Cash Flow

912 Words Aug 13th, 2013 4 Pages
ASSIGNMENT #2
Application of Cash flow formulae [problems 1-5], Depreciation [problems 6-8] and Break-even Analysis [problems 9-10]

Total Marks: 100

Problem #1 [5] What amount would you need to pay each January 1 into a savings account if at the end of 15 years (15 payments) you desire RM 30,000? Annual interest is 7%. (Note: The last payment will coincide with the time of RM RM 30,000 balance.)

Problem #2 [5] A future amount, F, is equivalent to $1,500 now when six years separate the amounts and the annual interest rate is 12%. What is the value of F?

Problem #3 [5] A present obligation of $20,000 is to be repaid in equal uniform annual amounts, each of which includes repayment of the debt (principal) and interest on the
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Problem #7 [4+6=10]

Upjohn Company has purchased a new packaging equipment with an estimated useful life of five years. The cost of the equipment was $55,000, and the salvage value was estimated to be $5,000 at the end of year 5. Compute the annual depreciation expenses over the five year life of the equipment under each of the following methods of depreciation:

Straight –line method

Double-declining balance method

Problem #8 [3+3+3+3+3=15]

A special-purpose computer workstation has B = $50,000 with a 4-year recovery period.
(a) Tabulate and plot the values for SL depreciation, accumulated depreciation, and book value for each year if there is no salvage value
(b) Tabulate and plot the values for SL depreciation, accumulated depreciation, and book value for each year if the salvage value, S=$16,000.
(c) Use a spreadsheet to solve this problem by using DDB method.
(d) Plot the book value for SL and DDB depreciation on a single XY scatter chart.
(e) Calculate the DDB annual depreciation rate for all years 1 through 4.

Problem # 9 [6+4=12]

Jack’s Grocery is manufacturing a “store brand” item that has a variable cost of $0.75 per unit and a selling price of $1.25 per unit. Fixed costs are $12,000. Current volume is 50,000 units. The Grocery can substantially improve the product quality by adding a new piece of equipment at an

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