X Corporation exchanged a warehouse located in New York for a warehouse located in New Jersey. The adjusted basis of the New York warehouse was $30,000. The fair market value of the New Jersey warehouse just prior to the exchange was $25,000. In addition to the warehouse, X Corporation also received $8,000 in cash.

54.     The amount realized by X Corporation is:

The gain realized by X Corporation is:

The gain recognized by X Corporation on the exchange is:

The basis for X Corporation in the property received, the warehouse in New Jersey, is:

Trademark Inc. is planning to set up a new manufacturing plant in New York to produce safety tools. The company bought some land six years ago for $4.3 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent these facilities from a competitor instead. If the land were sold today, the company would sell for $4.6 million on an after-tax basis. In four years, the land could be sold for $4.8 million after taxes. The company hired a marketing firm to analyze the market at a cost of $250,000. Here is the summary of marketing report: We believe that the company will be able to sell 5,600, 6,300, 7,200, and 5,900 units each year for the next four years, respectively. We believe that $550 can be charged for each unit. We believe at the end of the four-year period, sales should be discontinued. The company believes that fixed costs for the project will be $615,000 per year. Variable costs are $462,000, $519,750, $594,000, 486,750 each year for the next four years, respectively. The equipment necessary for production will cost $2.5 million and will be depreciated according to a three-year MACRS schedule. At the end of the project, the equipment can be scrapped for $450,000. Net working capital of $325,000 will be required immediately. The company has a 21 percent tax rate, and the required return on the project is 9 percent.

Which of the following is true

$250,000 is an incremental cash flow and it will be part of the total project cash flow of year zero as an outflow.

$4,300,000 is an incremental cash flow since it is the original cost of land.

$4,800,000 is an opportunity cost and it will be part of the project cash flow of year zero as an outflow.

$4,600,000 is an opportunity cost and it will be part of the total project cash flow of year zero as an outflow.

$4,300,000 and $250,000 are sunk costs and they will be part of the total project cash flow of year zero as outflows.

What is the Year 2 depreciation expense

$833,250

$370,250

$185,250

$1,111,250

$370,379.63

What is the after-tax cash flow from the sale of the equipment?

$450,000

$185,250

$555,500

$355,500

$94,500

What is the capital spending cash flow of Year 0 and Year 4

Year 0:$2,500,000, outflow / Year 4:$4,800,000, inflow

Year 0:$7,100,000, outflow / Year 4:$5,155,500, inflow

Year 0:$7,100,000, outflow / Year 4:$5,250,000, inflow

Year 0:$6,800,000, outflow / Year 4:$5,155,500, inflow

Year 0:$2,500,000, outflow / Year 4:$355,500, inflow

What is the operating cash flow at Year 4?

$2,074,260.00

$1,732,070.00

$2,140,150

$2,251,042.50

$1,757,352.50

What is the project's NPV? Should you accept or reject the project?

(NO CHOICES)

1. A new machine will cost $600,000 including delivery and installation. The new unit has a CCA depreciation rate of 25 percent. At the end of four years, it will be sold for $100,000. The net working capital requirement required at the beginning of the first four years are $50,000, $60,000, $70,000, and $60,000.

   In the first year, revenue will increase by $150,000 and operating costs will decrease by $30,000. The difference between them, R−C, will grow at 3 percent. The tax rate is 30 percent, and the discount rate is 14 percent.

   (a) How will R − C in the next four years affect the project’s NPV?
   (b) How will the PVCCATS and the proceeds from the sale at the end of year 4 affect the project’s NPV?

   (c) How will net working capital in the next four years affect the project’s NPV? (d) What is the free cash flow in year 1?

   (e) What is the NPV of the project?

A new instruction is to be included in our core MIPS instruction subset.

This new true-op instruction is addm rt,disp(rs) which computes the sum of the contents of a memory word plus the contents of the rt register and places the sum back into the rt register.

a) Show the MIPS machine code format required for this new true-op instruction.

b) Are any changes to the multi-cycle datapath required to support this new true-op instruction? If so, describe the required changes.

c) Describe how the FSM (finite state machine) for our MIPS core instruction subset requires to be modified to support this new true-op instruction while continuing to support the other instructions within the subset without changing their behavior. In particular, what new or modified states, control signals and transitions are required?

