accounts data bank accounts data bank Question 17. On January 1, 20X7, Parent Company purchased 80% of the common stock of Subsidiary Company for $402,000. On this date Subsidiary had total owners' equity of $440,000. Any excess of cost over book value is due to goodwill. During 20X7 and 20X8, Parent has appropriately accounted for its investment in Subsidiary using the simple equity method. On January 1, 20X8, Parent held merchandise acquired from Subsidiary for $30,000. During 20X8, Subsidiary sold merchandise to Parent for $100,000, of which $50,000 is held by Parent on December 31, 20X8. Subsidiary's usual gross profit on affiliated sales is 40%. On December 31, 20X8, Parent still owes Subsidiary $10,000 for merchandise acquired in December. On December 31, 20X7, Parent sold $100,000 par value of 11%, 10-year bonds for $106,232, which resulted in an effective interest rate of 10%. The bonds pay interest semi-annually on June 30 and December 31. Parent uses the effective interest method of amortization for the premium. An amortization table for 20X2 is presented below: Carrying Carrying Effective Interest Nominal Premium Value on Value Interest Expense Interest Write-off 12-31-X7 $106,232 5% $5,312 $5,500 - $188 6-30-X8 - 188 5% 5,302 5,500 - 198 - 106,044 12-31-X8 198 $105,846 ======== On December 31, 20X8, Subsidiary repurchased $50,000 par value of the bonds, paying a price equal to par. Required: Complete the Figure 5-16 worksheet for consolidated financial statements for the year ended December 31, 20X8. Round all computations to the nearest dollar. 5-37 Chapter 5 18. On January 1, 20X7, Parent Company purchased 80% of the common stock of Subsidiary Company for $402,000. On this date Subsidiary had total owners' equity of $440,000. Any excess of cost over book value is due to goodwill. During 20X7, 20X8, and 20X9, Parent has appropriately accounted for its investment in Subsidiary using the simple equity method. On January 1, 20X9, Parent held merchandise acquired from Subsidiary for $50,000. During 20X9, Subsidiary sold merchandise to Parent for $120,000, of which Parent holds $30,000 on December 31, 20X9. Subsidiary's gross profit on sales is 40%. On December 31, 20X9, Parent still owes Subsidiary $5,000 for merchandise. On December 31, 20X9, Parent sold $100,000 par value of 11%, 10-year bonds for $106,232, which resulted in an effective interest rate of 10%. The bonds pay interest semi-annually on June 30 and December 31. Parent uses the effective-interest method of amortization for the premium. An amortization table for 20X2 and 20X3 is presented below: Carrying Carrying Effective Interest Nominal Premium Value on Value Interest Expense Interest Write-off 12-31-X7 $106,232 5% $5,312 $5,500 - $188 6-30-X8 - 188 5% 5,302 5,500 - 198 - 106,044 12-31-X8 198 5% 5,292 5,500 - 208 - 105,846 6-30-X9 208 5% 5,282 5,000 - 218 - 105,638 12-31-X9 218 $105,420 ======== On December 31, 20X8, Subsidiary repurchased $50,000 par value of the bonds, paying a price equal to par. The bonds are still held on December 31, 20X9. On December 31, 20X9, Parent sold equipment with a cost of $50,000 and accumulated depreciation of $30,000 to Subsidiary for $40,000. Subsidiary will use the equipment beginning in 20X0. Required: Complete the Figure 5-17 worksheet for consolidated financial statements for the year ended December 31, 20X9. Round all computations to the nearest dollar. 