Use Annualized Worth to determine best choice between these three.  I = 6% Show your work.

A     Planning horizon 10 years.   Initial Cost 50,000   annual maintenance costs 5000  annual revenue 40,000 salvage value 15000,

B   Planning horizon 8 years.    Initial Cost 75000

  annual maintenance cost   first year 5000  each year increases by 500.  

Annual revenue  first year 35000  each year increases 1000.  

Salvage value 18000.

C  Planning horizon 12 years   Initial cost 90,000

       Annual maintenance cost  first year 4000   each year increases 3000

       Annual Revenue   first year 65000   each year decreases 2000.

         Salvage value 16000

Jake’s Sporting Goods presented two years of data for its Clothing Division and Sports Equipment Division. Clothing Division: Year 1 Year 2 Sales $21,550,000 $22,320,000 Operating Income 2,430,000 1,960,000 Average Operating Assets 5,150,000 5,150,000 Sports Equipment Division: Year 1 Year 2 Sales $28,070,000 $31,250,000 Operating Income 475,000 1,006,000 Average Operating Assets 7,012,000 7,012,000

PART A Compute the ROI and the margin and turnover ratios for the first year for the Clothing Division.

PART B Compute the ROI and the margin and turnover ratios for the second year for the Sports Equipment Division.

PART C Based on the ratios you calculated in Parts A and B, how does the clothing division in year 1 compare to the sports equipment division in year 2? Explain.

1. If you wanted to find the difference in Elementary Statistics grades between students who transferred to CSULB from a community college and students who entered CSULB straight out of high school, what test statistic would you use?

2. If you wanted to find the difference in grades among students who took Elementary statistics in their Freshman year, Sophomore year, Junior year, or Senior year in college, what test statistic would you use?

3. If you wanted to see if there is a difference among students who took Elementary statistics in their Freshman year, Sophomore year, Junior year, or Senior year in college, and whether their age at the time affects their grade, what test statistic would you use?

a. On January 1, Year 1, Jones Company issued bonds with a $160,000 face value, a stated rate of interest of 8.5%, and a 5-year term to maturity. The bonds were issued at 97. Interest is payable in cash on December 31st of each year. The company amortizes bond discounts and premiums using the straight-line method. What is the amount of interest expense shown on Jones' income statement for the year ending December 31, Year 1?

b.

On January 1, Year 1, Denver Co. issued bonds with a face value of $83,000, a stated rate of interest of 9%, and a 5-year term to maturity. The bonds were sold at 103. Denver uses the straight-line method to amortize bond discounts and premiums. What is the amount of interest expense during Year 1?

Alternative A and Alternative B are being considered for recovering aluminum from garbage. Alternative A – has a capital cost of $100,000, a first year maintenance cost of $15,000, with maintenance increasing by $500 per year for each year after the first. Alternative B - has a capital cost of $120,000, a first year maintenance cost of $17,000, with maintenance increasing by $1,000 per year after the first. Revenues from the sale of aluminum are $20,000 in the first year, increasing $2,000 per year for each year after the first. Life of both alternatives is 10 years. There is no salvage value. The before-tax MARR is 10%. Using present worth analysis, determine which alternative is preferred.
a.) The present worth of alternative A
b.) The present worth of alternative B

Carlson Development owns a prime parcel of land that can be developed into a residential, commercial, or industrial complex. Carlson plans to manage each of the projects for seven years and then cash out. After considerable research, Carlson estimates that cash flows from the three alternative projects are as follows:

        Cash Flows In Millions

Calculate the NPV and IRR on the three projects identify which (if any) project should Carlson select?

Calculate the following present value for the following annuities.

a. Dan will be collecting his retirement benefit starting one month from now and continuing for 25 years. He will receive 3000 per month for the first year and the monthly benefit increases by 3% per year. At the rate of 5% annual interest compounded monthly, calculate the present value of the retirement benefit.

b. A 10-year decreasing annuity-immediate, with annual payments of 20, 18, 16, …, 2. Given an effective rate of 6%.

c. A perpetuity-immediate with annual payments. The perpetuity pays 1 in year 1, 2 in year 2, 3 in year 3, and so on, until year 10 where it pays 10 every year from then on. Given an effective rate of 6%.

3. Loan Interest. Sharon is considering the purchase of a car. After making the down payment, she will finance $11,450.00. Sharon is offered 3 maturities. On a four-year loan she will pay $284.93 per month. On a five-year loan, Sharon’s monthly payment will be $237.68. On a six-year loan they will be $206.39. Sharon rejects the four-year loan, as it is not within her budget. How much interest will Sharon pay over the life of the five-year loan? Of the six-year loan? Which should she choose if she bases her decision solely on interest paid?

• The amount of interest on the five-year loan is ___
• The amount of interest on the six-year loan is  _______
• She should choose the __________ loan based on total interest paid.
• What would be a valid reason for choosing the other loan option? ______________.

After several profitable years running her business, Ingrid decided to acquire the assets of a small competing business. On May 1 of year 1, Ingrid acquired the competing business for $366,000. Ingrid allocated $61,000 of the purchase price to goodwill. Ingrid’s business reports its taxable income on a calendar-year basis.(Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)

a. How much amortization expense on the goodwill can Ingrid deduct in year 1, year 2, and year 3?

b. In lieu of the original facts, assume that Ingrid purchased only a phone list with a useful life of 5 years for $15,500. How much amortization expense on the phone list can Ingrid deduct in year 1, year 2, and year 3?

Oak Mart, a producer of solid oak tables, reports the following data from its second year of business.

1. Prepare the current-year income statement for the company using variable costing.