Herrera Music is considering the sale of a new sound board used in recording studios.  The new board would sell for $25,500 and the company expects to sell 1,400 per year.  The company currently sells 1,900 units of its existing model per year.  If the new model is introduced, sales of the existing model will fall to 1,720 units per year.  The old board retails for $21,400.  Variable costs are 55 percent of sales, depreciation on the equipment to produce the new board will be $1,350,000 per year and fixed costs are $1,250,000 per year.  If the tax rate is 38 percent, what is the annual OCF for the project? Please post pictures on how you do this in excel step by step thank you !

You have been hired as the new cost accountant & operations manager for a new tax practice in Fayetteville, NC. You are responsible for several things that relate to a new tax office and ultimately the cost per tax return.

You do not do any tax preparation work, so your salary is not in the product cost.

Your salary is $48,000 per year, plus benefits, and you get $1.00 per tax return as an incentive.

Based on the following information, construct a memo that gives CVP analysis, the variable costs and fixed costs for the firm. Your final goal is to develop a cost per tax return to charge to potential clients. This is a real-world application and can have positive and negative issues.

Cost Data:

$5.00 per tax return for paper and printing

$5.00 per tax return for software

$40.00 per tax return for direct labor. Mr. McKenzie has agreed to prepare all tax returns for $40.00 per hour and can do all tax returns in 1-hour. He is an independent contractor, thus no payroll taxes or benefits.

The partner reviews the tax returns, and spends 10 minutes per return or $10.00 in review. This is QC for the process and not direct labor.

The partner makes $5,000 per month as a draw. There are no taxes paid by the practice, as this is a partnership. His wife works as the receptionist and is paid $3,000 per month, as a draw.

Your taxes, benefits and insurance are $3,000 per month for computation purposes.

Firm costs:

Rent- $1,500 per month

Phone/Internet- $500 per month

Copier- $500 per month

Utilities- $500 per month

Supplies- $1,000 per month

Business Insurance- $250 per month

Errors and Omission Insurance $250 per month.

Depreciation on computer and fixtures is $500 per month.

Miscellaneous firm costs are $500 per month and are not allocated to tax preparations.   

You expect to do 180 tax returns per month.

Presentations-

Memo format,

1-    Firm Name, location, website, and any marketing ideas

2-    Vision Statement

3-    Core Competencies

4-    Variable Costs- list and explain variable costs

5-    Fixed Costs- List and explain fixed costs

6-    Conclusion and any comments

7-    Price per tax return to charge clients

Is the decision to raise approximately $20 million to finance the new division exclusively using new equity likely to affect HK’s WACC? Explain why or why not in terms of financial leverage, component costs, and capital structure. What is the likely impact? (Note: A recalculation of the WACC is not required for this question.)

Dysound Inc. is considering a new project. The project will require $325,000 for new fixed assets, $95,000 for additional inventory and accounts receivable (working capital). The project has a 5-year life. The fixed assets belong to a 30% CCA class. At the end of the project there is no salvage cost. The net working capital returns to its original level at the end of the project. The project is expected to generate annual sales of $554,000 and costs of $430,000. The tax rate is 38% and the required rate of return is 15%. A) Find the NPV for the project. B) Find the PV of the Operating Cash Flow. C) Find the Project's total cash flow for the 1st year of the project

Nature’s Way Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 5,700 units at $54 each. The new manufacturing equipment will cost $129,600 and is expected to have a 10-year life and $9,900 residual value. Selling expenses related to the new product are expected to be 5% of sales revenue. The cost to manufacture the product includes the following on a per-unit basis:

Direct labor   $9.20
Direct materials   30.00
Fixed factory overhead-depreciation   2.10
Variable factory overhead   4.60
    Total   $45.90
Determine the net cash flows for the first year of the project, Years 2–9, and for the last year of the project. Use the minus sign to indicate cash outflows. Do not round your intermediate calculations but, if required, round your final answer to the nearest dollar.

Out of Eden, Inc.
Net Cash Flows

Year 1   Years 2-9   Last Year
Initial investment   $
Operating cash flows:          
Annual revenues   $
307,800
$
$
Selling expenses  
Cost to manufacture  
Net operating cash flows   $
$
$
Total for Year 1   $
Total for Years 2-9       $
Residual value          
Total for last year           $