Jobs R Us, Inc. is a recruiting firm that specializes in post – college placement in the finance industry. Its clients are currently concentrated in the North-Eastern United States. It is contemplating expanding into the Mid-West and accesses the risk of the new venture to be similar to that of the existing company.
Your RBS summer intern created a summary for Jobs R Us, Inc. potential in the Midwest market over the next 5 years:
Revenue is expected to be $7,500,000 in the first year and grow 8% per year for the next 4 years.
Variable cost is expected to be 45% of revenue.
Fixed cost (including depreciation) is expected to be $1,250,000 of revenue each year.
Depreciation expense is expected to be $75,000 each year.
Maintenance capex is expected to be $150,000 each year.
Change in Net working capital is expected to be $100,000 in year 1, growing at the same percentage as revenue thereafter.
Taxes are 40%.
Initial investment today is estimated to be $2,500,000.
After tax cost of capital is 12%
What is the NPV?
(answer in millions. round to 1 decimal)
In: Finance
Greenwood Company manufactures two products—15,000 units of Product Y and 7,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y and Z:
Using the ABC system, what percentage of the Machine Setups is assigned to Product Y and Product Z?
| Activity cost pool | activity measure | estimated overhead cost | expected activity |
| Machining | machine hours | 216700 | 11000 |
| machine setups | number of setups | 79900 | 170 |
| production design | number of products | 81000 | 2 |
| general factory | direct labor hours | 247000 | 10000 |
| Activity measure | product Y | product Z | |
| machining | 67000 | 4300 | |
| number of setups | 60 | 110 | |
| number of products | 1 | 1 | |
| direct labor hours | 7700 | 2300 |
In: Accounting
A firm has projected the following financials for a possible project:
| YEAR | 0 | 1 | 2 | 3 | 4 | 5 |
|---|---|---|---|---|---|---|
| Sales | 136,856.00 | 136,856.00 | 136,856.00 | 136,856.00 | 136,856.00 | |
| Cost of Goods | 62,752.00 | 62,752.00 | 62,752.00 | 62,752.00 | 62,752.00 | |
| S&A | 30,000.00 | 30,000.00 | 30,000.00 | 30,000.00 | 30,000.00 | |
| Depreciation | 20,519.20 | 20,519.20 | 20,519.20 | 20,519.20 | 20,519.20 | |
| Investment in NWC | 1,171.00 | 542.00 | 542.00 | 542.00 | 542.00 | 542.00 |
| Investment in Gross PPE | 102,596.00 |
The firm has a capital structure of 33.00% debt and 67.00% equity.
The cost of debt is 8.00%, while the cost of equity is estimated at
15.00%. The tax rate facing the firm is 36.00%. (Assume that you
can't recover the final NWC position in year 5. i.e. only consider
the change in NWC for each year)
What is the WACC for the project?
Submit
Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))
In: Finance
Janice acquired an apartment building on June 4, 2020, for $1,600,000. The value of the land is $300,000. Assume Janice sold the apartment building on November 29, 2026.
If required, round your answers to the nearest dollar.
Click here to access the depreciation table to use for this problem.
a. How is the property classified for
MACRS?
b. What is the life of the asset for
MACRS?
c. Determine Janice's cost recovery deduction
for 2020 and 2026.
2020: $
2026: $
On April 30, 2019, Leo purchased and placed in service a new car that cost $78,600. The business use percentage for the car is always 100%. He does not take the additional first-year depreciation or any § 179.
If required, round your answers to the nearest dollar.
Click here to access the depreciation table of the textbook. Click here to access the limits for certain automobiles.
a. What MACRS convention applies to the new
car?
b. Is the automobile considered "listed
property"?
c. Leo's cost recovery deduction in 2019 is $ and for 2020 is $.
In: Accounting
Provided is the following data for Marina Bay, a boat repair shop.
|
Repairs |
Material Loading Charges |
|
|
Mechanics’ wages and benefits |
$103,500 |
|
|
Parts manager’s salary and benefits |
$11,500 |
|
|
Office employee’s salary and benefits |
20,700 |
2,300 |
|
Other overhead (supplies, depreciation, property taxes, advertising, utilities) |
26,800 |
14,400 |
|
Total budgeted costs |
$151,000 |
$28,200 |
Employees worked 5,000 hours for repair work. Marina Bay desires a profit margin of $8 per hour.
The total invoice cost of parts and materials used was $120,000. Marina Bay desires a 20% profit margin on the invoice cost of parts and materials.
Required
Using the time and material pricing
In: Accounting
McKinsey Machines Ltd manufactures a single product A. It has two cost centers namely molding department and painting department.
|
Information |
Molding Department |
Painting Department |
|
Total Manufacturing overheads |
$ 1,806,000 |
$ 2,205,000 |
|
Total Machine hours (estimated) |
210,000 |
|
|
Total Direct Labour Cost |
$ 1,260,000 |
McKinsey Ltd executes job no. 410. The cost and output details of Job No.410 are given below:
|
Information |
Molding Department |
Painting Department |
|
Direct Materials |
$ 1,410 |
$ 996 |
|
Direct Labour |
$ 870 |
$ 2,040 |
|
Number of machine hours used in job no. 410 |
330 hours |
|
|
Output (units) (expected to be received from Job No. 410) |
150 units |
|
Overheads allocation to Job No. 410 will be as follows:
(a) Molding department overheads will be allocated based on machine hours
(b) Painting Department overheads will be allocated using direct labour costs (as a percentage).
Required
(4) Explain why the costs reported under traditional costing and activity-based costing differ from one another?
In: Accounting
According to a survey, 10% of Americans are afraid to fly. Suppose 1100 Americans are sampled.
a) What is the probability that 121 or more americans in the survey are afraid to fly? Write your answer as a percentage rounded to two decimal places.
b) What is the probability that 165 or more americans in the survey are afraid to fly? Write your answer as a percentage rounded to two decimal places.
c) What is the probability that 8% or less of the americans surveyed answered they were afraid to fly? Write your answer as a percentage rounded to two decimal places.
In: Statistics and Probability
The body temperatures of a group of healthy adults have a bell-shaped distribution with a mean of
98.13 degrees°F
and a standard deviation of
0.53 degrees°F.
Using the empirical rule, find each approximate percentage below.
|
a. |
What is the approximate percentage of healthy adults with body
temperatures within 3 standard deviations of the mean, or between
96.54 degrees°F and 99.72 degrees°F? |
|
b. |
What is the approximate percentage of healthy adults with body
temperatures between
97.07 degrees°F and 99.19 degrees°F? |
In: Statistics and Probability
A bond has four years to maturity, an 8% annual coupon and a par value of $100. The bond pays a continuously compounded interest of 5%. a. What would the actual percentage change in the price of the bond be if the interest rate goes up from 5% to 6%? b. What would be the percentage change in the price of the bond implied by the duration approximation? c. What would be the percentage change in the price of the bond implied by the duration plus convexity approximation? d. Why does adding the convexity term to the approximation improve it?
In: Accounting
A bond has four years to maturity, an 8% annual coupon and a par value of $100. The bond pays a continuously compounded interest of 5%.
a. What would the actual percentage change in the price of the bond be if the interest rate goes up from 5% to 6%?
b. What would be the percentage change in the price of the bond implied by the duration approximation?
c. What would be the percentage change in the price of the bond implied by the duration plus convexity approximation?
d. Why does adding the convexity term to the approximation improve it?
In: Accounting