A Belgium subsidiary's beginning and ending trial balances appear below:

Exchange rates ($/€) are:

The subsidiary was acquired at the beginning of the year. Its sales, inventory purchases, and out-of-pocket selling and administrative expenses occurred evenly during the year. Equipment was purchased for €10,000 when the exchange rate was $1.23. Depreciation for the year includes €200 related to the equipment purchased during the year. The ending inventory was purchased at the end of the year, and the beginning inventory was purchased at the end of the previous year.

If the subsidiary's functional currency is the euro, what is the translation gain or loss for the year?

On January 1, Year 1, Webb Construction Company overhauled four cranes, resulting in a slight increase in the life of the cranes. Such overhauls occur regularly at two-year intervals and have been treated as a maintenance expense in the past. Management is considering whether to capitalize this year’s $28,420 cash cost in the Cranes asset account or to expense it as a maintenance expense. Assume that the cranes have a remaining useful life of two years and no expected salvage value. Assume straight-line depreciation.

Required
a. Determine the amount of additional depreciation expense Webb would recognize in Year 1 and Year 2 if the cost were capitalized in the Cranes account.
b. Determine the amount of expense Webb would recognize in Year 1 and Year 2 if the cost were recognized as maintenance expense.
c. Determine the effect of the overhaul on cash flow from operating activities for Year 1 and Year 2 if the cost were capitalized and expensed through depreciation charges.
d. Determine the effect of the overhaul on cash flow from operating activities for Year 1 and Year 2 if the cost were recognized as maintenance expense.

KFA has issued a 100-year coupon bond with par of $1,000, and a 6.50% annual coupon paid semi-annually. Calculate its price for each of the following three YTM scenarios: 4.0%, 6.0%, and 8.0%.

KFA is evaluating a project with the following cash flows in the first 4 years: $4,000, $5,000, $6,000, and $7,000. Use an 8.0% discount rate to calculate the project's net present values (NPV) for three potential initial investments: $11,000 (scenario 1), $13,000 (scenario 2), and $15,000 (scenario 3). Assume no residual value.

Hathaway Health Club sold three-year memberships at a reduced rate during its opening promotion. It sold 1,000 three-year nonrefundable memberships for $354 each. The club expects to sell 100 additional three-year memberships for $885 each over each of the next two years. Membership fees are paid when clients sign up. The club's bookkeeper has prepared the following income statement for the first year of business and projected income statements for Years 2 and 3.

Cash-basis income statement:

*Equipment was purchased at the beginning of year 1 for $118,000 and is expected to last for three years and then to be worth $1,180.

Required:

Convert the income statements for each of the three years to the accrual basis. Indicate a net loss with a minus sign.

This is all the information I was provided with for this question. There was nothing more provided.

Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $32,000 and will be depreciated straight-line over 3 years. It will be sold for scrap metal after 5 years for $8,000. The grill will have no effect on revenues but will save Johnny’s $16,000 in energy expenses. The tax rate is 30%. Required:

a. What are the operating cash flows in each year?

b. What are the total cash flows in each year?

c. Assuming the discount rate is 12%, calculate the net present value (NPV) of the cash flow stream.

Should the grill be purchased?

Answer for:

A. What are the 3-Year Operating Cash Flows?

Year 1

Year 2

Year 3

B. What are the total cash flows in each year? (Negative amounts should be indicated with a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)

Total Cash Flows

Year 0 $(32,000.00)

Year 1

Year 2

Year 3

C. Assuming the discount rate is 12%, calculate the net present value (NPV) of the cash flow stream.

Should the grill be purchased? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

What is the NPV of cash flow stream?

Should the grill be purchased?

Company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by a MBA student. The production line would be set up in unused space (Market Value Zero) in Sugar Land’ main plant. Total cost of the machine is $350,000. The machinery has an economic life of 4 years and will be depreciated using MACRS for 3-year property class. The machine will have a salvage value of $35,000 after 4 years.

The new line will generate Sales of 1,750 units per year for 4 years and the variable cost per unit is $110 in the first year. Each unit can be sold for $210 in the first year. The sales price and variable cost are expected to increase by 3% per year due to inflation. Further, to handle the new line, the firm’s net working capital would have to increase by $30,000 at time zero (No change in NWC in years 1 through 3 and the NWC will be recouped in year 4). The firm’s tax rate is 40% and its weighted average cost of capital is 11%.

**** Estimate the after tax salvage cash flow

*******Estimate the net cash flow of this project

Year zero

Year 1

Year 2

Year 3

Year 4

Estimate the NPV, IRR, MIRR, and profitability Index of the project.

Blue Jeans Corp. has done an analysis of whether to continue offering a new line of jeans or to halt operations, this analysis cost $250,000. The new product has expected sales at the end of this year of $800,000 and this grow every year by 3%. This product has created some cannibalization worth $75,000 of sales reduction each year. COGS is $200,000 at the end of this year and will also grow every year by 3%. COGS related to the cannibalized product is $25,000 each year. The line of jeans will be in production for three years, afterwards they become obsolete. The equipment cost of $2M ($2 million) was spent at the beginning of this year (t=0) and it has a 40% CCA rate. The space for the equipment could have received $10,000 each year in its next best alternative use. Interest charges are $50,000 annually. There will be a one-time net working capital increase of $20,000 at the end of year one; this will be recovered at the end of year 3. The firm demands a 5% return on projects such as this. The corporate tax rate is 30%. Assume that at the end of year 3 the equipment is sold for $0 and does not bring any tax consequences thereafter. What is the NPV of this project?

A $584,434 （I know this is the answer but I dont know the process please）

B -$550,910

с $354,306

D$547,368

E $531,847

Kelly Company manufactures and sells one product. The following information pertains to each of the company’s first two years of operations:

The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, Kelly produced 61,000 units and sold 48,250 units. During its second year of operations, it produced 61,000 units and sold 73,750 units. The selling price of the company’s product is $53 per unit.

Required:

1. Assume the company uses super-variable costing:

a. Compute the unit product cost for Year 1 and Year 2.

b. Prepare an income statement for Year 1 and Year 2.

2. Assume the company uses a variable costing system that assigns $13.00 of direct labor cost to each unit produced:

a. Compute the unit product cost for Year 1 and Year 2.

b. Prepare an income statement for Year 1 and Year 2.

3. Reconcile the difference between the super-variable costing and variable costing net operating incomes in Years 1 and 2.