Aramark is considering a 3-year project with an initial cost of $570,000. The project will not directly produce any sales but will reduce operating costs by $147,000 a year. The equipment is classified as MACRS 7-year property. The MACRS table values are .1429, .2449, .1749, .1249, .0893, .0892, .0893, and .0446 for Years 1 to 8, respectively. At the end of the project, the equipment will be sold for an estimated $295,000. The tax rate is 25 percent and the required return is 12 percent. An extra $41,000 of inventory will be required for the life of the project. What is the total cash flow for Year 3? $459,738.50 $465,546.17 $476,218.44 $481,983.20 $488,549.26

A firm can lease a truck for 5 years at a cost of $42,000 annually. It can instead buy a truck at a cost of $92,000, with annual maintenance expenses of $22,000. The truck will be sold at the end of 5 years for $32,000.

a. What is the equivalent annual cost of buying and maintaining the truck if the discount rate is 12%? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b. Which is the better option?

Buy

Lease

For a firm to maximize profit, it must minimize the cost of producing whatever quantity it produces. Use the isocost and isoquant tools to present a firm that is choosing the optimal levels of labor and capital (i.e., tools) to produce a certain quantity and a certain cost. Then, show in your diagram how this firm would respond if it were to expand and spend more on its inputs, assuming it is best for the firm to become more “capital intensive” as it grows. Comment on WHY a firm might best become more capital intensive as it expands, even when the relative prices of labor and capital remain unchanged.

Cost of debt with fees. Kenny Enterprises will issue a bond with a par value of ​$1,000​, a maturity of twenty​ years, and a coupon rate of 11.6​% with semiannual​ payments, and will use an investment bank that charges ​$30 per bond for its services. What is the cost of debt for Kenny Enterprises at the following market​ prices? (ROUND TO TWO DECIMAL PLACES.)

a. ​$954.14 = ____%?

b. ​$1,017.02 = ____%?

c. 1,057.63 = ____%?

d. ​$1,136.54 = ____%?

You are evaluating a proposed expansion of an existing subsidiary located in Switzerland. The cost of the expansion would be SF24 million. The cash flows from the project would be SF6.2 million per year for the next five years. The dollar required return is 10 percent per year, and the current exchange rate is SF1.05. The going rate on Eurodollars is 6 percent per year. It is 4 percent per year on Swiss francs.

a. Convert the projected franc flows into dollar flows and calculate the NPV. NPV $ =

b. What is the required return on franc flows? Return on franc flows % =

c. What is the NPV of the project in Swiss francs? NPV SF =

d. What is the NPV in dollars if you convert the franc NPV to dollars? NPV $ =

A pet association claims that the mean annual cost of food for dogs and cats are the same. The results for samples for the two types of pets are shown below. At

alphaαequals=0.05

can you reject the pet​ association's claim? Assume the population variances are not equal. Assume the samples are random and​ independent, and the populations are normally distributed. Complete parts​ (a) through​ (e) below.

​(a) Identify the claim and state

Upper H0

and

Upper H Subscript aHa.

Which is the correct claim​ below?

A.

​"The mean annual cost of food for cats is greater than the cost for​ dogs."

B.

​"The mean annual cost of food for dogs is greater than the cost for​ cats."

C.

​"The mean annual costs of food for dogs and cats are​ equal."

D.

​"The mean annual costs of food for dogs and cats are not​ equal."

What are

Upper H0

and

Upper H Subscript aHa​?

The null​ hypothesis,

Upper H0​,

is

(1)

The alternative​ hypothesis,

Upper H Subscript aHa​,

is

(2)

Which hypothesis is the​ claim?

The alternative​ hypothesis, Upper H Subscript aHa

The null​ hypothesis, Upper H0

​(b) Find the critical​ value(s) and identify the rejection​ region(s).

Enter the critical​ value(s) below.

nothing

​(Type an integer or decimal rounded to three decimal places as needed. Use a comma to separate answers as​ needed.)

Select the correct rejection​ region(s) below.

A.

t greater than t 0t>t0

B.

negative t 0 less than t less than t 0−t0<t<t0

C.

t less than minus t 0 comma t greater than t 0t<−t0, t>t0

D.

t less than minus t 0t<−t0

​(c) Find the standardized test statistic.

tequals=_________

​(Type an integer or decimal rounded to three decimal places as​ needed.)

​(d) Decide whether to reject or fail to reject the null hypothesis.

(3)

the null hypothesis.

​(e) Interpret the decision in the context of the original claim.

At the

five percent

significance​ level,

(4)

enough evidence to reject the claim that the mean annual costs of food for dogs and cats are the same.

Which of the options below is correct?

(1)

mu 1 equals mu 2 .μ1=μ2.

mu 1 less than or equals mu 2 .μ1≤μ2.

mu 1 greater than or equals mu 2 .μ1≥μ2.

(2)

mu 1 not equals mu 2 .μ1≠μ2.

mu 1 greater than mu 2 .μ1>μ2.

mu 1 less than mu 2 .μ1<μ2.

(3)

Fail to reject

Reject

(4)

there is not

there is

A new machine will provide the following net annual cash inflows. If the cost of the machine is $12,000, what is the payback period? What is the discounted payback period if the discount rate is 10%?

Year    Cash Inflow

1 $ 1,345

2. 2,605

3 4,509

4 5,219

5 4,481

6 3,823

7 3,500

There are various depreciation methods that require an adjustment to Cost for the asset's estimated residual value. These are 1) Straight-line, 2) Units-of-Production, and 3) Sum-of-the-years-digits.

For Double-Declining, no adjustment to cost is made. The residual value is left un-depreciated at the end.

A New Truck had a cost of $35,000 and was expected to operate for five years. It is estimated to be worth $3,000 at the end of it's useful life of 100,000 miles. The truck was used 25,000 miles in year one and 20,000 in year two.

A) Under each of these methods what will be the book value of the truck at the end of it's useful life?
B) How much is year one's depreciation using sum-of-the year digits, unit-of-production and double-declining balance.

Mercury Inc. purchased equipment in 2019 at a cost of $138,000. The equipment was expected to produce 500,000 units over the next five years and have a residual value of $38,000. The equipment was sold for $78,200 part way through 2021. Actual production in each year was: 2019 = 70,000 units; 2020 = 112,000 units; 2021 = 57,000 units. Mercury uses units-of-production depreciation, and all depreciation has been recorded through the disposal date.

Required:
1. Calculate the gain or loss on the sale.
2. Prepare the journal entry to record the sale.
3. Assuming that the equipment was instead sold for $105,200, calculate the gain or loss on the sale.
4. Prepare the journal entry to record the sale in requirement 3.