5-38 Chapter 5 5-39 Chapter 5 19. On January 1, 20X7, Parent Company purchased 80% of the common stock of Subsidiary Company for $402,000. On this date Subsidiary had total owners' equity of $440,000 including retained earnings of $140,000. Any excess of cost over book value is due to goodwill. During 20X7, 20X8, and 20X9, Parent has appropriately accounted for its investment in Subsidiary using the cost method. On January 1, 20X9, Parent held merchandise acquired from Subsidiary for $50,000. During 20X9, Subsidiary sold merchandise to Parent for $120,000, of which $30,000 is held by Parent on December 31, 20X9. Subsidiary's usual gross profit on affiliated sales is 40%. On December 31, 20X9, Parent still owes Subsidiary $5,000 for merchandise acquired in December. On December 31, 20X7, Parent sold $100,000 par value of 10%, 10-year bonds for $102,000. Parent uses the straight-line method of amortization for the premium. The bonds pay interest semi-annually on June 30 and December 31. On December 31, 20X8, Subsidiary repurchased $50,000 par value of the bonds, paying $49,100. Subsidiary uses the straight-line method of amortization for the discount. The bonds are still held on December 31, 20X9. Required: Complete the Figure 5-18 worksheet for consolidated financial statements for the year ended December 31, 20X9. Round all computations to the nearest dollar. 5-40 Chapter 5 5-41 Chapter 5 ESSAY 1. The Park Company owns 80% of the outstanding common stock of the Sea Company. Park is about to lease a machine with a 5-year life to the Sea Company. The lease would begin January 1, 20X8. Required: Explain the adjustments that will be required in the consolidation process if each of the following occurs. a. The lease is an operating lease. b. The lease is a direct financing lease with a bargain purchase option. c. The lease is a sales-type lease with a bargain purchase option.
A manager of the engineering department of Manchester University A manager of the engineering department of Manchester University Question 11-A2. A manager of the engineering department of Manchester University is contemplating acquiring 120 computers. The computers will cost $240,000 cash, have zero terminal salvage value, and a useful life of 3 years. Annual cash savings from operations will be $110,000. The required rate of return is 14%. There are no taxes. 1. Compute the NPV. 2. Should the engineering department acquire the computers? Explain 11-37 City View Restaurant is about to open at a new location. Operating plans indicate the following expected cash flows: Outflows Inflows Initial investment now $235,000 $ ------ End of year: 1 $150,000 $200,000 2 $200,000 $250,000 3 $250,000 $300,000 4 $300,000 $450,000 5 $350,000 $500,000 1. Compute the NPV for all these cash flows. This should be a single amount. Use a discount rate of 14%. 2. Suppose the minimum desired rate was 12%. Without further calculations, determine whether the NPV is positive or negative Explain.
PENSION TRUST FUND PENSION TRUST FUND Question Harvey City has only one Trust and Agency Fund. The city maintains and administers a defined benefit pension plan for police department and fire department personnel. The plan is financed from contributions by the city and from investment income.The fiduciary fund used in the case is a Pension Trust Fund. Compare the primary forms of accountability as among (1) the General Fund and Special Revenue Funds, (2) Capital Projects Funds, and (3) Trust and Agency Funds.Is it possible and/or permissible to account for more than one type of trust or agency relationship within a single Trust Fund or Agency Fund? Explain.How could internal (interfund or intragovernmental) Agency Funds be used to facilitate a governmental unit’s financial management and accounting processes?
