Part 1 AnimalChin! Co. has decided to sell a new line of longboards: "The Veloce." These longboards will be sold for $276 per unit and have variable costs of $180 per unit. The company has spent $350,000 for a marketing study which determined that the company will sell 3,000,000 boards in year 1. Sales will stay the same until the project is discontinued in year 8. The same marketing study also mentioned that some old clients are likely to switch to the new board. Sales of the other AnimalChin! board The Classic are likely to decrease by 150,000 units each year, the price of The Classic price $280, and variable costs are $230. Space rental, marketing and advertisement costs, and administrative expenses will total $15,000,000 per year. A few months ago, the company has also spent $3,700,000.00 to test new wheels and shock pads and they recently repaired some of their machines for $1,400,000.00. Three of these machines are currently not in use, they could be used for the production of The Veloce or could be sold today for $30,000,000.00 total (their initial cost 3 years ago was $210,000,000.00 (the company is currently depreciating these assets straight-line to zero book value over 5 years). The plant and equipment investment required for this project is $700,000,000.00 and will be depreciated on a straight-line basis to a zero book value over the next 8 years. Despite depreciating to zero for tax reasons, the company believes that the market value of the equipment in 8 years will be $50,000,000.00. The company will sell the equipment. The production of The Veloce will require an immediate increase in inventory of $ 113,000,000.00 that will be returned at the end of the project. The tax rate is 40%.

Calculate the annual operating cash-flow (OCF) for the project for year 1 to year 8.

5. Based on points 1-4 fill the CFFA table and compute the Cash-flow from assets (CFFA) for Year 0 to year 8. Copy and paste from excel if needed.

Return on Investment, Margin, Turnover

Ready Electronics is facing stiff competition from imported goods. Its operating income margin has been declining steadily for the past several years. The company has been forced to lower prices so that it can maintain its market share. The operating results for the past 3 years are as follows:

For the coming year, Ready's president plans to install a JIT purchasing and manufacturing system. She estimates that inventories will be reduced by 70% during the first year of operations, producing a 20% reduction in the average operating assets of the company, which would remain unchanged without the JIT system. She also estimates that sales and operating income will be restored to Year 1 levels because of simultaneous reductions in operating expenses and selling prices. Lower selling prices will allow Ready to expand its market share.

(Note: Round all numbers to two decimal places.)

Required:

1. Compute the ROI, margin, and turnover for Years 1, 2, and 3.

2. Conceptual Connection: Suppose that in Year 4 the sales and operating income were achieved as expected, but inventories remained at the same level as in Year 3. Compute the expected ROI, margin, and turnover.

Why did the ROI increase over the Year 3 level?

3. Conceptual Connection: Suppose that the sales and net operating income for Year 4 remained the same as in Year 3 but inventory reductions were achieved as projected. Compute the ROI, margin, and turnover.

Why did the ROI exceed the Year 3 level?

4. Conceptual Connection: Assume that all expectations for Year 4 were realized. Compute the expected ROI, margin, and turnover.

Why did the ROI increase over the Year 3 level?

Return on Investment, Margin, Turnover Ready Electronics is facing stiff competition from imported goods. Its operating income margin has been declining steadily for the past several years. The company has been forced to lower prices so that it can maintain its market share. The operating results for the past 3 years are as follows: Year 1 Year 2 Year 3 Sales $14,000,000 $ 9,500,000 $ 9,000,000 Operating income 1,200,000 1,295,000 945,000 Average assets 15,000,000 15,000,000 17,750,000 For the coming year, Ready's president plans to install a JIT purchasing and manufacturing system. She estimates that inventories will be reduced by 70% during the first year of operations, producing a 20% reduction in the average operating assets of the company, which would remain unchanged without the JIT system. She also estimates that sales and operating income will be restored to Year 1 levels because of simultaneous reductions in operating expenses and selling prices. Lower selling prices will allow Ready to expand its market share. (Note: Round all numbers to two decimal places.) Required: 1. Compute the ROI, margin, and turnover for Years 1, 2, and 3. Year 1 Year 2 Year 3 ROI % % % Margin % % % Turnover 2. Conceptual Connection: Suppose that in Year 4 the sales and operating income were achieved as expected, but inventories remained at the same level as in Year 3. Compute the expected ROI, margin, and turnover. ROI % Margin % Turnover Why did the ROI increase over the Year 3 level? 3. Conceptual Connection: Suppose that the sales and net operating income for Year 4 remained the same as in Year 3 but inventory reductions were achieved as projected. Compute the ROI, margin, and turnover. ROI % Margin % Turnover Why did the ROI exceed the Year 3 level? 4. Conceptual Connection: Assume that all expectations for Year 4 were realized. Compute the expected ROI, margin, and turnover. ROI % Margin % Turnover Why did the ROI increase over the Year 3 level?

