You have been asked to calculate the Return on Investment (ROI) for a project whose development will be accomplished during a single calendar year with the go-live date of Jan 1st The project, to develop a new Web-based ordering and fulfillment system, has already been conceptualized, and the team has provided estimates and a partial resource plan. Labor Operating expenses in years 2 through 5 are projected to be $57,000 annually. Miscellaneous expenses in years 2 through 5 are projected to be $6,500 annually. The benefit is projected to be $225,000 the first year of operation, increasing 11% each year. Hardware cost that would be installed for development is $100,000. You’ll need to complete the resource plan, the 5 year planning sheet, and calculate a 5 year ROI. Please finish filling out these tables and answer the associated questions.
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Development Team |
Quantity |
$/hour |
Hours/each resource |
Total Hours |
Total Dollars |
|
Program Director |
1 |
95 |
500 |
||
|
Project Manager |
1 |
95 |
1000 |
||
|
BA |
1 |
95 |
750 |
||
|
Development Lead |
1 |
80 |
1000 |
||
|
QA Lead |
1 |
80 |
1000 |
||
|
Off-Shore Developers |
6 |
25 |
750 |
||
|
Off-Shore QA |
4 |
25 |
750 |
||
|
Total |
|
Expense |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
Labor |
|||||
|
Hardware |
|||||
|
Misc |
|
Benefit |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
Benefit |
|||||
Question 1 [2 points]: What is the total labor cost of development?
Question 2 [2 points]: What is the total expense of this project projected to be for the first 5 year period?
Question 3 [2 points]: What is the total benefit projected to be for the first year?
Question 4 [2 points]: What is the total benefit projected to be for the first five years?
Question 5 [2 points]: Given ROI % = ((Benefit – Cost) / Cost)*100, what is the 5 year ROI for this project?
Question 6 [2 points]: If the company could just put the money to cover the project expenses in the bank (instead of doing this project) it could make a investment gain of 7% over this same 5 year period. Should the company invest in this project, or put the money in the bank? Why?
Question 7 [4 points]: Describe in your own words BRIEFLY why APO05 and APO06 are important to project funding selection based on ROI calculation.
In: Operations Management
This is all one question with several parts for my accounting homework. I've tried but I keep getting the wrong answer please help.
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 if your formulas are correct, you should get the correct answers to the following questions. (a) What is the net operating income (loss) in Year 1 under absorption costing?(b) What is the net operating income (loss) in Year 2 under absorption costing? (c) What is the net operating income (loss) in Year 1 under variable costing? (d) What is the net
operating income (loss) in Year 2 under variable costing? (e) The net operating income (loss) under absorption costing is less than the net operating income (loss) under variable costing in Year 2 because:
Make a note of the absorption costing net operating income (loss) in Year 2. At the end of Year 1, the company’s board of directors set a target for Year 2 of net operating income of $40,000 under absorption costing. If this target is met, a hefty bonus would be paid to the CEO of the company. Keeping everything else the same from part (2) above, change the units produced in Year 2 to 3,800 units. (a) Would this change result in a bonus being paid to the CEO?
(b) What is the net operating income (loss) in Year 2 under absorption costing (c) Would this doubling of production in Year 2 be in the best interests of the company if sales are expected to continue to be 2,100 units per year?
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In: Accounting
When doing your calculations, round to the nearest whole dollar amount AND the nearest whole number of shares, Enter your answers in whole dollar amounts, without '$' signs and without commas.
This fact pattern spans three years. All eight requirements are based on this fact pattern. However, #1 only asks the balance in the Common Stock account at the end of Year 2.
●Issuance of Shares: Company issued 6,000 common shares with a $10 per share par value for $95,000 cash early in Year 1. At the same time the firm issued 500 shares of its $50 par value 8% preferred stock for $35,000 cash. The preferred shares are participating and cumulative. In Year 1, Company had Net Income of $70,000.
●On January 1, Year 2, the firm issued a 30% common stock dividend when the shares had a fair market value of $25 per share. No cash dividends were paid in Year 2. During Year 2, the firm had Net Income of $75,000.