Law question data bank Law question data bank Question 576. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question PR Ali is in the 35% tax bracket. He acquired 1,000 shares of stock in Cardinal Corporation seven years ago for $100 a share. In the current year, Cardinal Corporation (E & P of $1 million) redeems all of his shares for $300,000. What are the tax consequences to Ali if: a. The redemption qualifies for sale or exchange treatment, and Ali has no other transactions in the current year involving capital assets? b. The redemption does not qualify for sale or exchange treatment? 577. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question 91 Jill has a capital loss carryover in the current tax year of $80,000. She owns 1,000 shares of stock in Black Corporation which she purchased nine years ago for $75 per share. In the current year, Black Corporation (E & P of $800,000) redeems all of her shares for $600,000. Jill is in the 35% tax bracket. What are the tax consequences to Jill if: a. The redemption qualifies for sale or exchange treatment, and Jill has no other transactions in the current year involving capital assets? b. The redemption does not qualify for sale or exchange treatment? 578. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question 92 Hawk Corporation has 2,000 shares of stock outstanding: Marina owns 700 shares, Russell owns 600 shares, Velvet Partnership owns 300 shares, and Yellow Corporation owns 400 shares. Marina and Russell, unrelated individuals, are equal partners of Velvet Partnership. Marina owns 25% of the stock in Yellow Corporation. a. Applying the § 318 stock attribution rules, determine how many shares in Hawk Corporation each shareholder owns, directly and indirectly: Marina: Russell: Velvet Partnership: Yellow Corporation b. Assume, instead, that Marina owns 75% of Yellow Corporation. How many shares does Marina own, directly and indirectly, in Hawk Corporation? 579. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question 93 Egret Corporation has manufactured recreational vehicles for 8 years. In addition, for the last 3 years, Egret has operated a separate division that sells bicycle equipment. Francis, an individual, and Loon Corporation each acquired 500 shares of stock in Egret (basis of $2,000 per share) 10 years ago. In the current year, the bicycle equipment division is entirely destroyed by fire. Egret Corporation decides to discontinue the business and distributes pro rata all of the $5 million of insurance proceeds collected as a result of the fire to Francis and Loon Corporation in redemption of 200 shares of stock from each shareholder. Determine the tax consequences of the stock redemption to Egret Corporation (E & P of $6 million), to Francis, and to Loon Corporation. Corporation)]. 580. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question 94 Sam’s gross estate includes stock in Tern Corporation and Wren Corporation, valued at $1.4 million and $980,000, respectively. At the time of Sam’s death in 2011, the stock represented 22% of Tern’s outstanding stock and 27% of Wren’s outstanding stock. Sam’s adjusted gross estate equals $6,500,000. Death taxes and funeral and administration expenses for Sam’s estate total $980,000. Sam had a basis of $350,000 in the Tern stock and $190,000 in the Wren stock at the time of his death. None of the beneficiaries of Sam’s estate own (directly or indirectly) any stock in Tern Corporation, but some of the beneficiaries own stock of Wren Corporation. Consider the following independent questions. a. What are the tax consequences to the estate if all of its Wren stock is redeemed by Wren Corporation for $980,000? b. What are the tax consequences to the estate if all of its Tern stock is redeemed by Tern Corporation for $1.4 million? 581. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question 95 The gross estate of Raul, decedent who died in 2011, includes 700 shares of stock of Orange Corporation (basis to Raul of $400,000, fair market value on date of death of $3 million). The estate will incur $2 million of death taxes and funeral and administration expenses, and the adjusted gross estate is $8 million. Denise, Raul’s daughter and sole heir of his estate, owns the remaining 300 shares of Orange Corporation’s (1,000) shares outstanding. In the current year, Orange (E & P of $4 million) redeems all of the estate’s 700 shares for $3 million. What are the tax consequences of the redemption to Raul’s estate? 582. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question 96 Ivory Corporation (E & P of $650,000) has 1,000 shares of common stock outstanding owned by unrelated parties as follows: Veronica, 500 shares, and Tommie, 500 shares. Veronica and Tommie each paid $125 per share for the Ivory stock 12 years ago. In May of the current year, Ivory distributes securities held as an investment (basis of $140,000, fair market value of $250,000) to Veronica in redemption of 200 of her shares. a. What are the tax results to Veronica on the redemption of her Ivory stock? b. What are the tax results to Ivory Corporation on the distribution of the securities? 583. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question 97 Fred is the sole shareholder of Puce Corporation, having a basis of $90,000 in 1,000 shares of Puce common stock. Last year, Puce (E & P of $500,000) issued a dividend of 2,000 shares of preferred stock to Fred. On the date of distribution, the fair market values per share of the common and preferred stocks were $160 and $20, respectively. In the current year, Puce (E & P of $720,000) redeems all of Fred’s preferred stock for its fair market value of $40,000. a. What are the tax consequences of the preferred stock dividend to Fred? b. What are the tax consequences of the stock redemption to Fred? c. What are the tax consequences of the stock redemption to Puce? 584. