A mining company is offered a 9-year lease for a coal mine at a cost of P120M. The engineers estimate the company will be able to mine 15 000 tons/yr for the first four years and 22 500 tons/yr for the next five years. Operating costs is computed at P1250/ton, while the price of coal is P2750/ton. If the company requires a 12% minimum rate of return on its investment, determine if the offer should be considered Apply PW analysis. (Ans. Offer should be accepted, P25.66M)
Q: ABC Company, a computer repair shop provided the following information at the end of its first month…
A: Income Statement Amount Revenues: Computer Repair Services Rendered 160,000…
Q: Question 9: During a recent week, Jonathan Phelps worked 38 regular hours. He earns $10.25/hour and…
A: Federal tax withholding is where your employer takes a certain amount of money out of your paycheck…
Q: On June 1, 2021, Demer Consulting provides services to a customer for $150,000. To pay for the…
A: The journal entries are prepared to record the day to day transactions of the business during the…
Q: Omega Company prepared an aging of accounts receivable on December 31, 2018 and determined that the…
A: Ending Allowance for uncollectible accounts balance = Ending accounts receivable - ending net…
Q: Macinski Leasing Company Leases a new machine to Sharrer Corporation. The machine has a cost of…
A:
Q: Dominador's Pizza Inc. enters into a franchise agreement on December 31, 20x7 giving Doming Corp.…
A: Franchise Revenue To recognize the franchise revenue is one of the important task of the franchise…
Q: AG is preparing the comparative financial statements to be included in the annual report to…
A: The number of weighted shares are calculated using the following formula:- Weighted Number of shares…
Q: PROBLEM: Selected transactions from Juliana transport services began on August 6, 2020 by Naz Roby…
A: Accounting equation implies that the total assets of an entity equals the sum of liabilities and…
Q: Xaviery Computers is a franchisor and provides a range of computing services hardware/software…
A: Answer - Correct Option is Option - b- 1 Rights to the trade name, market area, and proprietary…
Q: Sales in Units 50,000 75,000 90,000 80,000 = of preparing a production budget for the: n that…
A: Production budget calculates the number of units to be produced in a period . It based on budgeted…
Q: Carol Morgan manages the production division of Perez Corporation. Ms. Morgan's responsibility…
A: A budget is an estimate of sales and expenditure for a particular future period of time that is used…
Q: temzed deductions are an add back for AMT purposes O True False
A: Itemized deductions refer to the sum value of money paid for state and local income or sales taxes,…
Q: 26. Per the Fraud Examiners Manual, which of the following is NOT true about pass-through shell…
A: ANSWER Per the Fraud Examiners Manual, which of the following is NOT true about pass-through shell…
Q: Which of the following journals would correctly post an adjustment for deferred (prepaid) income?…
A: The journal entries are prepared to keep the record of day to day transactions of the business on…
Q: How can the predetermined factory overhead rate be used in job order cost accounting to assist…
A: Factory overheads refer to the total cost of manufacturing and operating a manufacturing process, is…
Q: What will be the value of the general receivables provision? £ 906 What will be the irrecoverable…
A: Balance at receivable in account at the year end £ 54,500 Special Provision of 9200…
Q: Which of the following is correct? Group of answer choices 1. The lower the price you pay for a…
A: An overpriced bond is one whose price is more than its value. Therefore, 2nd option is incorrect.…
Q: What is the effect of deferred tax asset and deferred tax liability on the current year’s income tax…
A: Deferred tax assets and deferred tax liability arises because of the timing differences of the…
Q: I need a Journal entry for this equation
A: Answer:
Q: Balance Est. Percentage Uncollectible Age Interval Not due $63,000 2% 1-30 days past due 7,100 5%…
A: Formula: Estimated Uncollectibe amount = Balance amount x Estimated Percentage Uncollectible
Q: Muscat company purchased office supplies costing OMR2,000 and debited Office Supplies for the full…
A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…
Q: Explain Doctrine Separate Legal Entity
A: Doctrine separate legal entity is a concept related to Company / Corporation. The concept is…
Q: What is the production budgeted for the third quarter? Company policy is to have a finished goods…
A: A budget is a statement prepared by the companies, government, and individuals by making an estimate…
Q: 68 Advanced Corporate Accounting 4. Spring Field Ltd. is absorbed by Sports Field Ltd., the…
A: The purchase consideration is the amount paid in the form of cash or securities issued to the…
Q: a-1. Determine the unadjusted rate of return and (use ave places. (i.e., 0.2345 should be entered as…
A: IRR is a tool that is used to calculate the return over the project cash flow or its investment. If…
Q: Covariance and Correlation The following table shows the expected returns from six different stocks…
A: Expected Return of each stock. Stock A = (Weight1 * Return1) + Weight 2 * Return 2) + ( Weight3 *…
Q: On a recent trip to Hongkong, Brian Santos, sales manager of Micro electronic Devices, took his wife…
A: General Journal shows the recording of transactions during an accounting year and in the journal,…
Q: At the start of the period, ABC Company has total assets of P500,000 and total liabilities of…
A: Total equity at the start of the period = Total assets - Total liabilities = P500,000 - P300,000 =…
Q: Problem 19-04 The manufacturer of a product that has a variable cost of $2.60 per unit and total…
A: The correct answer for the above mentioned question is given in the following steps for your…
Q: If a business receives P 10,000 on account from a client who owed money for services previously…
A: 1.The end goal of the accounting cycle is the preparation of the financial statements. True…
Q: tables. The owne y their male chet e Becker's meas ide chould include
A: Given: pay their male chefs $45/hr Female chef $35/hr.
