Calculate the following: (LG 15-2) a. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $240,000 for 20 years? Assume that the annuity will earn 7 percent per year. b. Calculate the annual cash flows from a $2.5 million, 20-year fixed-payment annuity earning a guaranteed return of 7 percent per year if payments are to begin at the end of the current year. c. Calculate the annual cash flows from a $2.5 million, 20-year fixed-payment annuity earning a guaranteed return of 7 percent per year if payments are to begin at the end of year 6.

PLEASE answer in excel format

7)    On January 1, Tiger Corp. paid $66,000 cash for machinery that was expected to last for 11 years.

a) Is the machinery a current asset or a long-term asset? Why?

b) Give Tiger’s journal entry to record the purchase of the machinery.

c) Give Tiger’s journal entry to record depreciation expense on the machinery for the first year.

d) Give Tiger’s journal entry to record depreciation expense on the machinery for the second year.

e) What is the balance in accumulated depreciation at the end of the first year? At the end of the second year?

f) What is the net (book) value of the machinery at the end of the first year? At the end of the second year? At the end of the 11th year?

A flood control project has construction cost during the first year (i.e. at EOY 1) of $10 million, during the second year of $7 million, and during the third year of $4 million, It is completed at the end of the third year and thereafter incurs an annual operating cost of $170,000 per year. Benefits from the project begin during the fourth year and are valued at $1,300,000 in that year, growing at a 2% rate of increase out to the end of the project life, which is 50 years (i.e., three years of construction, 47 years of operation). Assuming an interest rate of 7%, determine if this is a viable project, that is do the capitalized benefits exceed the capitalized costs?

A research project would require initial investment of 100,000. There are three possible outcomes for this project:

a.) 30% probability that investment yields annual income of 35,000 for six year (starting from year 1 to year six) and zero salvage value
b.) 50% probability that investment yields annual income of 25,000 for six year (starting from year 1 to year six) and zero salvage value
c.) 20% probability of failure that yields zero annual income but salvage value of 75,000 dollar at the end of year 1

Calculate expected Rate of Return for this investment. Explain your work in detail including all the required equations and calculations.

ABC Company has 2 mutually exclusive investment options. Information on the two options is reported below:

Option A Option B

Initial Investment $150,000 $350,000

Year 1 return $45,000 $100,000

Year 2 return $55,000 $110,000

Year 3 return $60,000 $125,000

Year 4 return $70,000 $110,000

Year 5 return $55,000 $75,000

Year 6 return $60,000

Year 7 return $45,000

Calculate the IRR, NPV (assume a 5% discount rate for NPV calculation), Profitability Index and Payback period for both investments and then determine which one you would choose and explain why.

a. Assuming that the expectations hypothesis is valid, compute the expected price of the four-year zero coupon bond shown below at the end of (i) the first year; (ii) the second year; (iii) the third year; (iv) the fourth year. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Beginning of Year Price of Bond

1. 950.90

2. 899.97

3. 877.62

4. 785.26

b. What is the rate of return of the bond in years 1, 2, 3, and 4? Conclude that the expected return equals the forward rate for each year. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Dividends Per Share Seventy-Two Inc., a developer of radiology equipment, has stock outstanding as follows: 70,000 shares of cumulative preferred 3% stock, $20 par and 400,000 shares of $25 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $33,000; second year, $73,000; third year, $90,000; fourth year, $100,000. Determine the dividends per share on each class of stock for each of the four years. Round all answers to two decimal places. If no dividends are paid in a given year, enter "0.00".

for 1st year - 4th year on preferred stock and common stock

A machine costing $212,200 with a four-year life and an estimated $19,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 483,000 units of product during its life. It actually produces the following units: 122,500 in 1st year, 124,200 in 2nd year, 120,100 in 3rd year, 126,200 in 4th year. The total number of units produced by the end of year 4 exceeds the original estimate—this difference was not predicted. (The machine must not be depreciated below its estimated salvage value.)

  
Required:

Compute depreciation for each year (and total depreciation of all years combined) for the machine under each depreciation method.

ABC Company has 2 mutually exclusive investment options. Information on the two options is reported below:

Option A Option B

Initial Investment $150,000 $350,000

Year 1 return $45,000 $100,000

Year 2 return $55,000 $110,000

Year 3 return $60,000 $125,000

Year 4 return $70,000 $110,000

Year 5 return $55,000 $75,000

Year 6 return $60,000

Year 7 return $45,000

Calculate the IRR, NPV (assume a 5% discount rate for NPV calculation), Profitability Index and Payback period for both investments and then determine which one you would choose and explain why.

Alpaca Corporation had revenues of $275,000 in its first year of operations. The company has not collected on $19,400 of its sales and still owes $27,500 on $98,500 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $13,200 in salaries. Owners invested $16,500 in the business and $16,500 was borrowed on a five-year note. The company paid $4,200 in interest that was the amount owed for the year, and paid $8,200 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 40%. (Assume taxes are paid in the same year).

Compute the cash balance at the end of the first year for Alpaca Corporation.