Please do in java

Program 3: Give a baby $5,000! Did you know that, over the last century, the stock market has returned an average of 10%? You may not care, but you’d better pay attention to this one. If you were to give a newborn baby $5000, put that money in the stock market and NOT add any additional money per year, that money would grow to over $2.9 million by the time that baby is ready for retirement (67 years)! Don’t believe us? Check out the compound interest calculator from MoneyChimp and plug in the numbers! To keep things simple, we’ll calculate interest in a simple way. You take the original amount (called the principle) and add back in a percentage rate of growth (called the interest rate) at the end of the year. For example, if we had $1,000 as our principle and had a 10% rate of growth, the next year we would have $1,100. The year after that, we would have $1,210 (or $1,100 plus 10% of $1,100). However, we usually add in additional money each year which, for simplicity, is included before calculating the interest.

Your task is to design (pseudocode) and implement (source) for a program that 1) reads in the principle, additional annual money, years to grow, and interest rate from the user, and 2) print out how much money they have each year. Task 3: think about when you earn the most money! Lesson learned: whether it’s your code or your money, save early and save often…

Sample run 1:

Enter the principle: 2000

Enter the annual addition: 300

Enter the number of years to grow: 10

Enter the interest rate as a percentage: 10

Year 0: $2000

Year 1: $2530

Year 2: $3113

Year 3: $3754.3

Year 4: $4459.73

Year 5: $5235.7

Year 6: $6089.27

Year 7: $7028.2

Year 8: $8061.02

Year 9: $9197.12

Year 10: $10446.8

On 31 December year 0, Khan Ltd invested in some machinery and started to manufacture a new product the ‘gadget’. The decision was based on the machinery being capable of producing gadgets until the end of Year 6 and sales continuing until that time.

Actual sales of gadgets have not been as buoyant as projected when the investment was being appraised during year 0. As a result, the business’s management is considering abandoning the project at the end of year 3, earliest date at which it would be feasible to do so. You have been asked to prepare calculations and recommend whether to abandon the project at that time or to continue as originally projected until the end of year 6.

You have discovered the following :

1. The machinery was bought on 31 December year 0 for £420,000. Where production to be abandoned at the end of year 3. Should the project continue, the machinery would be disposed of in late December year 6, for zero proceeds.

Depreciation of this machinery has been, and if retained will continue to be, charged at the rate of £70,000 a year.

2. It has been estimated that the most likely sales levels for the remaining three years of the project will be as follows:

                                                                                                Number of gadgets         

                             Year 4                                                               2,400

                             Year 5                                                             2,400

                             Year 6                                                              1,500

3. Gadgets are sold for £200 each. This produces a contribution of £80 a gadget.

4. The variable costs include £90 a gadget for materials. The only other element of variable operating cost is labour.

5. The business also has a longstanding product, the ‘widget’, for which the market is very buoyant. This uses the same manufacturing labour, paid at the same rate, as the gadgets. As a result of a shortage of this labour, sales of widgets are lost when gadgets are produced. A higher-than-planned output of widgets has occurred since Year 1, due to the labour released by the gadget sales shortfalls

6. It is believed that there are no other relevant cash flows associated with the decision.

7. Given the risk of the project, a cost of capital of 15% per year is considered appropriate.

8. Assume that all operating cash flows arise on the last day of the accounting year concerned.

Required:

Show calculations that indicate, on the basis of net present value at 31 December Year 3, whether Khan Ltd should abandon gadget production at the end of Year 3 or continue until Year 6.

