A machine costing $209,400 with a four-year life and an estimated $15,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 486,000 units of product during its life. It actually produces the following units: 122,800 in 1st year, 123,200 in 2nd year, 121,500 in 3rd year, 128,500 in 4th year. The total number of units produced by the end of year 4 exceeds the original estimate—this difference was not predicted. Identify the straight-line, units-of-production and double-declining-balance.

Tommy plans to retire in 25 years (1st withdrawal in year 26). He is told by Simon that a desirable standard of living in 26 years will require $180,249 per year. Tommy wants to be able to maintain that level of purchasing power forever (Assume inflation = 3% per year). Tommy plans to increase his savings by 2% per year and expects to earn 6% per year on his investments.

How much does Tommy have to save the first year to fund his retirement goal?

Trooper limited is an American company which needs to raise US$1,000,000 for its expansion inside US. The options are:

a. A 2-year floating rate note at 1% above the 1-year US Dollar rate. Interest is paid once a year.

b. A 2-year bond sold in the US at a fixed interest rate of 5%.

Currently, the 1-year US dollar LIBOR rate is 3.50% and is expected to rise to 4.5% next year. Which security should the treasurer choose if borrowing costs are same for both securities?

problem 3 (ii)

Michael consumes apples and pears. In year 1, apples cost $1 each, pears cost $2 each, Michael buys 4 apples and 2 pears in year 1. In year 2, apples cost $2 each and pears cost $1 each, and michael buys 2 apples and 4 pears.

Define the implicit price deflator as nominal spending divided by real spending; compute the deflator for each year. How does the deflator change from year 1 to year 2?

Q2

: Kaleem Limited (KL) is a listed company and its accounting year ends on 30 June. KL is now considering to change its accounting year from 30 June to 30 September. Under the provisions of the Income Tax Ordinance, 2001:
(a) Briefly describe normal, special and transitional tax year.
(b) State the requirements regarding change in tax year from normal to special.
(c) State the tax year corresponding to the income year ended 30 September 20X8 and the due date for filing the return of income.

An engineer who works for Zpac is pitching a project for a new machine to his management. Zpac’s MARR is 12%. To finance this project, Zpac would have to invest $34,000 immediately and then $5000 each year for the next five years starting one year from now. The project is expected to generate revenue of $10000 one year from now, and then the revenue would increase by $2000 each year through year 4. The revenue in year 5 would be $24,000. a. Determine the rate of return for this project by hand NOT EXCEL please

Serenity by Jan is considering expanding its operations. The expansion will require new equipment costing​ $750,000 that would be depreciation straightlin to zero over a 4 year life. The estimated​ after-tax proceeds on the sale this equipment is​ $124,000. The project requires an investment in net working capital of​ $40,000. The projected annaul operating cash flow is​ $230,000. Serenity by​ Jan's tax rate is​ 34%.  

What are the annual cash flows for this​ project?

Year​ 0:

Year​ 1:

Year​ 2:

Year​ 3:

Year​ 4:

Given the discount rate and the future cash flow of each project listed in the following​ table, use the PI to determine which projects the company should accept.

a) What is the PI of project A?

b) What is the PI of project B?