Suppose an industrial building can be purchased for $2,500,000 today and is expected to yield cash flows of $180,000 each of the next five years. (Note: assume cash flows are received at end of year.) If the building is expected to be sold at the end of the fifth year for $2,800,000, calculate the IRR for this investment over the five year holding period
Answers
Answer: 9.20%
Explanation:
Use Excel to find out the IRR.
Ensure that you write the purchase price in negatives as shown in the attached picture.
The cashflow for the last year will be the sum of the selling price and the cash flow.
= 2,800,000 + 180,000
= $2,980,000
IRR = 9.20%
Related Questions
For 2020, Ms. Deming earned wages totaling $225,000.
Required:
1. Calculate any 0.9 percent additional Medicare tax owed, assuming that Ms. Deming is single.
2. Calculate any 0.9 percent additional Medicare tax owed, assuming that Ms. Deming files a joint return with her husband who earned $100,000 of wages for 2019.
Answers
Answer:
Additional Medicare is charged on the wages that are higher than $200,000.
1. Medicare owed assuming Ms. Deming is single:
= (225,000 - 200,000) * 0.9%
= 25,000 * 0.9%
= $225
2. Medicare owed assuming Ms. Deming files a joint return with her husband.
When filed together, their wages would be considered jointly.
= ( (100,000 + 225,000) - 200,000) * 0.9%
= 125,000 * 0.9%
= $1,125
A public works department in a metropolitan area is looking into buying a major equipment to enhance productivity. The initial cost is estimated to be $600,000. It is projected that new equipment will help save $250,000 the first year and decrease gradually by $50,000 for the next four years. Determine the payback period for this equipment purchase.
Answers
Answer:
Public Works Department
The payback period for this equipment purchase is:
= 3 years.
Explanation:
a) Data and Calculations:
Initial cost of new equipment = $600,000
Savings from the equipment:
Year 1 = $250,000
Year 2 = $200,000 ($250,000 - $50,000)
Year 3 = $150,000 ($200,000 - $50,000)
Year 4 = $100,000 ($150,000 - $50,000)
Year 5 = $50,000
Payback period:
Year 1 = $250,000
Year 2 = $450,000 ($250,000 + $200,000)
Year 3 = $600,000 ($450,000 + $150,000)
Which of the following approaches for calculating the market value of a property involves estimating the dollar value associated with replacing the property new, as well as determining the loss in value due to physical, functional, and external obsolescence?
a. income approach
b. sales comparison approach
c. cost approach
d. Investment approach
Answers
Answer:
c. cost approach
Explanation:
The cost approach is a real estate valuation method in which the price estimated regarding the buyer that have to pay for the property and the same is equivalnet to the cost for creating a buidling.
Here the property value should be equivalent to the land cost also add the construction cost and minus the depreciation expense
So as per the given situation, it is the cost approach that determined the market value of the property
Alieia Boat Company manufactures 10 luxury yachts per month. A navigation system is included in each yacht. Alieia Boat manufactures the navigation system in-house but is considering the possibility of outsourcing this function. At present, the variable cost per unit is $300, and the fixed costs are $38,000 per month. If it outsources the security system, fixed costs could be reduced by half, and the vacant facilities could be rented out to earn $3000 per month of rental income. What is the maximum contract cost that Alieia should pay for outsourcing?
a) any cost lower than $2500 per unit
b) any cost lower than $2200 per unit
c) any cost lower than $300 per unit
d) any cost lower than $3800 per unit
Answers
Answer:
a) any cost lower than $2500 per unit
Explanation:
total avoidable costs = ($300 * 10) + ($38,000 / 2) + $3,000 = $25,000
total number of navigation systems prodcued per month = 10
avoidable cost per navigation system = $25,000 / 10 = $2,500
this means that th e comapny could pay up to $2,500 per navigtion system provided by an extrenal supplier
Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 24 percent for the next three years, with the growth rate falling off to a constant 7 percent thereafter. If the required return is 11 percent, and the company just paid a dividend of $2.05, what is the current share price
Answers
Answer:
$84.18
Explanation:
The current share price can be determined using the two-stage dividend growth model.