Swanson & Hiller, Inc., purchased a new machine on September 1 of the current year at a cost of $160,000. The machine’s estimated useful life at the time of the purchase was five years, and its residual value was $10,000. The company reports on a calendar year basis. Required: a-1. Prepare a complete depreciation schedule, beginning with the current year, using the straight-line method. (Assume that the half-year convention is used). a-2. Prepare a complete depreciation schedule, beginning with the current year, using the 200 percent declining-balance method. (Assume that the half-year convention is used). a-3. Prepare a complete depreciation schedule, beginning with the current year, using the 150 percent declining-balance, switching to straight-line when that maximizes the expense. (Assume that the half-year convention is used). b. Which of the three methods computed in part a is most common for financial reporting purposes? c. Assume that Swanson & Hiller sells the machine on December 31 of the fourth year for $31,000 cash. Compute the resulting gain or loss from this sale under each of the depreciation methods used in part a. Swanson & Hiller, Inc., purchased a new machine on September 1 of the current year at a cost of $160,000. The machine’s estimated useful life at the time of the purchase was five years, and its residual value was $10,000. The company reports on a calendar year basis. Required: a-1. Prepare a complete depreciation schedule, beginning with the current year, using the straight-line method. (Assume that the half-year convention is used). a-2. Prepare a complete depreciation schedule, beginning with the current year, using the 200 percent declining-balance method. (Assume that the half-year convention is used). a-3. Prepare a complete depreciation schedule, beginning with the current year, using the 150 percent declining-balance, switching to straight-line when that maximizes the expense. (Assume that the half-year convention is used). b. Which of the three methods computed in part a is most common for financial reporting purposes? c. Assume that Swanson & Hiller sells the machine on December 31 of the fourth year for $31,000 cash. Compute the resulting gain or loss from this sale under each of the depreciation methods used in part a.

1. Berful Industries, a US corporation using US GAAP accounting standards, wants to increase its reported net income this year. Will the following actions result in an increase in net income for the firm?

1. Berful is going to select double-declining balance depreciation for the new assets it acquires this year instead of the straight-line method.                                                              Yes _____ No _____

2. Berful plans to sell treasury stock at a price substantially above its acquisition cost this year.                               Yes _____ No _____

3. Berful plans to issue new common shares this year, with a par value of $1 per share, believing that it can sell the new shares for $40 per share.                                       Yes _____ No _____

4. Berful plans to receive about $5,000 in dividends from its marketable security portfolio of publicly-traded common stock this year.                                                              Yes _____ No _____

5. Berful plans to change from LIFO to FIFO in measuring the cost of its ending inventory and cost of goods sold, in a period of rising prices.                                                        Yes _____ No _____

6. Berful has used the direct write-off method to account for bad debts, but must change to the allowance method, in a year in which it has no write-offs, but expects to discover next year that some of the current year sales are uncollectible. Will this change reduce net income?                                      Yes _____ No _____

7. Berful wishes to accelerate the timing of the recognition of revenue by collecting cash in advance of performing services or delivering goods. Does net income increase?                  Yes _____ No _____

8. Berful is planning to sell land it has owned for many years, expecting to recognize a gain of $50,000.      Yes _____ No _____

1. Berful is considering purchasing a machine, but is concerned that the sales taxes and delivery costs will drive down its reported profit in the year of purchase. Will these costs decrease net income in the year of purchase?                                   Yes _____ No _____

10. Berful is planning to hire a new officer for the corporation on the last day of the year, with his services to begin next year. Will the profit this year be decreased for his salary? Yes _____ No _____

11. Berful plans to undertake a large research and development project this year. Will the cost of this R&D activity reduce net income this year?                                   Yes _____ No _____

12. Berful is planning to acquire another company this year, and hopes to avoid the recognition of goodwill. Will the recognition of goodwill reduce the net income of Berful in the year of acquisition?                                                                           Yes _____ No _____

13. Berful is concerned that the dividends it declares will be treated as expenses in the year declared—true?                  Yes _____ No _____

Sal, a calendar-year taxpayer, uses the cash-basis method of accounting for his sole proprietorship. In late December he performed $50,000 of consulting services for a client. Sal typically requires his clients to pay his bills immediately upon receipt. Assume that Sal's marginal tax rate is 32 percent this year and 37 percent next year and that he can earn an after-tax rate of return of 7 percent on his investments. Should Sal send his client the bill in December or January? Use Exhibit 3.1. (Round discount factor(s) to three decimal places.)

