P11d Using the time value of money to compute the present and future values of single lump sums and annuities. Congratulations! You have won a state lottery. The state lottery offers you the following (after-tax) payout options: Option #1: $13,000,000 after five years Option #2: $2,300,000 per year for the next five years
The department is considering the purchase of a new, more efficient pool heater for its swimming pool at a cost of $15000. It should save $3000 in cash operating costs per year. The estimated useful life is 8 years and zero disposal value. Ignore taxes. 1. What is the payback time? 2. Compute the NPV if the minimum rate of ret
1. Tesar Chemicals is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The CEO believes the IRR is the best selection criterion, while the CFO advocates the NPV. If the decision is made by choosing the project with the higher IRR rather t
Please help with with the questions below: Define decentralized budgeting. Discuss what benefits could be realized by implementing decentralized budgeting and defend with examples. List two critical requirements for accurate capital budgeting estimation. Also, give an example of applying one capital budgeting tool.
I need help for the question below: A company owned a plot of land that appeared in its fixed assets at its acquisition cost in 1910, which was $10,000. The land was not used. In 2009, the local boys club asked the company to donate the land as the site for a new recreation building. The donation would be a tax deduction of
A shellfish processing company is thinking about purchasing a new clam digger for $14,000. The expected net cash flows resulting from the digger are $9,000 in year 1, $7,000 in the 2nd year, $5,000 in the 3rd year, and $3,000 in the 4th year. Should the company purchase this digger if its cost of capital is 12 percent? In provi
Explain what planning and budgeting are and why they are so important to an organization's success? Please distinguish between the two and state how they are related.
New equipment would permit the manufacture of 100,000 additional spark plugs every year. It will have a useful life of 5 years with no salvage value. The equipment will be depreciated using straight-line method. The plugs sell for $20 and cost $8 to manufacture using the new equipment. Indirect costs are remain the same. The eq
Analyze the following scenario: River County is planning several capital acquisitions for the coming year. These include the purchase of two new garbage trucks at $150,000 each, one new bulldozer at $240,000, three new riding lawn mowers at $16,000 each, and construction of an activity center in the park for $650,000. The expec
Please compare the advantage of using NPV instead of other evaluation methods such as (IRR, ARR and PP) in decision making.
Respond to the following scenario with your thoughts, ideas, and comments. Be substantive and clear, and use research to reinforce your ideas. Over lunch, you and Mary meet to discuss next steps with the expansion project. "Do we have everything we need on sales and costs?" you ask. "It must be time to compute the net pres
You will take on the role of a budget analyst for a local government agency. The first role of the budget analyst is to become familiar with the agency, the budget, programs, and capital projects. Select any local (city) government (e.g., Oklahoma City). To locate your agency's budget, you can either conduct a Google search on t
1. When an income statement shows data for segments of the organization, and data for each segment are added together to get totals for the whole organization: A. all expenses should be allocated to the segments. B. common fixed expenses should be allocated to the segments. C. only direct revenues and direct expenses shoul
POSTED PROBLEMS: Problem 3 Blaster Drive-In is a fast-food restaurant that sells burgers and hot dogs in a 1950s environment. The fixed operating costs of the company are $5,000 per month. The controlling shareholder interested in product profitability and pricing, wants all costs allocated to either the burgers or the hot d
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter: 1 As of December 31, (the end of the prior quarter), the company's general ledger showed the following acco
-Provide an example of an organization that uses line items, and describe the organization. -Why do line items appeal to you? Explain in detail. -In your opinion, what strengths and weaknesses do line items contain? Explain in detail.
Why is capital budgeting important, specifically in terms of increasing shareholder wealth? - Describe an example where pursuing an investment that has not passed normal capital budgeting go/no go criteria, may hurt the firms value. - Explain the pros and cons of the simple payback method, the net present value method and IRR
A Masters of Accountancy degree at CU cost $10,000 for an additional fifth year of education beyond the bachelors degree. Assume that all tuition is paid at the beginning of the year. A student considering this investment must evaluate the present value of cash flows from possessing a graduate degree versus holding only the unde
A firm has the capacity to produce 1,000,000 units of a product each year. At present, it is operating at 70 percent of capacity. The firm's annual revenue is $700,000. Annual fixed costs are $300,000, and the variable costs are $0.50 per unit. The following equations will be useful. Profit = Revenue - Costs Revenue = Pric
To what extent do not-for-profit organizations have the ability to choose among the following: a. Using depreciation, b. Ignoring depreciation, c. Maintaining building and equipment on the balance sheet at their original cost, d. Showing such assets at their market value, or e. Completely charging such assets
Explain how the CAPM assists in measuring both risk and return. Explain how the CAPM assists in calculating the weighted average costs of capital (WACC) and its components. Illustrate why some managers have difficulty applying the Capital Asset Pricing Model (CAPM) in financial decision making. Identify the benefits and draw
Following are the cash flows (equal in years 1-5) and a MARR for a proposal. MARR=14% Year 0 1 2 3 4 5 Cash Flow ($3,250) $500 $750 $1,100 $1,500 $1,200 a. Determine the Present Worth. Based on this, should the proposal be app
Please help with the attached Corporate Finance Question regarding Payback, NPV, and IRR. I am looking for the calculations and work shown (any formulas) on how the answer was obtained. Corporate Finance Question: P10-21 Payback, NPV, and IRR Rieger International is attempting to evaluate the feasibility of investing
GAAP vs. IFRS The United States uses Generally Accepted Accounting Principles (GAAP) as the basis of financial reporting. The International Financial Accounting Standards (IFRS) is an alternative way to report financials. This article from Ernst and Young compares the two methods of financial reporting. Ernst & Young's US
In the file attached is the Cash Flow Projection of two proposed projects. Both of these projects involve additions to DMart's highly successful product line and as a result, the required rate of return on both projects has been established at 12 percent. Please help to: (a) Briefly explain why the capital-budgeting proces
Three of the most commonly used techniques for evaluating possible capital projects are the Payback Period, Net Present Value, and Internal Rate of Return. Discuss the strengths and weaknesses of each of these three methods. Which technique do you think is the best method? Be sure to justify your choice of the best method.
1. What are the pros and cons of the decision rules for the NPV, the IRR, the MIRR, and the payback methods? Which is the most accurate method and why? 2. What are sunk costs? Should they be included in the cash flow estimation when making a capital budgeting decision? Why or why not?
Do capital budgets have an impact on operating budgets? Explain.
Develop a final recommendation on Subway franchise opportunity. The recommendation should include the following: - An executive summary - A decision objective regarding selection of franchise opportunity - Forecasts of franchise profits and cash flows(Included in attached document) - An estimated internal rate of return on
S&J Plumbing, Inc.'s 2010 income statement shows a net profit before tax of $468, whereas the balance sheet that the company's equity for the fiscal year-end 2010 is $1,746. a) Calculate the company's return on equity and whether the managers are providing a good return on the capital provided by the company's shareholders.