When doing your calculations, round to the nearest whole dollar amount. When entering your answers, round to the nearest whole dollar amount, do not use '$' signs OR commas.
#1: Common Stock balance at the end of Year 2: ______________
The other requirements are shown here for your convenience in responding to all the requirements in this quiz.
#2: Retained Earnings balance at the end of Year 2: _____________
●Early in Year 3, Company distributed a 10% common stock dividend when the fair market value of the common shares was $28 each. Net Income in Year 3 was $80,000. The firm declared and distributed a cash dividend in Dec. Year 3 in the amount of $29,000.
#3: Retained Earnings balance at Dec. 31, Year 3 _____________
#4: Cash paid to common shareholders in Year 3: _____________
#5: Balance in Common Stock account at Dec. 31, Yr 3: _____________
●On Jan. 1, Year 4, Company declared and distributed a 5% stock dividend when the fair market value of each common share was $40. Cash dividends declared and distributed late in Year 4 amounted to $38,000. Net Income for Year 4 was $85,000.
#6: Retained Earnings balance at Dec. 31, Year 4 $_____________
#7: Cash paid to preferred shareholders in Year 4: $_____________
#8: Balance in Common Stock account at Dec. 31, Yr. 4: $_____________
In: Accounting
Hank, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December, he performed $21,000 of legal services for a client. Hank typically requires his clients to pay his bills immediately upon receipt. Assume his marginal tax rate is 32 percent this year and will be 37 percent next year, and that he can earn an after-tax rate of return of 4 percent on his investments. a. What is the after-tax income if Hank sends his client the bill in December? b. What is the after-tax income if Hank sends his client the bill in January? Use Exhibit 3.1. (Round your answer to the nearest whole dollar amount.) c. Based on requirement a and b, should Hank send his client the bill in December or January? 4% 5% 6% 7% 8% 9% 10% 11% 12% Year 1 .962 .952 .943 .935 .926 .917 .909 .901 .893 Year 2 .925 .907 .890 .873 .857 .842 .826 .812 .797 Year 3 .889 .864 .840 .816 .794 .772 .751 .731 .712 Year 4 .855 .823 .792 .763 .735 .708 .683 .659 .636 Year 5 .822 .784 .747 .713 .681 .650 .621 .593 .567 Year 6 .790 .746 .705 .666 .630 .596 .564 .535 .507 Year 7 .760 .711 .665 . .623 .583 .547 .513 .482 .452 Year 8 .731 .677 .627 .582 .540 .502 .467 .434 .404 Year 9 .703 .645 .592 .544 .500 .460 .424 .391 .361 Year 10 .676 .614 .558 .508 .463 .422 .386 .352 .322 Year 11 .650 .585 .527 .475 .429 .388 .350 .317 .287 Year 12 .625 .557 .497 .444 .397 .356 .319 .286 .257 Year 13 .601 .530 .469 .415 .368 .326 .290 .258 .229 Year 14 .577 .505 .442 .388 .340 .299 .263 .232 .205 Year 15 .555 .481 .417 .362 .315 .275 .239 .209 .183
In: Accounting
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1. Change all of the numbers in the data area of your worksheet so that it looks like this:
If your formulas are correct, you should get the correct answers to the following questions. (a) What is the net operating income (loss) in Year 1 under absorption costing?(b) What is the net operating income (loss) in Year 2 under absorption costing? (c) What is the net operating income (loss) in Year 1 under variable costing? (d) What is the net operating income (loss) in Year 2 under variable costing? (e) The net operating income (loss) under absorption costing is less than the net operating income (loss) under variable costing in Year 2 because (You may select more than one answer.)
