41. Apartment building manager reports revenue of $1,350 per month. He was 100% occupied for the year. He pays $70 per month for water & trash for the complex. His insurance was $1,050 for the year. His payment on the building were $8,400 for the year. $4,815 of it was interest. He was $50 in advertising expense for the year. Maintenance totaled for year totaled $925. He will be depreciating the property $2,320 for the year. He is also depreciating a Heat & Air unit at $815 for the year, which he bought and installed this year for the cost of $5,000. He has $5,300 in his business bank account and is holding deposits of $1,300 in escrow. The land is valued at $20,000. The building is valued at 116,000 with the land. Total depreciation on the building has been $25,000. He owns the local printer $65; the plumber, $420 and the local paper $50. He owes $73,500 on the property. Property taxes for the year are $1,725. The owner paid income tax of $12,500 this year.
The bottom line Annual Profit or Loss is
(A) Profit of $1,350.00 (B) Loss of $1,350.00 (C)Profit of $3,660.00 (D) None of the above
In: Accounting
Your company is deciding whether to invest in a new machine. The
new machine will increase cash flow by $325,000 per year. You
believe the technology used in the machine has a 10-year life; in
other words, no matter when you purchase the machine, it will be
obsolete 10 years from today. The machine is currently priced at
$1,750,000. The cost of the machine will decline by $105,000 per
year until it reaches $1,225,000, where it will remain.
If your required return is 13 percent, calculate the NPV if you
purchase the machine today. (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
NPV $
If your required return is 13 percent, calculate the NPV if you
wait to purchase the machine until the indicated year. (A
negative answer should be indicated by a minus sign. Do not round
intermediate calculations and round your answers to 2 decimal
places, e.g., 32.16.)
|
NPV |
|
|
Year 1 |
$ |
|
Year 2 |
$ |
|
Year 3 |
$ |
|
Year 4 |
$ |
|
Year 5 |
$ |
|
Year 6 |
$ |
In: Finance
|
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.64 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,060,000 in annual sales, with costs of $755,000. The project requires an initial investment in net working capital of $280,000, and the fixed asset will have a market value of $270,000 at the end of the project. If the tax rate is 35 percent, what is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3? (Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars, e.g. 1,234,567. Negative amounts should be indicated by a minus sign.) |
| Years | Cash Flow |
| Year 0 | $ |
| Year 1 | $ |
| Year 2 | $ |
| Year 3 | $ |
|
If the required return is 13 percent, what is the project's NPV? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) |
| NPV | $ |
In: Finance
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.32 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1.735 million in annual sales, with costs of $650,000. The project requires an initial investment in net working capital of $250,000, and the fixed asset will have a market value of $180,000 at the end of the project. The tax rate is 21 percent.
a. What is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3? (Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars, e.g., 1,234,567. A negative answer should be indicated by a minus sign.)
b. If the required return is 12 percent, what is the project's NPV? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Year 0=
Year 1=
Year 2=
Year 3=
NPV=
In: Finance
Rotorua Products, Ltd., of New Zealand markets agricultural products for the burgeoning Asian consumer market. The company’s current assets, current liabilities, and sales over the last five years (Year 5 is the most recent year) are as follows:
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||||||||||
| Sales | $ | 4,601,270 | $ | 4,897,930 | $ | 5,118,700 | $ | 5,510,220 | $ | 5,778,750 | |||||
| Cash | $ | 88,540 | $ | 97,890 | $ | 94,214 | $ | 78,232 | $ | 77,351 | |||||
| Accounts receivable, net | 418,193 | 419,393 | 437,761 | 515,351 | 576,719 | ||||||||||
| Inventory | 801,902 | 880,170 | 822,958 | 893,920 | 899,522 | ||||||||||
| Total current assets | $ | 1,308,635 | $ | 1,397,453 | $ | 1,354,933 | $ | 1,487,503 | $ | 1,553,592 | |||||
| Current liabilities | $ | 300,057 | $ | 335,370 | $ | 335,797 | $ | 330,208 | $ | 408,998 | |||||
Required:
1. Express all of the asset, liability, and sales data in trend percentages. Use Year 1 as the base year. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
Year 1Year 2Year 3Year 4Year 5Sales%%%%%Current
assets:Cash%%%%%Accounts receivable%%%%%Inventory%%%%%Total current
assets%%%%%Current liabilities%%%%%
In: Accounting
Boran Stockbrokers, Inc., selects four stocks for the purpose of developing its own index of stock market behavior. Prices per share for a year 1 base period, January year 3, and March year 3 follow. Base-year quantities are set on the basis of historical volumes for the four stocks.
