A) Dog Up! Franks is looking at a new sausage system with an installed cost of $506559. This cost will be depreciated straight-line to zero over the project's five-year life, at the end of which the sausage system can be scrapped for $73471. The sausage system will save the firm $175487 per year in pretax operating costs, and the system requires an initial investment in net working capital of $30680. If the tax rate is 38 percent and the discount rate is 9 percent, what is the NPV of this project?

A proposed bridge on the interstate highway system is being considered at the cost of 5 million dollars. It is expected the bridge will have a life of 30 years. Construction costs will be paid by government agencies. Operation and maintenance costs are estimated to be 180,000 per year. Benefits to the public are estimated to be 1,100,000 per year. The building of the bridge will result in an estimated cost of 250,000 per year to the general public. The project requires a return of 10 percent.

Determine the benefit/cost (B/C) ratio.

0.02

1.20

1.55

What is the link between our cost measurements and performance? Why is it important to be careful what you measure?

Find the net present value of a project with initial cost of $5,876,000 and produces the following cash flows: $3,200,000 at the end of year 1; $2,973,000 at the end of year 2; and $2,525,000 at the end of year 3. The required rate of return for the project is 15 percent.

A project costs $4,769,500 initially and produces the following cash flows: $1,000,000 at the end of year 1; $1,500,000 at the end of year 2; $1,860,000 at the end of year 3; and $2,000,000 at the end of year 4. calculate the project's internal rate of return.

The project below has a net present value of $2,300,000. Find the missing cash flow, if the discount rate is 12 percent.

A $1,000 face value bond has a bid quote of $101.472 and a bid ask spread of 0.205. What price must you pay to purchase this bond? Ignore any accrued interest or trading costs.

A bond that pays interest annually yields a rate of return of 7.25 percent. The inflation rate for the same period is 2.74 percent. What is the real rate of return on this bond?

Western Sports bonds have a face value of $1,000, mature in 9 years, pay interest semiannually, and have a coupon rate of 7.25 percent. The next interest payment will be paid two months from today. What is the dirty price of this bond if the market rate of return is 8.3 percent?

You are purchasing a bond with a face value of $1,000 and a coupon rate of 6.95 percent. The bond pays interest semiannually and has a yield to maturity of 7.23 percent. The bond matures in 6.5 years and pays its next interest in two months. What amount of accrued interest must you pay to purchase this bond today?

River Tours has 7.20 percent coupon bonds that pay interest semiannually. The face value of each bond is $1,000 and the current market price is $1,078.60. If the yield to maturity is 6.38 percent, how many years is it until these bonds mature?

A bond's price is quoted to sell at 94 percent of par. The bond has a face value of $25,000 and yield to maturity of 7.85 percent. If the bond matures 15 years from today and has semiannual payments, what is its coupon rate?

Which of the following bonds is subject to the greatest interest rate risk?

Which of the following items are generally included in a bond indenture?

I.   Sinking fund provisions/requirements

II. Security description

III. Bid and asked prices

IV. Total amount of bonds issued

Sussie's has a 7 percent profit margin and a dividend payout ratio of 30 percent. The total asset turnover is 1.6 and the debt-equity ratio is 0.4. What is the sustainable rate of growth?

The most recent financial information for Myfirm Inc. is as follows:

Assets and costs are proportional to sales. Debt and equity are not. A dividend of $424 was paid, and the company wishes to maintain a constant dividend payout ratio. Next year's sales are projected to be $10,682. What is the amount of the external financing need?

The Zhang/Tamara Inc. has a 12 percent return on assets and a 35 percent dividend payout ratio. What is its internal growth rate?

The most recent financial data for Tiger Eye Inc. is:

Assets and costs are proportional to sales. Debt and equity are not. No dividends or taxes are paid. Next year's sales are projected to be $5,673. What is the amount of the external financing needed?

Scenario analysis is defined as the:

Assume both the discount and tax rates are positive values. At the financial break-even point, the:

Smith and Jim Inc. is analyzing a proposed project. The company expects to sell $3,500 units ± 4 percent. The expected variable cost per unit is $310 and the expected fixed costs are $628,000. Costs estimates are considered accurate within plus or minus 3 percent range. The depreciation expense is $128,000. The sales price is estimated at $823 per unit, plus or minus 6 percent. What is the sales revenue under the worst case scenario?

Assume a project has a sales quantity of 9,700 units, plus or minus 5 percent and a sales price of $71 a unit, plus or minus 1 percent. The expected variable cost per unit is $12 ± 3 percent and the expected fixed costs are $295,000 plus or minus 2 percent. The depreciation expense is $82,000. The tax rate is 21 percent. What is the operating cash flow under the best-case scenario?

Mercury Inc. purchased equipment in 2019 at a cost of $212,000. The equipment was expected to produce 460,000 units over the next five years and have a residual value of $28,000. The equipment was sold for $115,600 part way through 2021. Actual production in each year was: 2019 = 65,000 units; 2020 = 104,000 units; 2021 = 52,000 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 $143,600, calculate the gain or loss on the sale.
4. Prepare the journal entry to record the sale in requirement 3.

In a random sample of ten cars, the mean minor repair cost was $150.00 and the standard deviation was $25.75. If the repair cost is assumed to be normally distributed, construct a 99% confidence interval for the population mean. Give your answer using two decimal digits:

1-the left end of the interval, LCL, is? ...

2- the right end of the interval, UCL, is?...

Explain the concept of cost allocation as it pertains to property, plant, and equipment and

intangible assets.

Determine periodic depreciation using both time-based and activity-based methods and

account for dispositions.

Calculate the periodic depletion of a natural resource.

Calculate the periodic amortization of an intangible asset.

Explain the appropriate accounting treatment required when a change is made in the service

life or residual value of property, plant, and equipment and intangible assets.

Explain the appropriate accounting treatment required when a change in depreciation,

amortization, or depletion method is made.

Explain the appropriate treatment required when an error in accounting for property, plant,

and equipment and intangible assets is discovered.

Identify situations that involve a significant impairment of the value of property, plant, and

equipment and intangible assets and describe the required accounting procedures.

Discuss the accounting treatment of repairs and maintenance, additions, improvements, and

rearrangements to property, plant, and equipment and intangible assets

Read and comment about the following statement and question. The Benefit – Cost analysis is a well – rooted method of evaluating public projects (Rigs, J, & West, T., 1986, page 234.). Do you think the government use this economic method or use other criteria for project evaluation?

Muncy, Inc., is looking to add a new machine at a cost of $4,133,250. The company expects this equipment will lead to cash flows of $817,822, $863,275, $937,250, $1,019,610, $1,212,960, and $1,225,000 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment?

22. Fillips, Inc. is trying to estimate is cost of capital.

- Fillips believes that the appropriate value of debt and equity is debt: $7000 and equity $13000

- Fillips has a tax rate of 30%.

- Fillips’ bonds currently trade in the market for a price of $835. These $1,000 par value bonds have a coupon rate of 10% (annual coupon payments) and they mature in 28 years.

- Fillips’ common stock trades for $22 per share. The dividend just paid by Fillips was $3.15 (D₀ = 3.15) and future dividends are expected to grow at a rate of 4% per year forever.

Assume that Fillips’ common stock is priced fairly using CAPM model.

What is Fillips’ cost of capital (WACC)?

a)14.32%

b)15.24%

c)18.89%

d)11.27%