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question 98 The stock in Camel Corporation is owned by Albert and Tomoko, who are unrelated. Albert owns 30% and Tomoko owns 70% of the stock in Camel Corporation. All of Camel Corporation’s assets were acquired by purchase. The following assets are to be distributed in complete liquidation of Camel Corporation: Adjusted Fair Market Basis Value Cash $400,000 $400,000 Inventory 80,000 100,000 Equipment 230,000 200,000 Land 390,000 300,000 a. What gain or loss would Camel Corporation recognize if it distributes the land to Albert and the cash, inventory, and equipment to Tomoko? b. What gain or loss would Camel Corporation recognize if it distributes the inventory and equipment to Albert and the cash and land to Tomoko? 585. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question 99 Mary and Jane, unrelated taxpayers, own Gray Corporation’s stock equally. One year before the complete liquidation of Gray, Mary transfers land (basis of $420,000, fair market value of $350,000) to Gray Corporation as a contribution to capital. Assume that Mary also contributed other property in the same transaction having a basis of $20,000 and fair market value of $95,000. In liquidation, Gray distributes the land to Jane. At the time of the liquidation, the land is worth $290,000. a. How much loss may Gray Corporation recognize on the distribution of the land to Jane? b. Assume that the transfer of land to Gray Corporation was made so that the corporation could subdivide the land and build residential housing. However, a subsequent deterioration of the housing market forced Gray Corporation to abandon its plans. What amount of loss may Gray Corporation recognize on the distribution of the land to Jane? 586. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question100 After a complete liquidation has been adopted, Wren Corporation sells its only asset, unimproved land (basis of $200,000) held as an investment. The land is sold to Seth (an unrelated party) for $500,000. Under the terms of the sale, Wren Corporation receives cash of $50,000 and Seth’s notes for the balance of $450,000. The notes are payable over the succeeding 5 years ($90,000 per year) and carry an appropriate rate of interest. Immediately after the sale, Wren Corporation distributes the cash and notes to Adam, the sole shareholder of Wren. Adam has an adjusted basis of $80,000 in the Wren stock. The installment notes have a value equal to their face amount of $450,000. a. How will Wren Corporation be taxed on the distribution? b. How will Adam be taxed on his receipt of the cash and notes? 587. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question101 The stock of Tan Corporation (E & P of $1.3 million) is owned as follows: 90% by Egret Corporation (basis of $520,000), and 10% by Zoe (basis of $55,000). Both shareholders acquired their shares in Tan more than six years ago. In the current year, Tan Corporation liquidates and distributes land (fair market value of $1.1 million, basis of $750,000) and equipment (fair market value of $700,000, basis of $410,000) to Egret Corporation, and securities (fair market value of $200,000, basis of $150,000) to Zoe. What are the tax consequences of these distributions to Egret, to Tan, and to Zoe? 588. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question102 On April 16, 2010, Blue Corporation purchased 15% of the Gold Corporation stock outstanding. Blue Corporation purchased an additional 50% of the stock in Gold on November 23, 2010, and an additional 20% on May 4, 2011. On September 23, 2011, Blue Corporation purchased the remaining 15% of Gold Corporation stock outstanding. a. For purposes of the § 338 election, on what date does a qualified stock purchase occur? b. What is the due date for making the § 338 election? 589. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question ES Explain the stock attribution rules that apply in the case of stock redemptions. 590. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question103 What are the requirements that must be satisfied for a distribution to qualify under § 302(b)(2) as a disproportionate redemption? 591. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question104 Explain the requirements for waiving the family attribution rules in the case of complete termination redemptions. 592. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question105 The partial liquidation rules provide a unique opportunity for a corporation to contract its business enterprises in a manner that produces favorable tax results for its shareholders. Discuss the requirements for a partial liquidation and the resulting tax consequences to the shareholders. 593. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question106 When is a redemption to pay death taxes under § 303 most advantageous? 594. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question107 What are the tax consequences of a qualifying stock redemption to the distributing corporation? 595. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question108 Discuss the tax consequences associated with a sale of § 306 stock. Can the § 306 rules have a harsher tax result than if the corporation had distributed a taxable dividend in the first place? 596. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question109 The text discusses four different limitations on loss recognition by liquidating corporations. Provide a brief description of each of these loss limitations. 597. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question110 What are the tax consequences of a § 332 liquidation to the parent corporation, subsidiary corporation, and minority shareholder? 598. CHAPTER 6—CORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question111 Describe the requirements for and tax consequences of a § 338 election.