3. Make a note of the absorption costing net operating income (loss) in Year 2. At the end of Year 1, the company’s board of directors set a target for Year 2 of the net operating income of $70,000 under absorption costing. If this target is met, a hefty bonus would be paid to the CEO of the company. Keeping everything else the same from part (2) above, change the units produced in Year 2 to 5,400 units. (a) Would this change result in a bonus being paid to the CEO? Yes or No?(b) What is the net operating income (loss) in Year 2 under absorption costing? (c) Would this doubling of production in Year 2 be in the best interests of the company if sales are expected to continue to be 2,900 units per year? yes or no? |
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In: Accounting
1)Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.73 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,090,000 in annual sales, with costs of $783,000. The project requires an initial investment in net working capital of $310,000, and the fixed asset will have a market value of $215,000 at the end of the project. a. If the tax rate is 21 percent, what is the project’s Year 1 net cash flow? Year 2? Year 3? Table 8.3. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) b. If the required return is 13 percent, what is the project's NPV? (Enter your answer in dollars, not millions of dollars. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 1,234,567.89.)
Year 0 Cash Flow:
Year 1 Cash Flow:
Year 2 Cash Flow:
Year 3 Cash Flow:
NVP:
2)
| Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.61 million. The fixed asset qualifies for 100 percent bonus depreciation. The project is estimated to generate $2,050,000 in annual sales, with costs of $751,000. The project requires an initial investment in net working capital of $270,000, and the fixed asset will have a market value of $275,000 at the end of the project. |
| a. | If the tax rate is 23 percent, what is the project’s Year 1 net cash flow? Year 2? Year 3? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) |
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b. If the required return is 15 percent, what is the project's NPV? (Enter your answer in dollars, not millions of dollars. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 1,234,567.89.) Year 0 Cash Flow: Year 1 Cash Flow Year 2 Cash Flow Year 3 Cash Flow NPV |
In: Finance
(a) A city is spending $10 million on building a new sewage system. Suppose the annual operating expenses for the system are projected to be $6,000 for each year, starting in year one and continuing forever. And maintenance expense of $20,000 starts in year five, repeating every five years thereafter and continuing forever. If the city’s MARR is 10% per year, what is the capitalized worth of the system?
b. Alice deposits $2,000 in a savings account now which offers a variable rate of interest. She plans to withdraw all her money in 5 years. During the period, the annual interest rate paid on her deposits in this account changes each year. How much will Alice receive upon withdrawing her money after 5 years?
The interest rates which will be offered by the savings account in the next 5 years are stated as follows:
|
Year |
Interest Rate |
|
Year 1 |
8% |
|
Year 2 |
10% |
|
Year 3 |
9% |
|
Year 4 |
10% |
|
Year 5 |
10% |
c. )
Consider two mutually exclusive alternatives A and B. Assume MARR = 10% per year, the alternatives are repeatable and the study period is 20 years, which alternative would you choose? Use both AW and PW methods of analysis.
|
Alternative A |
Alternative B |
|
|
Capital investment |
$50,000 |
$20,000 |
|
Operating costs |
$5,000 at end of year 1 and increasing by $500 per year thereafter |
$10,000 at end of year 1 and increasing by $1,000 per year thereafter |
|
Overhaul costs |
$5,000 every 5 years |
None |
|
Life |
20 years |
10 years |
|
Salvage value |
$10,000 |
Negligible |
d. John has purchased a bond that was issued by ABC Medical. The bond has a face value of $10,000 and will mature in eight years. The coupon rate of the bond is 8% per year, and interest payments are made to the bondholder every quarter. John bought the bond five years ago at the face value and he wants to sell it now for a price that will allow him to earn an annual yield of 12% compounded quarterly. How much does John need to sell the bond for to earn his desired return?
In: Accounting
A bonus package pays an employee $1,000 at the end of the first year, $1,500 at the end of the second year, $2,000 at the end of the third year, and so on, continuing to increase by $500 every year for the first nine years of employment. What is the present value today of the bonus package at 9% interest?
In: Finance
A person is paying back a loan at 5% effective rate, with payments at the end of each year for 10 years, such that the payment the first year is $200, the second year is $190, etc. until it reaches $110, on the 10th year.
In: Finance
A person is paying back a loan at 5% effective rate, with payments at the end of each year for 10 years, such that the payment the first year is $200, the second year is $190, etc. until it reaches $110, on the 10th year.
In: Finance