The December 31, Year 4, balance sheet for Deen Company showed total stockholders’ equity of $156,000. Total stockholders’ equity increased by $65,000 between December 31, Year 4, and December 31, Year 5. During Year 5, Deen Company acquired $20,000 cash from the issue of common stock. The Company paid a $5,000 cash dividend to the stockholders during Year 5.
Required
Determine the amount of net income or loss Deen reported on its Year 5 income statement. (Hint: Remember that stock issues, net income, and dividends all change total stockholders’ equity.)
In: Accounting
In: Finance
Home Place Hotels, Inc., is entering into a 3-year remodeling and expansion project. The construction will have a limiting effect on earnings during that time, but when it is complete, it should allow the company to enjoy much-improved growth in earnings and dividends. Last year, the company paid a dividend of $3.80. It expects zero growth in the next year. In years 2 and 3, 6% growth is expected, and in year 4, 18% growth. In year 5 and thereafter, growth should be a constant 9% per year. What is the maximum price per share that an investor who requires a return of 15% should pay for Home Place Hotels common stock?
In: Finance
(Inflation) Here are some recent data on the U.S. consumer price index:
Year CPI Year CPI Year CPI Year CPI
1988 3 1993 144.5 1998 163.0 2003 184.0
1989 0 1994 148.2 1999 166.6
1990 7 1995 152.4 2000 172.2
1991 2 1996 156.9 2001 176.9
1992 3 1997 160.5 2002 179.9
Compute the inflation rate for each year 1989-2003 and determine which years were years of inflation. In which years did deflation occur? In which years did disinflation occur? Was there hyperinflation in any year?
In: Economics
A large food-processing corporation is considering using laser technology to speed up and eliminate waste in the potato peeling process. To implement the system, the company anticipates needing $800,000 to purchase the industrial strength lasers. The system is expected to have an 8-year service life. 180,000 per year will be saved in labor and materials. However, it will require additional costs over eight years. The additional cost is 42,000 in year one. These expenses increase by 2% each year. Assuming a $20,000 salvage value at the end of year eight and a MARR=12% per year, use the NPW method to check whether the project is justifiable.
In: Economics
On January 1, Year 1, Prairie Enterprises issued common stock for $30,000 cash and purchased computer equipment for $28,000 cash. The equipment had a useful life of 5 years and a salvage value of $2,000. Prairie uses the straight line depreciation method.
How much Depreciation Expense does Prairie recognize each year?
What is the ending balance of Accumulated Depreciation at the end of Year 3?
What is the book value of the equipment at the beginning of Year 4?
What is the gain or loss if the equipment is sold for $13,000 at the beginning of Year 4?
What is the gain or loss if the equipment is sold for $1,000 at the beginning of Year 4?
In: Accounting
3. Amortize a $250,000 (Sale Price) house on a 30 year loan at 4.0% annual interest rate Amortize a $250,000 (Sale Price) house on a 15 year loan at 3.0% annual interest rate (7) What will be the total cost of the 30 year loan? (Total of all Interest & Principle ) (8) What will be the total cost of the 15 year loan? (Total of all Interest & Principle ) (9) At the end of 4 years, how much less will the loan balance of the 15 year mortgage be compared to the 30 year? (10) If you were buying a house at age 30, which loan would you prefer?
In: Finance
In: Accounting
Your company just bought a new piece of equipment to manufacture widgets. It has a cost basis of $275,000, a useful life of 13 years, and no salvage value. If the asset is depreciated using a 150% declining balance with straight line switchover method, answer the following questions:
a) How much does the value depreciate in Year 1?
b) How much does the value depreciate in Year 2?
c) What is the book value at the end of Year 4?
d) How much does the value depreciate in Year 10?
e) In which year does the switchover occur (what is the first year of straight line depreciation)?
In: Economics
4) Harold’s Hotels Inc., is entering into a 3-year remodeling and expansion project. The construction will have a limiting effect on earnings during that time, but when it is complete, it should allow the company to enjoy much improved growth in earnings and dividends. Last year, the company paid a dividend of $3.00. It expected zero growth in one year. In years two and three, 2% growth is expected, and in year 4, 6% growth. In year 5 and thereafter, growth should be a constant 4% per year. What is the maximum price per share that an investor who requires a return of 12% should pay for Harold’s Hotel’s common stock?
In: Finance