| Stock | Industry | Year 1 Quantity |
Price per Share ($) | ||
|---|---|---|---|---|---|
| Year 1 Base |
January Year 3 |
March Year 3 |
|||
| A | Oil | 100 | 31.50 | 20.75 | 22.50 |
| B | Computer | 150 | 65.00 | 49.00 | 45.50 |
| C | Steel | 75 | 40.00 | 32.00 | 29.50 |
| D | Real Estate | 50 | 16.00 | 6.50 | 2.75 |
Compute the price relatives for the four stocks making up the Boran index. (Round your answers to one decimal place.)
| Stock | Price Relative | |
|---|---|---|
| January | March | |
| A | ||
| B | ||
| C | ||
| D | ||
Use the weighted average of price relatives to compute the January year 3 and March year 3 Boran indexes. (Round your answers to one decimal place.)
IJan=
IMar=
In: Accounting
|
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $3 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,180,000 in annual sales, with costs of $875,000. The project requires an initial investment in net working capital of $400,000, and the fixed asset will have a market value of $260,000 at the end of the project. If the tax rate is 30 percent, what is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3? (Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars, e.g. 1,234,567. Negative amounts should be indicated by a minus sign.) |
| Years | Cash Flow |
| Year 0 | $ |
| Year 1 | $ |
| Year 2 | $ |
| Year 3 | $ |
|
If the required return is 9 percent, what is the project's NPV? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) |
| NPV | $ |
In: Finance
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.32 million. The fixed asset falls into the three-year MACRS class (MACRS schedule). The project is estimated to generate $1,735,000 in annual sales, with costs of $650,000. The project requires an initial investment in net working capital of $250,000 and the fixed asset will have a market value of $180,000 at the end of the project. The tax rate is 21 percent.
a. What is the project’s Year 0 net cash flow?
Year 1? Year 2? Year 3? (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, e.g., 1,234,567. A negative answer should be indicated by a minus sign.)
b. If the required return is 12 percent, what is the project's NPV? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Year 0 cash flow, Year 1 cash flow, Year 2 cash flow, Year 3 cash flow b. NPV
In: Finance
Boran Stockbrokers, Inc., selects four stocks for the purpose of developing its own index of stock market behavior. Prices per share for a year 1 base period, January year 3, and March year 3 follow. Base-year quantities are set on the basis of historical volumes for the four stocks.
| Stock | Industry | Year 1 Quantity |
Price per Share ($) | ||
|---|---|---|---|---|---|
| Year 1 Base |
January Year 3 |
March Year 3 |
|||
| A | Oil | 100 | 29.50 | 22.75 | 22.50 |
| B | Computer | 150 | 65.00 | 49.00 | 47.50 |
| C | Steel | 75 | 40.00 | 31.00 | 29.50 |
| D | Real Estate | 50 | 16.00 | 6.50 | 2.75 |
Part 1:
Compute the price relatives for the four stocks making up the Boran index. (Round your answers to one decimal place.)
| Stock | Price Relative | |
|---|---|---|
| January | March | |
| A | ||
| B | ||
| C | ||
| D | ||
Part 2:
Use the weighted average of price relatives to compute the January year 3 and March year 3 Boran indexes. (Round your answers to one decimal place.)
IJan=
IMar=
In: Statistics and Probability
Comparing three depreciation methods
Dexter Industries purchased packaging equipment on January 8 for $72,000. The equipment was expected to have a useful life of three years, or 18,000 operating hours, and a residual value of $3,600. The equipment was used for 7,200 hours during Year 1, 5,400 hours in Year 2, and 5,400 hours in Year 3.
Required:
1. Determine the amount of depreciation expense for the three years ending December 31, by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the three years by each method. Round the final answers for each year to the nearest whole dollar.
| Depreciation Expense | |||||||||
| Year | Straight-Line Method | Units-of-Activity Method | Double-Declining-Balance Method | ||||||
| Year 1 | $ | $ | $ | ||||||
| Year 2 | $ | $ | $ | ||||||
| Year 3 | $ | $ | $ | ||||||
| Total | $ | $ | $ | ||||||
2. What method yields the highest depreciation
expense for Year 1?
3. What method yields the most depreciation
over the three-year life of the equipment?
In: Accounting