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Oak Mart, a producer of solid oak tables, reports the following data from its second year of business.

2. Prepare the current-year income statement for the company using absorption costing.

Cornerstone Exercise 8.11 (Algorithmic)
Cash Receipts Budget and Accounts Receivable Aging Schedule

Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the following sales:

In Shalimar’s experience, 10 percent of sales are paid in cash. Of the sales on account, 65 percent are collected in the quarter of sale, 25 percent are collected in the quarter following the sale, and 7 percent are collected in the second quarter after the sale. The remaining 3 percent are never collected. Total sales for the third quarter of the current year are $5,710,000 and for the fourth quarter of the current year are $7,170,000.

Required:

1. Calculate cash sales and credit sales expected in the last two quarters of the current year, and in each quarter of next year.

What is the present value of the payment stream discounted at 5% annually: $1000 at the end of year 1, -$2000 at the end of year 2, and $3000 at the end of year 3? Also calculate future value of the cash flows at the end of year 3. Financial calculator not allowed for this question. Show all work!

1. Suppose the government imposes a tax on gasoline.

1. Would the revenue collected from this tax likely be greater in the first year after it is imposed or in the fifth year? Explain using a graph.
2. Would the deadweight loss from this tax be greater in the first year after it is imposed or in the fifth year? Explain using a graph.

The B/C ratio for a flood control project along the Swanee River was calculated to be 1.4. If the benefits were $600,000 per year and the maintenance costs were $200,000 per year, determine the initial cost of the project at an interest rate of 8% per year and a 50-year life. ( using spreadsheet)

A company is considering purchasing equipment costing $ 92,000. The equipment is expected to reduce costs from year 1 to 3 by $22,000, year 4 to 9 by $9,000,and in year 10 by $2,000. In year 10, the equipment can be sold at a salvage value of $15,000.

Calculate the internal rate of return​ (IRR) for this proposal.

1. What is the NPV of an equipment investment that costs $150,000 and returns $80,000 in the first year but then declines by 8%/year with the final cash flow coming in year 5? Also assume a discount rate of 9.4% and that the equipment can be sold for $45,000 at the end of the fifth year.
   1. $250,000
   2. $266,400
   3. $116,400
   4. $190,900
   5. $145,100

Suppose that the spot interest rate on a one-year zero-coupon bond is 2% and the spot interest rate on a two-year zero-coupon bond is 3.5%. Based on the pure expectations theory of the term structure of interest rates, what is the expected one-year interest rate starting in one year?