Law – The focus in civil litigation is to Law – The focus in civil litigation is to Question 1. The focus in civil litigation is to A. punish the wrongdoer.B. compensate the victim.C. deter future wrongdoing.D. win punitive damages. 2. Evidence is competent if A. it’s based on a strongly held opinion.B. it’s common knowledge.C. it consists of sensory observation.D. it’s believable to the jury. 3. Which one of the following is acquired by serving a summons and complaint upon a defendant?A. Personal jurisdictionB. Removal jurisdictionC. Concurrent jurisdictionD. Limited jurisdiction 4. Attorneys and paralegals should begin identifying potential claims and defenses during theA. initial interview. C. appeal.B. trial. D. settlement. 5. An attorney is trying a criminal case, but isn’t sure what level of burden is required in criminal court. Which one of the following does the attorney have to meet?A. Preponderance of the evidence C. Clear and convincing evidenceB. Beyond a reasonable doubt D. Innocent until proven guilty 6. A claim is filed by the defendant against the plaintiff. Attorney A says that the defendant has filed a counterclaim. Attorney B says the defendant has filed a cross-claim. Which one of the attorneys is correct?A. Attorney A is correct. C. Neither attorney is correct.B. Attorney B is correct. D. Both attorneys are correct. 7. Notice of a motion must be given to opposing counsel in all cases except a/anA. motion for temporary orders.B. motion to amend pleadings.C. ex parte motion.D. Notice to opposing counsel is always required. 8. Which one of the following would be the best method of obtaining judgment from a debtor who works but doesn’t own any assets?A. Writ of execution C. GarnishmentB. Judgment lien D. Receivership 9. Which one of the following choices is a voluntary alternative dispute resolution?A. Arbitration C. InjunctionB. Pleading D. Mediation 10. Which one of the following choices introduces new matter that causes the plaintiff to lose even if the factual allegations of the complaint are true?A. Affirmative defense C. In rem jurisdictionB. Ex parte motion D. Supersedeas bond 11. Which one of the following serves the purpose of persuading another party to resolve a claim before trial? A. Trial notebook C. Initial interviewB. Settlement brochure D. Notice of appeal 12. Suppose a trial is nearing its end, and the attorneys are awaiting the jury’s decision. An attorney wants to make a last settlement attempt before the jury returns its verdict. Attorney A says it’s too late for settlement because the jury has already gone to deliberate. Attorney B says the attorney can make the settlement offer if it’s first presented to the jury. Which one of the attorneys is correct? A. Attorney A is correct. C. Both attorneys are correct.B. Attorney B is correct. D. Neither attorney is correct. 13. Suppose a judge made errors during a trial. Although the outcome probably would have been the same if the errors hadn’t occurred, a party wants to appeal. What is the most likely outcome?A. The party would win the appeal because any mistakes made are in opposition to the innocent until proven guilty guarantee.B. The judge would be investigated for a miscarriage of justice.C. The decision would be reversed because the mistake is a question of fact.D. The decision wouldn’t be reversed because the error must be important enough to change the outcome of the case. 14. The appropriate time to determine the applicable statute of limitations isA. before taking the case.B. after taking the case but before filing it.C. anytime before serving the summons.D. anytime prior to a motion to dismiss. 15. Both a lay witness and an expert witness can give opinions under certain circumstances. A lay witness can give opinions concerning onlyA. settlement negotiations.B. observations that don’t require expertise.C. the witness’s state of mind.D. communications that are privileged. 16. Suppose a state and federal court both have subject matter jurisdiction over a case. The federal court then transfers the case from the state court to federal court. Which two types of jurisdiction are described in this example?A. Exclusive jurisdiction and general jurisdictionB. Concurrent jurisdiction and removal jurisdictionC. Personal jurisdiction and in rem jurisdictionD. Limited jurisdiction and supplemental jurisdiction 17. Papers to be filed with the court are received by the A. court clerk. C. marshall.B. judge. D. court reporter. 18. Appellate courts review the actions of the trial courtsA. for legal errors. C. to retry a case.B. to substitute their own decision. D. for questions of fact. 19. Which of the following would be a valid reason to overturn an arbitrator’s decision?A. Obvious bias C. Arbitrator personalityB. Displeasure with the decision D. Improper notice of appeal