In the two-stage dividend growth model, the first stage is characterised by high growth rate. In the second stage, the high growth rate falls to a steady or normal growth rate
dividend in Y1 = 2.05 x 1.24 = 2.54
dividend in Y2 = 2.05 x 1.24^2 = 3.15
dividend in Y3 = 2.05 x 1.24^3 = 3.91
Y3 = (3.91 X 1.07) / (0.11 - 0.07) = 104.59
Find the present value of these cash flows
(2.54 / 1.11) + (3.15 / 1.11²) + (3.91 / 1.11³) + (104.59/1.11³) = 84.18
Indentify two causes, a part from a increase in income, of an increase in demand for a product
Answers
Answer:
Rise in price of subsitute product.
Fall in price of complementory product.
Increase in number of consumers.
acc 430 Firm B, a calendar year, cash basis taxpayer, leases lawn and garden equipment. During December, it received the following cash payments. To what extent does each payment represent current taxable income to Firm B
Answers
Answer: See explanation
Explanation:
a. Even though firm B received a cash of $522, only $22 which is the interest will be taxable as the $500 which is the principal isn't taxable.
b. Even though Firm B got $600 cash, there'll be no taxable income as the receipt brought about a liability. Hence, taxable income is 0.
c. Even though Firm B got $10000 cash, there'll be no taxable income as the receipt brought about a liability and the net worth wasn't increased. Hence, taxable income is 0.
d. The taxable income here will be $888.
Recently, Shandra purchased 5 movie DVDs and 12 three ring binders. What if the price of DVDs rose by $3 and the price of three ring binders declined by $2. With Shandra’s income unchanged and prices for other goods remaining the same, what actions would Shandra most likely take?
Answers
Answer:
1. She'll purchase less quantity of movie DVDs
2. She'll purchase more quantity of three-ring binders
Explanation:
INITIAL CASE:
Purchase: 5 DVDs and 12 Binders
Price of DVDs = x Price of Binders = y
NEW CASE:
Price of DVDs = $(x + 3) Price of Binders = $(y - 2)
Shandra's income is unchanged - it doesn't increase or fall in this period.
Prices of "other goods" is also constant - hence the decisions Shandra will make concerning quantity to purchase of DVDs & Binders, will solely be based on the new prices of the two items/commodities.
This clears the "ceteris paribus" assumption of the law of demand! All other things - income & prices of other goods - are already determined to be equal or constant.
In this case, the consumer, Shandra will purchase more of the good whose price has fallen and less of the good whose price has risen. Hence, the actions that Shandra would take are:
1. She'll purchase less quantity of movie DVDs
2. She'll purchase more quantity of three-ring binders
Entries for Notes Receivable, Including Year-End Entries The following selected transactions were completed by Interlocking Devices Co., a supplier of zippers for clothing: 20Y7 Dec. 7. Received from Unitarian Clothing and Bags Co., on account, a $60,000, 60-day, 7% note dated December 7. Dec. 31. Recorded an adjusting entry for accrued interest on the note of December 7. Dec. 31. Recorded the closing entry for interest revenue. 20Y8 Feb. 5. Received payment of note and interest from Unitarian Clothing
Answers
Answer:
Interlocking Devices Co.
Journal Entries:
20Y7
Dec. 7.
Debit Notes Receivable (Unitarian Clothing and Bags Co.) $60,000
Credit Accounts Receivable $60,000
To record the receipt of a 60-day, 7% note dated December 7.
Dec. 31.
Debit Interest Receivable (Unitarian Clothing and Bags Co.) $280
Credit Interest Income $280
To accrue interest on notes receivable ($60,000 * 7% * 24/360).
Dec. 31.
Debit Interest Income $280
Credit Income Summary $280
To close the interest income to income summary.
20Y8
Feb. 5.
Debit Interest Receivable (Unitarian Clothing and Bags Co.) $420
Credit Interest Income $420
To accrue interest on notes receivable.
