5. A machine was acquired on January 1, 2018, at a cost of $80,000. The machine was originally estimated to have a residual value of $5,000 and an estimated life of 5 years. The machine is expected to produce a total of 100,000 components during its life, as follows: 15,000 in 2018, 20,000 in 2019, 20,000 in 2020, 30,000 in 2021, and 15,000 in 2022.

Instructions

(a)   Calculate the amount of depreciation to be charged each year, using each of the following methods :

       1.    Straight-line method

       2.    Units-of-production

       3.    Double diminishing-balance

(b)        Which method results in the highest depreciation expense during the first two years? Over all five years?

Company issues bonds at a price of $925 and a flotation cost of 1%.

The bond has an annual coupon rate of 5% and a maturity of 10 years.

The corporate tax rate is 40%.

Common stock sells at $30 per share and new issues would have a flotation cost of $2.

The last dividend paid was $3 per share and the growth rate of dividends is 6%.

Your firm’s capital structure is 20% debt, 20% retained earnings, and 60% common stock.

1. Compute the after-tax cost of debt
2. Compute the cost of common stock
3. Compute the cost of retained earnings
4. Compute the Weighted Average Cost of Capital

Venezuela Co. is building a new hockey arena at a cost of $2,500,000. It received a down payment of $500,000 from local businesses to support the project, and now needs to borrow $2,000,000 to complete the project. It therefore decides to issue $2,000,000 of 8%, 10 year bonds. These bonds were issued on January 1, 2014, and pay interest annually on each January 1, starting January 1, 2015. The bonds yield 10%. Venezuela paid $48,000 in bond issue costs related to the bond sale. Instructions a) Prepare the journal entry to record the issuance of the bonds and the related bond issue costs incurred on January 1, 2014. b) Prepare a bond amortization schedule up to and including January 1, 2018, using the effective interest method. c) Assume that on July 1, 2017, Venezuela Co. redeems half of the bonds at a cost of $980,000 plus accrued interest. Prepare the journal entry to record this redemption.

Cost of Units Completed and in Process

The charges to Work in Process—Assembly Department for a period, together with information concerning production, are as follows. All direct materials are placed in process at the beginning of production.

Cost per equivalent units of $1.40 for Direct Materials and $4.10 for Conversion Costs.

a. Based on the above data, determine the different costs listed below.

If required, round your interim calculations to two decimal places.

b. Did the production costs change from the preceding period?

c. Assuming that the direct materials cost per unit did not change from the preceding period, did the conversion costs per equivalent unitincrease, decrease, or remain the same for the current period?

Daily Enterprises is purchasing a$ 9.6million machine. It will cost $54,000 to transport and install the machine. The machine has a depreciable life of five years using​ straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of$ 4.1 million per year along with incremental costs of $1.1 million per year.​ Daily's marginal tax rate is 35%. You are forecasting incremental free cash flows for Daily Enterprises. What are the incremental free cash flows associated with the new​ machine?

The free cash flow for year 0 will be ​$

​(Round to the nearest​ dollar.)

Discuss the dangers of product cost distortion.

What can be done to minimize it?

A variance is the difference between a budgeted, planned, or standard cost and the actual amount
incurred/sold. Variances can be computed for both costs and revenues. Identify and explain the types
of variance analysis tools, which can be used in a production department of a manufacturing company,

(25 pts) Your corporation is considering the purchase of land for the cost of $60,000 and you estimate that 6 years from now there is a 100% probability to sell the land for $165,000. Holding costs consist of property taxes of $2000 each year. Assume that your corporation is in the 21% effective ordinary tax bracket and that profit from the sale of the land in 6 years will be taxed as ordinary income (ignore capital gain taxes, depreciation, deduction for interest expense), and your minimum rate of return is 14%. Determine:

a) What is the return on investment and NPV if paying cash for the land?

b) What is the return on investment and NPV if you borrowed $48,000 of the $60,000 at 8% interest per year with a mortgage agreement that provides monthly payments over 10 years. Assume the loan is paid off at the end of year 6 when you sell the property.

c) Is this an acceptable investment project and why?

d) Suppose that upon further analysis, there is an 85% probability that the land will sell for $200,000 at the end of year 6. What is the resulting cash and leverage NPV & ROR?

e) How does the analysis change; and is it still an acceptable project and why?

All answers should be calculated in excel

-I thought I had it figured out but my answers look ridiculous! Any help would be deeply appreciated!

The following cost and inventory data are taken from the accounting records of a Company for the year just completed:

Costs incurred:

Direct labor cost ................................................... $140,000
Purchases of raw materials .................................. $236,000
Manufacturing overhead ...................................... $160,000
Advertising expense ............................................. $180,000
Sales salaries ....................................................... $100,000
Depreciation, office equipment ............................ $6,000

Inventories: Beginning the Year End the Year
Raw materials ............................ $14,000 $30,000
Work in process .......................... $20,000 $10,000
Finished goods ............................ $40,000 $70,000

Required:
1. Prepare the cost of goods sold section of Company’s income statement for the year.