A small solid sphere of mass M0, of radius
R0, and of uniform density ρ0 is placed in a
large bowl containing water. It floats and the level of the water
in the dish is L. Given the information below, determine the
possible effects on the water level L, (R-Rises, F-Falls,
U-Unchanged), when that sphere is replaced by a new solid sphere of
uniform density.
Read it to me
R F U R or U F or U R or F or U The new sphere has
density ρ = ρ0 and radius R > R0
R F U R or U F or U R or F or U The new sphere has
radius R = R0 and density ρ > ρ0
R F U R or U F or U R or F or U The new sphere has
density ρ < ρ0 and mass M = M0
R F U R or U F or U R or F or U The new sphere has
radius R > R0 and density ρ < ρ0
R F U R or U F or U R or F or U The new sphere has mass
M = M0 and radius R < R0
R F U R or U F or U R or F or U The new sphere has mass
M < M0 and density ρ = ρ0
In: Physics
Factor Company is planning to add a new product to its line. To
manufacture this product, the company needs to buy a new machine at
a $540,000 cost with an expected four-year life and a $26,000
salvage value. All sales are for cash, and all costs are
out-of-pocket, except for depreciation on the new machine.
Additional information includes the following. (PV of $1, FV of $1,
PVA of $1, and FVA of $1) (Use appropriate factor(s) from
the tables provided. Round PV factor value to 4 decimal
places.)
| Expected annual sales of new product | $ | 1,990,000 | |
| Expected annual costs of new product | |||
| Direct materials | 486,000 | ||
| Direct labor | 678,000 | ||
| Overhead (excluding straight-line depreciation on new machine) | 396,000 | ||
| Selling and administrative expenses | 166,000 | ||
| Income taxes | 30 | % | |
Required:
1. Compute straight-line depreciation for each
year of this new machine’s life.
2. Determine expected net income and net cash flow
for each year of this machine’s life.
3. Compute this machine’s payback period, assuming
that cash flows occur evenly throughout each year.
4. Compute this machine’s accounting rate of
return, assuming that income is earned evenly throughout each
year.
5. Compute the net present value for this machine
using a discount rate of 6% and assuming that cash flows occur at
each year-end. (Hint: Salvage value is a cash inflow at
the end of the asset’s life.)
In: Accounting
#1) The owners’ equity accounts for Trans World International are shown here: Common stock ($1 par value) $ 85,000 Capital surplus 227,000 Retained earnings 750,000 ________________________________________ ________________________________________ ________________________________________ ________________________________________ Total owners’ equity $ 1,062,000 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ Requirement 1: Assume Trans World stock currently sells for $28 per share and a stock dividend of 20 percent is declared. (a) How many new shares will be distributed? New shares issued (b) Show the new balance for each equity account. Common stock $ Capital surplus Retained earnings ________________________________________ ________________________________________ ________________________________________ ________________________________________ Total owners’ equity $ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ Requirement 2: Now assume that instead Trans World declares a stock dividend of 24 percent. (a) How many new shares will be distributed? New shares issued (b) Show the new balance for each equity account. Common stock $ Capital surplus Retained earnings ________________________________________ ________________________________________ ________________________________________ ________________________________________ Total owners’ equity $ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ #2) The company with the common equity accounts shown here has declared a 13 percent stock dividend at a time when the market value of its stock is $43 per share. Common stock ($1 par value) $ 470,000 Capital surplus 1,555,000 Retained earnings 3,878,000 ________________________________________ ________________________________________ Total owners’ equity $ 5,903,000 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ Required: Show the new equity account balances after the stock dividend distribution. Common stock $ Capital surplus Retained earnings ________________________________________ Total owners’ equity $ ________________________________________________________________________________ ________________________________________
In: Accounting
Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information:
| Present Truck |
New Truck |
|||||
| Purchase cost new | $ | 32,000 | $ | 40,000 | ||
| Remaining book value | $ | 19,000 | - | |||
| Overhaul needed now | $ | 18,000 | - | |||
| Annual cash operating costs | $ | 16,500 | $ | 14,000 | ||
| Salvage value-now | $ | 8,000 | - | |||
| Salvage value-five years from now | $ | 7,000 | $ | 6,000 | ||
If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be diesel-operated, resulting in a substantial reduction in annual operating costs, as shown above.
