After a critical analysis of the purchase options, we have narrowed our acquisition of the proposed factory machine to two candidate, KMP Leasing Company and GML Leasing Corporation.
Below are the details of responses from the shot listed companies:
Lease Terms – KMP Leasing Company
Purchase Price of machine $ 200000
Lease term 7 years
Estimated useful life of asset 10 years
Scrap value as a percentage of purchase price 20%
Depreciation method - straight method
Lease payments per year $33000 Marginal tax rate 21%
Current borrowing rate 7%
Determine the Net Present Value (NPV ) for each lease term using the after tax cost of borrowing ( marginal tax rate ) , and which lease term has the best deal for the company?
In: Accounting
Tix Corp. is a grocery store located in the Southwest. It paid an annual dividend of $2.00 last year to its shareholders and plans to increase the dividend annually at the rate of 3.0%. It currently has 1,000,000 common shares outstanding. The shares currently sell for $13 each. Four years ago, Tix Corp. issued 40,000 semiannual 22-year bonds with a coupon rate of 7% and a par value of $1,000. The bonds currently have a yield to maturity (YTM) of 6%. What is the weighted average cost of capital (WACC) for Tix Corp. if the corporate tax rate is 30%?
When answering this problem enter your answer using percentage notation but do not use the % symbol and use two decimals (rounding). For example, if your answer is 0.10469 then enter 10.47; if your answer is 10% then enter 10.00
In: Finance
A substantial portion of inventory owned by Prentiss Sporting
Goods was recently destroyed when the roof collapsed during a
rainstorm. Prentiss also lost some of its accounting records.
Prentiss must estimate the loss from the storm for insurance
reporting and financial statement purposes. Prentiss uses the
periodic inventory system. The following accounting information was
recovered from the damaged records:
| Beginning inventory | $ | 202,500 | |
| Purchases to date of storm | 403,200 | ||
| Sales to date of storm | 600,100 | ||
The value of undamaged inventory counted was $121,423.
Historically, Prentiss’s gross margin percentage has been
approximately 23 percent of sales.
Required
Estimate the following:
a. Gross margin in dollars.
b. Cost of goods sold in dollars.
c. Ending inventory.
d. Amount of lost inventory.
In: Accounting
Aeropostale, Inc., is a mall-based specialty retailer of casual apparel and accessories. The company concept is to provide the customer with a focused selection of high-quality, active-oriented fashions at compelling values. The items reported on its income statement for an earlier year (ended March 31) are presented here (dollars in thousands) in simplified form in alphabetical order:
| Cost of goods sold | $ | 1,733,916 |
| Interest expense | 417 | |
| Net revenue | 2,342,260 | |
| Other selling, general, and administrative expenses | 494,829 | |
| Provision for income taxes | 43,583 | |
| Weighted average shares outstanding | 81,208 | |
Required:
a. Prepare a classified (multiple-step) consolidated income statement (showing gross profit, operating income, and income before income taxes). Include a presentation of basic earnings per share.
b. What is the gross profit percentage?
In: Accounting
On January 1, 2017, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2017. Sales units: First quarter 5,800; second quarter 6,700; third quarter 7,200 Ending raw materials inventory: 40% of the next quarter’s production requirements Ending finished goods inventory: 25% of the next quarter’s expected sales units Third-quarter production: 7,800 units. The ending raw materials and finished goods inventories at December 31, 2016, follow the same percentage relationships to production and sales that occur in 2017. 4 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $5 per pound. Prpeare Production budget and Direct Material Budget
In: Accounting
A substantial portion of inventory owned by Prentiss Sporting
Goods was recently destroyed when the roof collapsed during a
rainstorm. Prentiss also lost some of its accounting records.
Prentiss must estimate the loss from the storm for insurance
reporting and financial statement purposes. Prentiss uses the
periodic inventory system. The following accounting information was
recovered from the damaged records:
| Beginning inventory | $ | 203,200 | |
| Purchases to date of storm | 404,800 | ||
| Sales to date of storm | 599,200 | ||
The value of undamaged inventory counted was $128,808.
