|
|
Total Years 1-4 |
300 |
300 |
|
Year 5 |
(500) |
(500) |
3. Comment on your answer to 2 above. Why is Scenario 2 better for the taxpayer? You may also show your erudition by citing, referencing, and attaching additional sources
In: Accounting
"A firm is considering purchasing a new milling machine and has
collected the following information for its income statement and
cash flow statement. However, this income statement was calculated
as if there is no inflation! All dollars are expressed in constant
(year-0) dollars. Recalculate the income and cash flow statement by
assuming there is a general (average) inflation of 2.6% applied to
revenue, O&M, and salvage value.
- The firm will pay back the loan in 2 years, and the annual loan
payment is $26,571.
- The tax rate is 38%.
- The revenue for year 1 is $40,000 and $36,000 for year 2.
- O&M for year 1 is $8,000 and $11,000 for year 2.
- The interest paid on the debt is $2743 for year 1 and $1409 for
year 2.
- The taxable income is $19,111 for year 1 and $14,897 for year
2.
- The income taxes are $7,262 for year 1 and $5,661 for year
2.
- The milling machine costs $71,000.
- The salvage value at the end of year 2 is $48,000.
Calculate the IRR of the cash flow based on actual dollars. Express
your answer as a percentage between 0 and 100.
You should calculate the depreciation based on the information
given in the problem, but do not refer to the MACRS table. You will
also need to calculate the amount that is borrowed and that goes to
the principal on the debt in years 1 and 2."
In: Economics
"A firm is considering purchasing a new milling machine and has
collected the following information for its income statement and
cash flow statement. However, this income statement was calculated
as if there is no inflation! All dollars are expressed in constant
(year-0) dollars. Recalculate the income and cash flow statement by
assuming there is a general (average) inflation of 4.7% applied to
revenue, O&M, and salvage value.
- The firm will pay back the loan in 2 years, and the annual loan
payment is $15,796.
- The tax rate is 39%.
- The revenue for year 1 is $36,000 and $27,000 for year 2.
- O&M for year 1 is $12,000 and $13,500 for year 2.
- The interest paid on the debt is $2427 for year 1 and $1264 for
year 2.
- The taxable income is $12,713 for year 1 and $4,644 for year
2.
- The income taxes are $4,958 for year 1 and $1,811 for year
2.
- The milling machine costs $62,000.
- The salvage value at the end of year 2 is $47,000.
Calculate the IRR of the cash flow based on actual dollars. Express
your answer as a percentage between 0 and 100.
You should calculate the depreciation based on the information
given in the problem, but do not refer to the MACRS table. You will
also need to calculate the amount that is borrowed and that goes to
the principal on the debt in years 1 and 2."
In: Accounting