Debit Cash $60,700
Credit Notes Receivable (Unitarian Clothing and Bags Co.) $60,000
Credit Interest Receivable (Unitarian Clothing and Bags Co.) $700
To record the receipt of principal and interests.
Explanation:
a) Data and Analysis:
20Y7
Dec. 7. Notes Receivable (Unitarian Clothing and Bags Co.) $60,000 Accounts Receivable $60,000 on account, a $60,000, 60-day, 7% note dated December 7.
Dec. 31. Interest Receivable (Unitarian Clothing and Bags Co.) $280 Interest Income $280 ($60,000 * 7% * 24/360)
Dec. 31. Interest Income $280 Income Summary $280
20Y8
Feb. 5. Interest Receivable (Unitarian Clothing and Bags Co.) $420 Interest Income $420
Cash $60,700 Notes Receivable (Unitarian Clothing and Bags Co.) $60,000 Interest Receivable (Unitarian Clothing and Bags Co.) $700
A machine costing $56,894 with a 6-year life and $51,236 depreciable cost was purchased January 1. Compute the yearly depreciation expense using straight-line depreciation. Round your answer to the nearest whole dollar.
Answers
Answer:
$8539
Explanation:
Depreciation is a method of expensing the cost of an asset.
Yearly deprecation expense =depreciable cost / useful life
depreciable cost = cost of the machine - salvage value
51,236 / 6 = $8539.33
8539
To round off to the nearest dollar, look at the first number after the decimal, if it is less than 5, add zero to the units term, If it is equal or greater than 5, add 1 to the units term.
A machine cost $1,200,000, has annual depreciation of $200,000, and has accumulated depreciation of $950,000 on December 31, 2020. On April 1, 2021, when the machine has a fair value of $275,000, it is exchanged for a machine with a fair value of $1,350,000 and the proper amount of cash is paid. The exchange had commercial substance. The gain to be recorded on the exchange is
Answers
Answer: $1,350,000
Explanation:
If an exchange is said to have commercial substance, it means that the company will either record the asset received at its fair value and if this is not available, it will then record the value of the asset received at the fair value of the assets that were exchanged for it.
The fair value of the assets acquired are available in this instance so the machine will be recorded at its fair value of $1,350,000.
A company estimates that the appropriate discount rate (i.e., the cost of capital) for Project A, Project B, Project C and Project D described below is 10 percent. Assuming that the projects are independent, which project(s) should the company accept?
a. Project A requires an up-front expenditure of $1,000,000 and generates a net present value of $3,200.
b. Project B has an internal rate of return of 9.5 percent.
c. Project C requires an up-front expenditure of $1,000,000 and has a profitability index of 0.85
d. Project D requires an up-front expenditure of $200,000 and generates a net present value of negative $200
e. None of the projects above should be accepted.
Answers
Answer:
a. Project A requires an up-front expenditure of $1,000,000 and generates a net present value of $3,200.
Explanation:
a.
The company should accept project A because it provides a positive net present value of $3,200 that is the highest among all the projects.
b.
When the IRR of a project is lower than the required rate of return of the project, it will generate the negative net present value because at IRR the net present value of the project will be zero and at a higher rate than IRR it will be negative.
c.
The project with a profitability index of less than 1 generates a negative NPV because the present value of future cash flows is less than the initial cash outflow.
d.
Project D also generates a positive net present value but it is lower than project A. So, after comparing the results we will choose the project with higher NPV.
On September 1, 2021, Hiker Shoes issued a $100,000, 8-month, noninterest-bearing note. The loan was made by Second Commercial Bank where the stated discount rate is 11% Hiker's effective interest rate on this loan (rounded) is: ____________
Answers
Answer: 11.87%
Explanation:
Effective interest rate on this loan is:
= Interest payment / (Note - Interest payment) * 12/8 months
Interest payment:
= Note * Interest rate * 8/12 months
= 100,000 * 11% * 8/12
= $7,333
Effective interest:
= 7,333 / (100,000 - 7,333) * 12/8
= 11.87%
Which points on the production possibilities curve show a level of production
that would be achievable only through further growth in the company?