Historically, Prentiss’s gross margin percentage has been
approximately 24 percent of sales.
Estimate the following:
a. Gross margin in dollars.
b. Cost of goods sold in dollars.
c. Ending inventory.
d. Amount of lost inventory.
In: Accounting
S
Selected information from the comparative financial statements of ZZ Tire Company for the year ended December 31, appears below:
|
2014 |
2013 |
||
|
Accounts receivable (net) |
$ 180,000 |
$200,000 |
|
|
Inventory |
140,000 |
160,000 |
|
|
Total assets |
1,200,000 |
800,000 |
|
|
Current liabilities |
140,000 |
110,000 |
|
|
Long-term debt |
400,000 |
300,000 |
|
|
Net credit sales |
1,330,000 |
700,000 |
|
|
Cost of goods sold |
900,000 |
530,000 |
|
|
Interest expense |
50,000 |
25,000 |
|
|
Income tax expense |
60,000 |
29,000 |
|
|
Net income |
150,000 |
85,000 |
There is no preferred stock and the tax rate is 30%.
Required:
Calculate each of the following for 2014:
a. Debt ratio
b. Debt-to-equity ratio
c. Times interest earned ratio
d. Gross margin percentage
e. Return on assets
f. Return on common stockholders’ equity
In: Accounting
Jarvie loves to bike. In fact, he has always turned down better-paying jobs to work in bicycle shops where he gets an employee discount. At Jarvie’s current shop, Bad Dog Cycles, each employee is allowed to purchase four bicycles a year at a discount. Bad Dog has an average gross profit percentage on bicycles of 25 percent. During the current year, Jarvie bought the following bikes:
| Description | Retail Price | Cost | Employee Price | |||
| Specialized road bike | $ | 7,900 | $ | 5,370 | $ | 5,530 |
| Rocky Mountain mountain bike | 8,600 | 7,300 | 6,880 | |||
| Trek road bike | 4,300 | 2,950 | 3,010 | |||
| Yeti mountain bike | 5,500 | 4,030 | 4,400 | |||
a. What amount is Jarvie required to include in taxable income from these purchases?
AMOUNT TO BE INCLUDED:
In: Accounting
Campbell Company makes and sells products with variable costs of $24 each. Campbell incurs annual fixed costs of $340,360. The current sales price is $91.
Note: The requirements of this question are interdependent. For example, the $268,000 desired to profit introduced in Requirement C also applies to subsequent requirements. Likewise, the $80 sales price introduced in requirement D applies to the subsequent requirements.
f) If variable cost rises to $30 per unit, what level of sales is required to earn the desired profit? Express your answer in units and dollars. Prepare an income statement using the contribution margin format.
g) Assume that Campbell concludes that it can sell 10,800 units of product for $80 each. Recall that variable costs are $30 each and fixed costs are $288,000. Compute the margin of safety in units and dollars and as a percentage.
In: Accounting
Luke Company has three divisions: Peak, View, and Grand. The
company has a hurdle rate of 6.51 percent. Selected operating data
for the three divisions follow:
| Peak | View | Grand | ||||
| Sales revenue | $ | 338,000 | $ | 236,000 | $ | 309,000 |
| Cost of goods sold | 211,000 | 116,000 | 191,000 | |||
| Miscellaneous operating expenses | 41,000 | 38,000 | 38,000 | |||
| Average invested assets | 1,260,000 | 880,000 | 1,165,000 | |||
|
1. Compute the return on investment for each division. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.)) (Find peak%,view% and grand % for ROI 2. Compute the residual income for each division. (Loss amounts should be indicated by a minus sign. Round your answers to nearest whole dollar.) (Find peak,view and grand.) |
||||||
In: Accounting