All American Pipeline

(2) Accumulated Depreciation- This account accumulates the depreciation over the course of the 12 months. As mentioned above, the appraisal value of PP&E is referred to as “PP&E, net”, which is the original value of $200,000 minus the accumulated depreciation for each month.

Thus, final free cash flows for the project come out to be $-3.750 million, $0.889 million, $2,563 million, $5,719 million and $2,388 million for years 2011, 2012, 2013, 2014 and 2015 years respectively.

What are the expected non-operating cash flows when the project is terminated in Year 10?

Descriptions: Carrying Amount of PPE is $163,982, 000, which is made up of the figure of plant &equipment which is $106,560,000 add to the Leasehold improvements which is $57,422,000 come out as the total Plant & Equipment Figure. To be expected that the plant and equipment accounts for more than 50% of total PPE ($106,560,000) for their main operating activity — retailing of home consumer products from stand alone destination sites and shopping

Finally, in order to complete a more accurate comparison between the two projects, we utilized the EANPV as the deciding factor. Under current accepted financial practice, NPV is generally considered the most accurate method of predicting the performance of a potential project. The duration of the projects is different, one lasts four years and one lasts six years. To account for the variation in time frames for the projects and to further refine our selection we calculated the EANPV to compare performance on a yearly basis.

The terminal growth rate is the average growth rates from 2007 to 2011. Combining with previous cash flows of 5 years, the whole future cash flows are:

2. Use the projections provided in the case to compute the incremental cash flows for the PCB project. Provide a reasonable estimate for cash flows after 2009 as well.

Keene: But isn’t that a pretty rosy estimate of these assets’ actual life? Trade publications show an average depreciation period of 12 years.

e. WorldCom improperly capitalized the line costs as a debit to the asset account Transmission Equipment for $3.055 billion and credit to cash for the same amount. These costs improperly appear on the balance sheet as an asset under the category of Property and Equipment. These costs are incorrectly categorized as a capital expenditure in the investing section of the Statement of Cash Flows.

See Table 1: Expected non-operating cash flow when the project is terminated at year 4 = 165,880$

If market conditions change, the capacity of the pipeline could be increased to 830,000 barrels per day (bpd). The overall pipeline is estimated to cost 7$ billion.

In the first step we analyze the data and calculate the free cash flow from the inception of the project to the foreseeable future.

Next, the terminal value at year ten was calculated. The following formula was used to do so: terminal value at year 10 = (FCF at year 11)/(WACC - g). This time we used the long-term growth rate of 7up, which was given by the case as 1% less than the industry rate. This resulted in a terminal value of $848M with its present value calculation being $231M.

Using this growth rate we calculated a terminal value of $6782.88 and a PV(terminal value) of $4698.39:

As mentioned before, the contractor’s that failed to meet expectations were usually just replaced by a new contractor in the same existing facility, this is an activity that impacts the company’s overall performance, as time and money has to again be spent re-negotiating terms of agreement, setting up and starting production lines. Overall the key metrics do not focus on activities that can have a more profound impact on the company’s performance. The heavy focus on production quota causes the company to