A. Points B and C
B. Points A and C
C. Points B and D
O D. Points A and B
Answers
Answer:
Most likely d and b
Explanation:
d is the best production so it should be in one of the answers and it is only with b so therfor it should be with d and b
Answer:
points a and c
Explanation:
A lender uses these tools to help prequalify you for a mortgage
Answers
Answer:
Following are the summary of tools/documents that are used by lenders to pre-qualify their customers for a mortgage :
1. Tax returns, W-2s, and 1099s are examples of income as well as employment records.
2. Bank, pension, and brokerage accounts property declarations
3. Settlements on your obligations on a regular basis as well as any real estate debt statements.
4. Rent deposits, divorce, insolvency, and repossession records are all kept on file.
Bonita Industries has several outdated computers that cost a total of $18400 and could be sold as scrap for $6400. They could be updated for an additional $3100 and sold. If Bonita updates the computers and sells them, net income will increase by $9000. At what price were the updated versions sold?
a. 13,400
b. 6600
c. 6800
d. 8000
Answers
Answer:
the updated version should be sold at $18,500
Explanation:
The computation of the selling price is given below:
= Sale value of scrap + additional amount sold + increase of net income
= $6,400 + $3,100 + $9,000
= $18,500
Hence, the updated version should be sold at $18,500
This is the answer but the same is not provided in the given options
When interest is compounded continuously, the amount of money increases at a rate proportional to the amount S present at time t, that is, dS/dt=rS, where r is the annual rate of interest.
a) Find the amount of money accrued at the end of 5 years when $6000 is deposited in a savings account drawing 534% annual interest compounded continuously. (Round your answer to the nearest cent.)
b) In how many years will the initial sum deposited have doubled? (Round your answer to the nearest year.)
c) Use a calculator to compare the amount obtained in part a) with the amount S=6000(1+14(0.0575))5(4) that is accrued when interest is compounded quarterly. (Round your answer to the nearest cent.)
Answers
Answer:
See explanation
Explanation:
Given that;
A = P(1 + r/n)^nt
Where;
P= $6000
r = 5 3/4%
t = 5 years
n= 1
A = 6000(1 + 0.0575)^5
A= $ 7935
b) What time will A become $12,000
12000 = 6000(1 + 0.0575)^t
12000/6000 = (1 + 0.0575)^t
2 = (1 + 0.0575)^t
Take logarithm of both sides
log2 = t log(1 + 0.0575)
t= log2/log(1 + 0.0575)
t= 0.3010/0.0243
t = 12 years
c) when compounded quarterly;
S= 6000(1 + 1/4(0.0575))^(5)(4)
S= $7982
The amount when interest is compounded quarterly is higher than when it is compounded annually because the interest increases as the number of compounding periods increases.
Total Cost Logistics Model takes into consideration ______. A. all of the transportation cost B. all of the handling cost C. all of fixed assets D. all of the inventory carrying cost
Answers
Answer:
Total Cost Logistics Model takes into consideration:
A. all of the transportation cost
B. all of the handling cost
D. all of the inventory carrying cost
Explanation:
The total cost logistics model includes all the logistics factors (transportation costs, inventory carrying costs, and administration costs). Logistics can be divided into procurement logistics, production logistics, sales logistics, recovery logistics, and recycling logistics.
Lemon company purchased 100 units for $20 each on January 31. It purchased 200 units for $30 each on February 28. It sold 200 units for $50 each from March 1 through December 31. If the company uses the first-in, first-out inventory costing method, what is the amount of Cost of Goods Sold on the income statement for the year ending December 31?
A. $6,350.
B. $4,350.
C. $1,600.
D. $4,750.
Answers
Answer:
Find detailed explanations below
Explanation:
Under the first-in-first-out inventory valuation method, the earlier stocks are sold first and the latest stocks remain in inventory.