Programming Exercise 11-2

QUESTION: In this chapter, the class dateType was designed to implement the date in a program, but the member function setDate and the constructor do not check whether the date is valid before storing the date in the member variables. Rewrite the definitions of the function setDate and the constructor so that the values for the month, day, and year are checked before storing the date into the member variables. Add a member function, isLeapYear, to check whether a year is a leap year. Moreover, write a test program to test your class.

Input should be format month day year with each separated by a space. Output should resemble the following:

Date #: month-day-year

An example of the program is shown below:

Date 1: 3-15-2008
this is a leap year

If the year is a leap year, print the date and a message indicating it is a leap year, otherwise print a message indicating that it is not a leap year.

The header file for the class dateType has been provided for you.

GIVEN FILE: dateType.h

FILES NEEDED: dateTypeImp.cpp, main.cpp

~~~~~~dateType.h~~~~~~

#ifndef date_H

#define date_H

class dateType

{

public:

    void setDate(int month, int day, int year);

      //Function to set the date.

      //The member variables dMonth, dDay, and dYear are set

      //according to the parameters

      //Postcondition: dMonth = month; dDay = day;

      //               dYear = year

    int getDay() const;

      //Function to return the day.

      //Postcondition: The value of dDay is returned.

    int getMonth() const;

      //Function to return the month.  

      //Postcondition: The value of dMonth is returned.

    int getYear() const;

      //Function to return the year.     

      //Postcondition: The value of dYear is returned.

    void printDate() const;

      //Function to output the date in the form mm-dd-yyyy.

    bool isLeapYear();

      //Function to determine whether the year is a leap year.

    dateType(int month = 1, int day = 1, int year = 1900);

      //Constructor to set the date

      //The member variables dMonth, dDay, and dYear are set

      //according to the parameters

      //Postcondition: dMonth = month; dDay = day;

      //               dYear = year

      //If no values are specified, the default values are

      //used to initialize the member variables.

private:

    int dMonth;      //variable to store the month

    int dDay;        //variable to store the day

    int dYear;       //variable to store the year

};

#endif

1. The management of Plitt Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 55,000 machine-hours. Capacity is 76,000 machine-hours and the actual level of activity for the year is assumed to be 71,000 machine-hours. All of the manufacturing overhead is fixed and both the estimated amount at the beginning of the year and the actual amount at the end of the year are assumed to be $2,508,000 per year. It is assumed that a number of jobs were worked on during the year, one of which was Job Q20L which required 410 machine-hours.

Multiple Choice

$13,530.00

$14,482.82

$10,480.99

$18,696.00

2. Daget Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $364,140. At the end of the year, actual direct labor-hours for the year were 24,000 hours, manufacturing overhead for the year was overapplied by $8,060, and the actual manufacturing overhead was $359,140. The predetermined overhead rate for the year must have been closest to:

Multiple Choice

$15.43 per direct labor-hour

$15.30 per direct labor-hour

$15.17 per direct labor-hour

$14.96 per direct labor-hour

3. Braam Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 11,500 hours. At the end of the year, actual direct labor-hours for the year were 9,700 hours, the actual manufacturing overhead for the year was $143,350, and manufacturing overhead for the year was underapplied by $18,220. The estimated manufacturing overhead at the beginning of the year used in the predetermined overhead rate must have been:

Multiple Choice

$164,023

$125,130

$148,350

$138,350

4. Darrow Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 10,000 direct labor-hours and incurred $80,000 of actual manufacturing overhead cost. If overhead was underapplied by $2,000, the predetermined overhead rate for the Corporation for the year must have been:

Multiple Choice

$7.80 per direct labor-hour

$8.00 per direct labor-hour

$8.20 per direct labor-hour

$8.40 per direct labor-hour