Project S has a cost of $10,000 and is expected to produce benefits Project S has a cost of $10,000 and is expected to produce benefits Question (10–10) Capital Budgeting MethodsProject S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects' NPVs, IRRs, MIRRs, and PIs, assuming a cost of capital of 12%. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should actually be selected?Inputsr12%Initial CostTimeProject SProject L0-$10,000-$25,000Project SNPVIRRMIRRPI$814.3315.24%13.77%1.081Cash Flows1$3,000$7,4002$3,000$7,4003$3,000$7,4004$3,000$7,400Project L$1,675.3414.67%13.46%1.0675$3,000$7,400Initial CostYearProj S012345-100002678.571428572391.581632652135.340743441906.554235211702.28056716Proj L-250006607.14295899.23475267.17384702.83384198.9587Which Project is to be selected?Using NPV, Project S wins with 814.33 vs 1,675.34Using IRR, Project S also wins with 15.24% vs 14.67%Using MIRR, Project S also wins with 13.77% vs 13.46%Using PI, again, project S wins with 1.081 vs 1.067Overall, although project L has an NPV higher than project S, in both IRR and MIRR, S is higher. PI is also smaller for project S, so I would choose S over L(10–17) Unequal LivesThe Perez Company has the opportunity to invest in one of two mutually exclusive machines that will produce a product it will need for the foreseeable future. Machine A costs $10 million but realizes after -tax inflows of $4 million per year for 4 years.After 4 years, the machine must be replaced. Machine B costs $15 million and realizes after-tax inflows of $3.5 million per year for 8 years, after which it must be replaced. Assume that machine prices are not expected to rise because inflation will be offset by cheaper components used in the machines. The cost of capital is 10%. By how much would the value of the company increase if it accepted the better machine?What is the equivalent annual annuity for each machine ?Unequal LivesInputsr10%Initial CostTimeMachine A-1Machine A-2Sum CFs0NPVA-1EFFAMachine BNPVEFFBAnalysisCash Flows1234NPVA-1,A-25678Multiple Rates of ReturnCOC8%Initial CostTimeProjectPVNPVIRRCash Flows02$4.40$0-$4a. Plot the project's NPV profile.b. Should the project be accepted if r = 8%? If r = 14%? Explain your reasoning.aData table for questionCost of Capital NPVIRR-$4.40c. Can you think of some other capital budgeting situations in which negative cashflows during or at the end of the project's life might lead to multiple IRRs?0%d. What is the project's MIRR at r = 8%? At r = 14%? Does the MIRR method lead tothe same accept-reject decision as the NPV met2%4%6%8%10%12%14%16%18%20%100%200%400%b1(10–19) Multiple Rates of ReturnThe Ulmer Uranium Company is deciding whether or not it should open a strip minewhose net cost is $4.4 million. Net cash inflows are expected to be $27.7 million, allcoming at the end of Year 1. The land must be returned to its natural state at a cost of$25 million, payable at the end of Year 2.see your table above and decide using NPV rule: accept positive NPV, reject negative net present valuescdMIRRr8%14%Economic Life(10–22) Economic LifeThe Scampini Supplies Company recently purchased a new delivery truck. The newtruck cost $22,500, and it is expected to generate net after-tax operating cash flows,including depreciation, of $6,250 per year. The truck has a 5 -year expected life. Theexpected salvage values after tax adjustments for the truck are given below. Thecompany's cost of capital is 1Inputsr10%Year012345AnnualTotal PVPV Cash PF SalvageOperating Salvage Valueper year DflowsValueCash Flow+E?$22,500$ 22,5006,250