The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 11% discount rate.
Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.
Required:
1. What is the net present value of the “keep the old truck” alternative?
2. What is the net present value of the “purchase the new truck” alternative?
3. Should Bilboa Freightlines keep the old truck or purchase the new one?
In: Accounting
Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information:
|
Present Truck |
New Truck |
|||||
| Purchase cost new | $ | 35,000 | $ | 50,000 | ||
| Remaining book value | $ | 25,000 | - | |||
| Overhaul needed now | $ | 24,000 | - | |||
| Annual cash operating costs | $ | 18,500 | $ | 18,000 | ||
| Salvage value-now | $ | 15,000 | - | |||
| Salvage value-five years from now | $ | 11,000 | $ | 9,000 | ||
If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be diesel-operated, resulting in a substantial reduction in annual operating costs, as shown above.
The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 13% discount rate.
Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.
Required:
1. What is the net present value of the “keep the old truck” alternative?
2. What is the net present value of the “purchase the new truck” alternative?
3. Should Bilboa Freightlines keep the old truck or purchase the new one?
In: Accounting
Question 16
Imagine that exactly 5 years ago, a team of epidemiologists identified a study population of 4,500 men, 65-74 years, in Cedar Rapids, Iowa, to determine the incidence (or risk) of prostate cancer. Initial tests indicated that 515 of the men already had prostate cancer (and therefore not at risk). The remaining men were followed for 5 years to determine the cumulative incidence of prostate cancer. By the end of the follow-up, 156 men had developed prostate cancer. What was 5-year cumulative incidence?
|
37 new cases of prostate cancer per 1,000 men over the 5-year study |
||
|
38 new cases of prostate cancer per 1,000 men over the 5-year study |
||
|
39 new cases of prostate cancer per 1,000 men over the 5-year study |
||
|
40 new cases of prostate cancer per 1,000 men over the 5-year study |
||
|
41 new cases of prostate cancer per 1,000 men over the 5-year study |
Question 17
Imagine that a study
of prostate cancer was initiated in Des Moines, Iowa. A total of
1,000 men, 55-64 years of age, with no prior evidence of prostate
cancer were enrolled in a 4 year study. Each year during the study,
the men being observed were examined and tested for presence of
prostate cancer. The results of annual examinations revealed:
20 cases confirmed at 1st
exam
25 additional cases at 2nd
exam
40 additional cases at 3rd
exam
45 additional cases at 4th
(final) exam
What is incidence density of prostate cancer in this group?
|
18 new cases of prostate cancer per 1,000 person-years in the study |
||
|
34 new cases of prostate cancer per 1,000 person-years in the study |
||
|
37 new cases of prostate cancer per 1,000 person-years in the study |
||
|
42 new cases of prostate cancer per 1,000 person-years in the study |
||
|
105 new cases of prostate cancer per 1,000 person-years in the study |
In: Statistics and Probability
Problem 13-28 Net Present Value Analysis [LO13-2]
Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information:
| Present Truck |
New Truck |
|||||
| Purchase cost new | $ | 35,000 | $ | 50,000 | ||
| Remaining book value | $ | 25,000 | - | |||
| Overhaul needed now | $ | 24,000 | - | |||
| Annual cash operating costs | $ | 18,500 | $ | 18,000 | ||
| Salvage value-now | $ | 15,000 | - | |||
| Salvage value-five years from now | $ | 11,000 | $ | 9,000 | ||
If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be diesel-operated, resulting in a substantial reduction in annual operating costs, as shown above.
The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 13% discount rate.
Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.
Required:
1. What is the net present value of the “keep the old truck” alternative?
2. What is the net present value of the “purchase the new truck” alternative?
3. Should Bilboa Freightlines keep the old truc
What is the net present value of the “keep the old truck” alternative? (Enter negative amount with a minus sign. Round your final answer to the nearest whole dollar amount.)
|
What is the net present value of the “purchase the new truck” alternative? (Enter negative amount with a minus sign. Round your final answer to the nearest whole dollar amount.)
|
Should Bilboa Freightlines keep the old truck or purchase the new one?
|
k or purchase the new one?
In: Accounting
Due to the recovery that is threatening to cause sales togrow faster than the company can produce output, City Manufacturing, Inc. has decided to change its credit terms from net 35 days to net 30 days. City believes that this policy change will keep sales at their current level, but decrease the firm’s averagecollection period by 5 days (from 35 days to 30 days). Assume that this policy change will have no effect on costs, and because it also will have no effect on sales, it will have no impact on net income.