In essence, the 200 units sold comprise of 100 units purchased on January 31 at $20 each and 100 units from purchases made on February 28 at $30 each as computed below
Cost of goods sold=(100*$20)+(100*$30)
Cost of goods sold=$5,000(the options are wrong)
The correct question for the options is provided below:
A company purchased 80 units for $20 each on January 31. It purchased 190 units for $25 each on February 28. It sold 190 units for $80 each from March 1 through December 31. If the company uses the first-in, first-out inventory costing method, what is the amount of Cost of Goods Sold on the income statement for the year ending December 31? (Assume that the company uses a perpetual inventory system.)
A.
$6,350
B.
$4,350
C.
$1,600
D.
$4,750
Cost of goods sold=(80*$20)+(110*$25)
Cost of goods sold=$4,350
Inventory records for Dunbar Incorporated revealed the following: Date Transaction Number of Units Unit Cost Apr. 1 Beginning inventory 510 $ 2.38 Apr. 20 Purchase 370 2.63 Dunbar sold 650 units of inventory during the month. Ending inventory assuming weighted-average cost would be: (Round weighted-average unit cost to 4 decimal places and final answer to the nearest dollar amount.) Multiple Choice
Answers
Answer:
$572
Explanation:
The calculation of the ending inventory under weighted average cost is given below:
But before that the average cost per unit should be
= (510 × $2.38 + 370 × $2.63) ÷ (510 units + 370 units)
= ($1,213.80 + $973.10) ÷ (880 units)
= $2.4851
Now the ending inventory should be
= (510 + 370 - 650) × $2.4851
= $572
)An investor is trying to decide between a muni paying 5.75 percent or an equivalent taxablecorporate paying 8.25 percent. What is the minimum marginal tax rate the investor must have toconsider buying the municipal bond
Answers
Answer: 30.3%
Explanation:
Because taxes are not paid on municipal bond interest, their interest rates are usually lower with the difference accounting for the taxes paid.
For a municipal bond to be similar to a corporate bond, the tax rate must be such that it makes them equal:
Municipal bond return = Corporate bond return * (1 - tax rate)
5.75% = 8.25% * (1 - tax)
1 - tax rate = 5.75% / 8.25%
1 = 0.6969697 + Tax rate
Tax rate = 1 - 0.6969697
= 30.3%
Gross Domestic Product is a ________measurement of standard of living because ________.
a. imperfect; not all important determinants of standard of living are incorporated
b. imperfect; all important determinants of standard of living are incorporated
c. perfect; all important determinants of standard of living are incorporated
d. perfect; not all important determinants of standard of living are incorporate
Answers
Answer: A. imperfect; not all important determinants of standard of living are incorporated.
Explanation:
The gross domestic product refers to the monetary value of the goods and the services which are produced in a nation.
Gross Domestic Product is an imperfect measurement as it excludes non-market transactions such as the activities of mothers etc. Also, it doesn't account for income inequality in the society. Therefore, not all the important determinants of standard of living are incorporated.
The US imposes a tariff on the import of a computer chip that is also produced at higher cost by a US firm. The US firm is an important supplier to the US Navy. The US is probably using the _____ argument for protectionism.
Answers
Answer: d. Strategic industry
Explanation:
Sometimes countries will introduce a tariff in order to reduce the importation of a good or service that might be ruled as important for the security of the country and so would need to be produced by a company in the country. Goods related to national defense are especially more likely to fall under such tariffs.
The industry is therefore said to be strategic. This is what happened in the scenario above because the chip is used by the U.S. Navy which makes it national defense related.
Each of Professor A and Professor B at UTD has a private secretary, who can type four letters per hour. The letters are generated at a rate of three per hour by each of the two professors, who have been wondering if they would benefit from pooling the two secretaries. Perform a queuing analysis. What is the average waiting time of a letter in the system.
Answers
Answer:
Average waiting time = 7.5 minutes
Explanation:
UTD private secretary can type the number of letters = 4 per hour by each.
By professor, the letter generated = 3 per hour by each
Thus by pooling the average time will be the time that comes by dividing the one hour with total letters in an hour.