ACC206 Week Five Problems ACC206 Week Five Problems Question Please complete the following 5 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.1. Basic present value calculationsCalculate the present value of the following cash flows, rounding to the nearest dollar:a. A single cash inflow of $12,000 in five years, discounted at a 12% rate of return.b. An annual receipt of $16,000 over the next 12 years, discounted at a 14% rate of return.c. A single receipt of $15,000 at the end of Year 1 followed by a single receipt of $10,000 at the end of Year 3. The company has a 10% rate of return.d. An annual receipt of $8,000 for three years followed by a single receipt of $10,000 at the end of Year 4. The company has a 16% rate of return.2. Cash flow calculations and net present valueOn January 2, 20X1, Bruce Greene invested $10,000 in the stock market and purchased 500 shares of Heartland Development, Inc. Heartland paid cash dividends of $2.60 per share in 20X1 and 20X2; the dividend was raised to $3.10 per share in 20X3. On December 31, 20X3, Greene sold his holdings and generated proceeds of $13,000. Greene uses the net-present- value method and desires a 16% return on investments.a. Prepare a chronological list of the investment's cash flows. Note: Greene is entitled to the 20X3 dividend.b. Compute the investment's net present value, rounding calculations to the nearest dollar.c. Given the results of part (b), should Greene have acquired the Heartland stock? Briefly explain.3. Straightforward net present value and internal rate of returnThe City of Bedford is studying a 600-acre site on Route 356 for a new landfill. The startup cost has been calculated as follows:Purchase cost: $450 per acreSite preparation: $175,000The site can be used for 20 years before it reaches capacity. Bedford, which shares a facility in Bath Township with other municipalities, estimates that the new location will save $40,000 in annual operating costs.a. Should the landfill be acquired if Bedford desires an 8% return on its investment? Use the net-present-value method to determine your answer.4. Straightforward net-present-value and payback computationsSTL Entertainment is considering the acquisition of a sight-seeing boat for summer tours along the Mississippi River. The following information is available:Cost of boat $500,000Service life 10 summer seasonsDisposal value at the end of 10 seasons $100,000Capacity per trip 300 passengersFixed operating costs per season (including straight-line depreciation) $160,000Variable operating costs per trip $1,000Ticket price $5 per passengerAll operating costs, except depreciation, require cash outlays. On the basis of similar operations in other parts of the country, management anticipates that each trip will be sold out and that 120,000 passengers will be carried each season. Ignore income taxes.Instructions:By using the net-present-value method, determine whether STL Entertainment should acquire the boat. Assume a 14% desired return on all investments- round calculations to the nearest dollar.5. Equipment replacement decisionColumbia Enterprises is studying the replacement of some equipment that originally cost $74,000. The equipment is expected to provide six more years of service if $8,700 of major repairs are performed in two years. Annual cash operating costs total $27,200. Columbia can sell the equipment now for $36,000; the estimated residual value in six years is $5,000.New equipment is available that will reduce annual cash operating costs to $21,000. The equipment costs $103,000, has a service life of six years, and has an estimated residual value of $13,000. Company sales will total $430,000 per year with either the existing or the new equipment. Columbia has a minimum desired return of 12% and depreciates all equipment by the straight-line method.Instructions:a. By using the net-present-value method, determine whether Columbia should keep its present equipment or acquire the new equipment. Round all calculations to the nearest dollar, and ignore income taxes.b. Columbia's management feels that the time value of money should be considered in all long-term decisions. Briefly discuss the rationale that underlies management's belief.