36.If any asset change(s) resulting from this new policy will be offset by a corresponding and equal change in short-term debt (i.e., notes payable), all else constant, this new policy should cause the firm’s current ratio (assuming an initial current ratio greater than one) to:
a.INCREASE
b.DECREASE
c.NO CHANGE3
7.If any asset change(s) resulting from this new policy will be offset by a corresponding and equal change in common stock, all else constant, this new policy should cause the firm’s return on equity to:
a.INCREASE
b.DECREASE
c.NO CHANGE
38.If any asset change(s) resulting from this new policy will be offset by a corresponding and equal change long-term debt, all else constant, this new policy should cause the firm’s debt ratio to (assuming that the current debt ratio is 40%):
a.INCREASE
b.DECREASE
c.NO CHANGE
39.If any asset change(s) resulting from this new policy will be offset by a corresponding and equal change in cash, all else constant, this new policy should cause the firm’s total asset turnover ratio to:
a.INCREASE
b.DECREASE
c.NO CHANGE
40.If any asset change(s) resulting from this new policy will be offset by a corresponding and equal change in short-term debt (i.e., notes payable), all else equal, this new policy should cause the firm’s quick ratio (assuming that the current quick ratio = 0.8) to:
a.INCREASE
b.DECREASE
c.NO CHANGE
In: Finance
Osama Co. is a listed company operating in the textile industry. Osama Co’s board of directors met recently to discuss a new strategy for the business. The proposal put forward was to sell all the old plant and machinery and use this fund as well as borrow from market to purchase new plant and equipment. The new plant and machinery are more productive and meet the current standard quality required by the international buyers. It is also argued that new plant is more energy efficient and environment friendly that gives more advantage when facing international competitors.
The proposal stated that the funds raised from the sale of the old plant and machinery would be used to buy the new plant and machinery.
New borrowing for the balance amount will be made from local bank which offered lowest rate. Since inflation is on higher side compared to last few years so cost of borrowing is on higher side which will increase firm cost of capital.
The board of directors are of the opinion that increasing the level of debt in OSAMA Co. will increase the company’s risk and therefore it can increase its cost of equity capital. It is assumed that due to change in plant and equipment current local sales of the product will not be affected.
New Plant price Rs.5.32 million
Sales of old plant Rs.1.32 million
Firm existing capital structure i.e. debt to assets ratio is 40:60.
At this level firm interest rate on all debt is 9.5%.
After borrowing firm capital structure will shift to 60:40 and at this level firm beta will shift from earlier 1.2 to 1.4. Risk free rate of return is 7% and market risk premium is 6%. New loan is negotiated with HBL bank and it is agreed that this loan will be for five years at 11% mark up.
Instructions:
In: Finance
Osama Co. is a listed company operating in the textile industry. Osama Co’s board of directors met recently to discuss a new strategy for the business. The proposal put forward was to sell all the old plant and machinery and use this fund as well as borrow from market to purchase new plant and equipment. The new plant and machinery are more productive and meet the current standard quality required by the international buyers. It is also argued that new plant is more energy efficient and environment friendly that gives more advantage when facing international competitors.
The proposal stated that the funds raised from the sale of the old plant and machinery would be used to buy the new plant and machinery.
New borrowing for the balance amount will be made from local bank which offered lowest rate. Since inflation is on higher side compared to last few years so cost of borrowing is on higher side which will increase firm cost of capital.
The board of directors are of the opinion that increasing the level of debt in OSAMA Co. will increase the company’s risk and therefore it can increase its cost of equity capital. It is assumed that due to change in plant and equipment current local sales of the product will not be affected.
New Plant price Rs.5.32 million
Sales of old plant Rs.1.32 million
Firm existing capital structure i.e. debt to assets ratio is 40:60.
At this level firm interest rate on all debt is 9.5%.
After borrowing firm capital structure will shift to 60:40 and at this level firm beta will shift from earlier 1.2 to 1.4. Risk free rate of return is 7% and market risk premium is 6%. New loan is negotiated with HBL bank and it is agreed that this loan will be for five years at 11% mark up.
Instructions:
In: Finance