A German car will cost $45,000 and have fuel usage of 21mpg for the first 5 years, and decrease
by 1% thereafter to year 8. Repair cost will start at $1000 in year 1 and increase by 4% per year.
It will have a salvage value of $7000 at the end of year 8. Insurance cost will be $850 the first year,
increasing by 2% per year thereafter.
The American car will cost $35,000 and have fuel usage of 20mpg for the first 3 years, and will
decrease by 3% per year thereafter. Repair cost will be $800 in year 1, increasing by 4% per year
thereafter. Being an American, the graduate will price the pride of owning an American car at $0.4
for every 20 miles driven, increasing by 2% per year. Insurance cost will be $800 per year
increasing by 2.2% per year. The car can be sold for $5500 at the end of year 8.
If the graduate anticipates driving 150000 miles by the end of year 8 and the average interest rate
is expected to remain at 5% per year, which car is economically affordable based on present worth
analysis? Assume fuel cost will be $3 per gallon in year 1 and increase by an average of 2% per
year. Show all your workings.

Wells Printing is considering the purchase of a new printing press. The total installed cost of the press is $2.2 million. This outlay would be partially offset by the sale of an existing press. The old press has zero book value, cost $1 million 10 years ago, and can be sold currently for $1.2 million before taxes. As a result of acquisition of the new press, sales in each of the next 5 years are expected to be $1.6 million higher than with the existing press, but product costs (excluding depreciation) will represent 50% of sales. The new press will not affect the firm’s net working capital requirements. The new press will be depreciated under MACRS, using a 5-year recovery period. The firm is subject to a 40% tax rate. Wells Printing’s cost of capital is 11%. (Note: Assume that the old and the new presses will each have a terminal value of $0 at the end of year 6.) [15 marks]
i. Determine the initial investment required by the new press. [2 marks]
ii. Determine the operating cash flows attributable to the new press. (Note: Be sure to consider the depreciation in year 6.) [6 marks]
iii. Determine the payback period. [2 marks]
iv. Determine the net present value (NPV) and the internal rate of return (IRR) related to the proposed new press. [4 marks]
v. Make a recommendation to accept or reject the new press, and justify your answer. [1 marks]

Pricing is based on a cost-plus formula where costs are estimated then contracts are priced at 50% above cost. What would happen if Maya picked the “wrong” cost driver to set target costs and prices? What other implications may result from choosing the wrong cost driver?

1. Lower-of-Cost-or-Market Inventory

   On the basis of the following data, determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit 10.

   Product	Inventory Quantity	Cost Per Unit	Market Value per Unit (Net Realizable Value)
   Class 1:
   Model A	19	$299	$295
   Model B	23	78	86
   Model C	44	237	241
   Class 2:
   Model D	9	78	83
   Model E	9	244	228

   a. Determine the value of the inventory at the lower of cost or market applied to each item in the inventory.

   Inventory at the Lower of Cost or Market
   Product	Inventory Quantity	Cost per Unit	Market Value per Unit (Net Realizable Value)	Cost	Market	Lower of Cost or Market
   Model A		$	$	$	$	$
   Model B
   Model C
   Model D
   Model E
   Total				$	$	$

   b. Determine the value of the inventory at the lower of cost or market applied to each class of inventory.

   Inventory at the Lower of Cost or Market
   Product	Inventory Quantity	Cost per Unit	Market Value per Unit (Net Realizable Value)	Cost	Market	Lower of Cost or Market
   Class 1:
   Model A		$	$	$	$
   Model B
   Model C
   Subtotal				$	$	$
   Class 2:
   Model D				$	$
   Model E
   Subtotal				$	$
   Total				$	$	$

   c. Determine the value of the inventory at the lower of cost or market applied to total inventory.

   Inventory at the Lower of Cost or Market
   Product	Inventory Quantity	Cost per Unit	Market Value per Unit (Net Realizable Value)	Cost	Market	Lower of Cost or Market
   Model A		$	$	$	$
   Model B
   Model C
   Model D
   Model E
   Total				$	$	$

Check My Work

5. If the buyer of merchandise agrees to pay shipping costs, how is the cost recorded?
6. If the seller of merchandise agrees to pay shipping costs, how is the cost recorded?
7. Why would the seller of merchandise offer a discount for early payment?
8. Payment terms are: 4/10, n/50. What does this mean?
9. If the buyer takes advantage of the discount offered, what will happen to the cost of his/her merchandise?
10. When would the contra revenue account Sales Returns & Allowances be used?
11. When would the contra revenue account Sales Discount be used?
12. How will the two contra revenue accounts (in #10 and #11) affect sales?
13. What kind of account is inventory?
14. How is the inventory account adjusted?
15. For each account below, indicate whether it is a permanent account or temporary account:

a. Cost of Goods Sold
b. Sales Revenue
c. Sales Discount
d. Sales Returns & Allowances
e. Inventory

Linh purchased a boat at a cost of $12 000. The boat has an estimated residual value of $2 000 and an estimated life of five years, or 100 000 hours of operation. The boat was purchased on 1 July 2017, and was used 27 000 hours in 2017/18 and 26 000 hours in 2018/19.

What method of depreciation will maximise depreciation expense in 2017/18?

Group of answer choices

Reducing Balance

Unit of Activity

Straight-line

All methods produce the same depreciation expense for the year 2017/2018

A-Rod Manufacturing Company is trying to calculate its cost of capital for use in making a capital budgeting decision. Mr. Jeter, the vice-president of finance, has given you the following information and has asked you to compute the weighted average cost of capital.
The company currently has outstanding a bond with a 10.2 percent coupon rate and another bond with an 7.8 percent rate. The firm has been informed by its investment banker that bonds of equal risk and credit rating are now selling to yield 11.1 percent. The common stock has a price of $56 and an expected dividend (D1) of $1.76 per share. The historical growth pattern (g) for dividends is as follows:

$   1.31
    1.45
    1.60
    1.76

The preferred stock is selling at $76 per share and pays a dividend of $7.20 per share. The corporate tax rate is 30 percent. The flotation cost is 2.0 percent of the selling price for preferred stock. The optimum capital structure for the firm is 25 percent debt, 20 percent preferred stock, and 55 percent common equity in the form of retained earnings.

Growth Rate is 10% (10.343) - Correct Answer

b. Compute the cost of capital for the individual components in the capital structure. (Use the rounded whole percent computed in part a for g. Do not round any other intermediate calculations. Input your answers as a percent rounded to 2 decimal places.)

Cost of Debt = 7.77% - Correct Answer

Cost of preferred stock = 9.67 Correct Answer

Please resolve Cost of common stock = ????

WACC = Sum of (Weights x Costs)

= 7.77% x 25% + 9.67% x 20% + ???? x 55%

Please resolve the above two issues (????). Thank you and I appreciate your help.

Daily Enterprises is purchasing a $9.8 million machine. It will cost $51,000 to transport and install the machine. The machine has a depreciable life of five years and will have no salvage value. The machine will generate incremental revenues of $4.2 million per year along with incremental costs of $1.2 million per year. If​ Daily's marginal tax rate is 35%​, what are the incremental earnings​ (net income) associated with the new​ machine? The annual incremental earnings are nothing.

SHOW THE WORK PLEASE!

2

a.) Draw the demand, marginal revenue and marginal cost curve for a monopolist. Show the equilibrium price and quantity supplied and total profit. Show the equilibrium price and quantity supplied and total profit.

b.) Suppose new policy suggest the government can imposed a tax on monopolists equal to 25 percent of their economic profits, how this affect the output level of the firm? How about the price? Explain.