ECO – Los Angeles International Airport (LAX) is located next to Playa Del Rey ECO – Los Angeles International Airport (LAX) is located next to Playa Del Rey Question Los Angeles International Airport (LAX) is located next to Playa Del Rey. The noise from air traffic negatively affects individuals living in Playa Del Rey, however, this cost is not considered by airlines or air travelers. The airlines feel they have a right to use the airspace while the individuals living in Playa Del Rey feel they have the right to quiet. The following diagram depicts the marginal costs and marginal benefits associated with air travel.Refer to Figure 16.5. Suppose the government assigns property rights to the airlines, then the airlines and the residents engage in negotiations. The resulting efficient level of air travel is ________.A: 0 unitsB: 100 unitsC: 120 unitsD: Indeterminate from the given information.
Projects can be classified into various categories. Projects can be classified into various categories. Question 1. Projects can be classified into various categories. These includea. new products and new businesses projects that include research and development activitiesb. cost savings and revenue enhancement projects that include improvements in production technology to realize cost savings and marketing campaigns to achieve revenue enhancementc. capacity expansion projects that involve expanding the current business by adding new equipment and facilitiesd. all of these 2. The _____ for a project equals one plus the present value of the future cash flows divided by the initial investment.a. NPVb. PIc. IRRd. Payback 3. Studies show systematic differences in capital structures across industries. These are due mostly to differences in the availability of tax shelter provided by things other than debt, such asa. hiring and firing practicesb. operating tax loss carryforwardsc. what the capital asset pricing theory tells usd. all of these 4. According to the _____ view of dividends, dividend changes are important indicators to investors of changes in management's expectations about the firm's future earnings.a. clienteleb. signalingc. capital gainsd. transferable 5. Most debt issuers select a coupon rate that will make the bondsa. less than parb. worth parc. greater than pard. greater than or equal to par 6. Which of the following statement is true?a. Under an indirect lease, the lessee identifies the asset it requires.b. Under a direct lease arrangement, the owner of an asset sells it, usually at market value, for cash.c. A lessor who provides lease financing for an expensive piece of equipment, such as an aircraft, may wish to borrow a portion of the funds to make that investment.d. none of these 7. You are evaluating a proposed project. You find that the DCF-NPV is ?$50,000. However, by investing today, you think you might have a future growth option to expand, but it would cost you an additional $100,000—in today’s dollars—to have this option. If this future opportunity occurs, you estimate the present value of this option will be $500,000. However, there's only a 60% chance of this occurring. Does the growth option make investment in the proposed project a positive NPV?a. Yes, the NPV is $50,000.b. Yes, the NPV is $100,000.c. Yes, the NPV is $125,000.d. Yes, the NPV is $150,000. 8. Which of these statements is true?a. Future investment opportunities are options to abandon investment possibilities in the future that result from a current opportunity or operation.b. When a firm makes a capital budgeting decision, one option to consider is the possibility of stopping the project earlier than originally planned.c. The abandonment option is the option to postpone, rather than cancel, an expansion.d. none of these 9. Benefits a firm hopes to realize from the planning process include a. past orientationb. nonstandardized assumptionsc. preparing for contingenciesd. subjectivity
Determine which statistics you will employ to measure the quality characteristics of your business Determine which statistics you will employ to measure the quality characteristics of your business Question In the same restaurant case could you answer those questions? Envision a business you would like to own that would employ at least 20 people. 1. Determine which statistics you will employ to measure the quality characteristics of your business and how often you will conduct statistical analysis.2. Analyze the key concepts related to capacity planning and facility location for your business. 3. Develop an appropriate level, chase, or hybrid aggregate plan to maintain a competitive advantage. Provide a rationale for developing the type of plan you did. 4. Apply the key elements of work system design, the project life cycle, and project management to your business.5. Analyze the key concepts related to inventory planning and management as they apply to your business.