(TCO 3) Use the table “Food and Beverage Sales for Jimmy’s Greek Restaurant” to answer the questions below.



Food and Beverage Sales for Jimmy’s Greek Restaurant

($000s)


Month

First Year

Second Year


January

242

263


February

235

238


March

232

247


April

278

193


May

284

193


June

240

149


July

145

157


August

152

161


September

110

122


October

130

130


November

152

167


December

236

231



Part (a): Calculate the regression line and forecast sales for January of Year 3.
Part (b): Calculate the seasonal forecast of sales for January of Year 3.
Part (c): Which forecast do you think is most accurate and why?

(TCO 6) Mimi Company is considering a capital investment of $250,000 in new equipment. The equipment is expected to have a 5-year useful life with no salvage value. Depreciation is computed by the straight-line method. During the life of the investment, annual net income and cash inflows are expected to be $25,000 and $75,000, respectively. Mimi's minimum required rate of return is 10%.

Part (a): Calculate the payback period.
Part (b): Calculate the net present value.
Part (c): Calculate the accounting rate of return.