Use the below formula:
Average waiting time = Minutes in one hour / total letters
Average waiting time = 60 / 8
Average waiting time = 7.5 minutes
For a certain item, the cost-minimizing order quantity obtained with the basic EOQ model is 350 units, and the total annual inventory (holding and order) cost is $1050. What is the inventory holding cost per unit per year for this item
Answers
Answer: $3 per unit per year
Explanation:
Inventory holding cost per unit for this item is:
= Total Annual inventory carrying cost / Average inventory
Total Annual inventory carrying cost = Total annual inventory / 2
= 1,050 / 2
= $525
Average inventory = EOQ / 2
= 350 / 2
= 175 units
Inventory holding cost per unit = 525 / 175
= $3 per unit
Dake Corporation's relevant range of activity is 3,200 units to 8,000 units. When it produces and sells 5,600 units, its average costs per unit are as follows:
Average Cost per Unit
Direct materials $ 6.55
Direct labor $ 3.50
Variable manufacturing overhead $ 1.30
Fixed manufacturing overhead $ 3.00
Fixed selling expense $ 0.90
Fixed administrative expense $ 0.60
Sales commissions $ 0.70
Variable administrative expense $ 0.60
If 4,600 units are produced, the total amount of direct manufacturing cost incurred is closest to:____.
A) $63,560.
B) $16,800.
C) $87,640.
D) $80,360.
Answers
Answer:
the direct manufacturing cost is $46,230
Explanation:
The computation of the direct manufacturing cost is given below;
= (direct material per unit + direct labor per unit) × number of units produced
= ($6.55 + $3.50) × 4,600 units
= $46,230
hence, the direct manufacturing cost is $46,230
This is the answer but the same is not provided in the given options
The same should be considered
An overhead variance report includes which of the followings: _________
a. Variable and fixed flexible budget costs
b. Variable and fixed actual results
c. Variable and fixed sales results
d. Variable and fixed variances
Answers
Answer: a. Variable and fixed flexible budget costs
Explanation:
An overhead variance report shows the difference between the overhead that was actually incurred to either produce or sell vs the overhead that was budgeted.
Overhead can either be fixed or variable so an overhead report will include both fixed and variable budgeted costs which will then be compared to fixed and variable actual overhead costs.
, G's employees each earned an average of $870 per week. A total of 600 vacation weeks earned in 2021 were not taken during 2021. Wage rates for employees rose by an average of 6 percent by the time vacations actually were taken in 2022. What is the amount of G's 2022 salaries expense related to 2021 vacation tim
Answers
Answer:
$31,320
Explanation:
Calculation to determine the amount of G's 2022 salaries expense related to 2021 vacation tim
G's employees earned average of $870 per week.
Total vacation week in 2021 wew not taken - 600 week
Total salary expense of G corporation = $870 per week × 600
Total salary expenses = $522,000
If Wage rates for employees rose by an average of 6 percent
The amount of G's 2022 salaries expense = Total salary expenses × wage rate
The amount of G's 2022 salaries expense = $522,000 × 6%
The amount of G's 2022 salaries expense = $31,320
Therefore the amount of G's 2022 salaries expense related to 2021 vacation tim is $31,320
You believe you must withdraw $12,000 per month during retirement. You plan to be retired for 30 years. Assuming your money will earn 4.5% during retirement and also assuming that you will not adjust your withdrawals for inflation, how much money will you need to have on hand on the day you retire, in order to fund your retirement?
a. $1,756,245.98.
b. $1,321,788.32.
c. $12,133,524.55.
d. $2,368,333.91.
Answers
In this type of budget, the master budget is based on a single prediction for sales volume, and the budgeted amount for each cost essentially assumes that a specific amount of sales will occur. Group of answer choices Flexible budget. Variable budget. Standard budget. Fixed budget.
Answers
Answer:
Fixed budget.
Explanation:
A fixed budget can be regarded as financial plan which is not been modified for any variations that could come up in actual activity. In most times some companies may have experience of substantial variations as regards their expected activity levels within the encompassed period of budget as well as the amounts in that budget. The budget cost allowances in a fixed budget for each cost item cannot be changed as regards the variable items. It should be noted that in Fixed budget the master budget is based on a single prediction for sales volume, and the budgeted amount for each cost essentially assumes that a specific amount of sales will occur.