Q: the predetermined overhead rate with machine usage as the basis
A: Factory overhead allocation: the factory overhead of a company can only be calculated at the end of…
Q: Closing entries are made: to make all ledger account balances equal to zero to make all nominal…
A: Closing entry means the entries passed at the end of specified period where all the balances of…
Q: You are required to develop a computer-based income and balance statement.
A: Particulars Amount Revenue from sales 650,000 Revenue from other sources 150,000 Total…
Q: WOSking capital fox all Years5? it al fox all Yeas? As Reported Annual Balance Sheet Report Date…
A:
Q: Record the journal entry.
A: Answer:
Q: itor needs to obtain an understanding of the overall internal control of a company, the auditor…
A: Auditor refers to the individual or an entity whose job is to check and collect all the data and…
Q: Assume a parent company acquired its subsidiary on January 1, 2016. On January 1, 2016, the…
A: Consolidation refers to when one company acquires the shares of another company. The acquiring…
Q: Land and buildings: Cost (including ¢60m land). ¢380000 Accumulated depreciation at 1/1/2020…
A: Cost of asset: Cost of asset is the value at which a company acquires an asset. It also encompasses…
Q: t Ltd had a bal d their issued sl IS O ordinary sha n 23 October 2
A: Share capital refers to the capital of the company which is a collective set created by the shares…
Q: a. Sold merchandise on account, $13,400, with terms 2/10, net 30. The cost of the merdchandise sold…
A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…
Q: That is, it is unacceptable to manually compute the solutions and simply insert the answers into the…
A: The cost-volume-profit analysis is widely used by the management to determine the change in profit…
Q: on relates to this agreement. rchase the equipment for $16, at Jan Way will exercise this o 120,000…
A: The journal entry is given as,
Q: P16-5. Please show all your workings clearly.
A: Earning Per Share Earning per share is considered to be the important calculated tool for the…
Q: EXERCISE 1: DOUBLE ENTRY ACCOUNTING Alia Maisarah is the owner and operator of Alia's Bakery, a shop…
A: In the given case, Cash Flow statement will be provided using direct method
Q: operating costs. The new machine would cost $350, lue of the old machine on January 1, year 3, is…
A: The income statement is explained as,
Q: Explain
A: The "Anti-Money Laundering Council" (AMLC) is the government entity entrusted with implementing the…
Q: a. On 5/15/2020, purchased 4,000 shares of its own common stock at $20 per share. b. On 7/10/2020,…
A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…
Q: we allow for international trade. Use the following information from problem 1: C = 400
A: The answer has been mentioned below. Note: Attempting the first three subparts of the…
Q: Current Attempt in Progress In its first month of operation, Metlock Company purchased 86 units of…
A: Solution:- step2 in the solution.
Q04
Step by step
Solved in 2 steps with 2 images
- Big Sky Mining Company must install 1.5 million of new machinery in its Nevada mine. It can obtain a bank loan for 100% of the purchase price, or it can lease the machinery. Assume that the following facts apply. (1) The machinery falls into the MACRS 3-year class. (2) Under either the lease or the purchase, Big Sky must pay for insurance, property taxes, and maintenance. (3) The firms tax rate is 25%. (4) The loan would have an interest rate of 15%. It would be nonamortizing, with only interest paid at the end of each year for four years and the principal repaid at Year 4. (5) The lease terms call for 400,000 payments at the end of each of the next 4 years. (6) Big Sky Mining has no use for the machine beyond the expiration of the lease, and the machine has an estimated residual value of 250,000 at the end of the 4th year. a. What is the cost of owning? b. What is the cost of leasing? c. What is the NAL of the lease?The Rodriguez Company is considering an average-risk investment in a mineral water spring project that has an initial after-tax cost of 170,000. The project will produce 1,000 cases of mineral water per year indefinitely, starting at Year 1. The Year-1 sales price will be 138 per case, and the Year-1 cost per case will be 105. The firm is taxed at a rate of 25%. Both prices and costs are expected to rise after Year 1 at a rate of 6% per year due to inflation. The firm uses only equity, and it has a cost of capital of 15%. Assume that cash flows consist only of after-tax profits because the spring has an indefinite life and will not be depreciated. a. What is the present value of future cash flows? (Hint: The project is a growing perpetuity, so you must use the constant growth formula to find its NPV.) What is the NPV? b. Suppose that the company had forgotten to include future inflation. What would they have incorrectly calculated as the projects NPV?Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.
- Redbird Company is considering a project with an initial investment of $265,000 in new equipment that will yield annual net cash flows of $45,800 each year over its seven-year life. The companys minimum required rate of return is 8%. What is the internal rate of return? Should Redbird accept the project based on IRR?Grummet Company is acquiring a new wood lathe with a cash purchase price of $80,000. The Wood Master Industries (the manufacturer) has agreed to accept $23,500 at the end of each of the next 4 years. Based on this deal, how much interest will Grummet pay over the life of the loan? A. $94,000 B. $80,000 C. $23,500 D. $14,000(1) Assume that the lease payments were actually 280,000 per year, that Consolidated Leasing is also in the 25% tax bracket, and that it also forecasts a 200,000 residual value. Also, to furnish the maintenance support, it would have to purchase a maintenance contract from the manufacturer at the same 20,000 annual cost, again paid in advance. Consolidated Leasing can obtain an expected 10% pre-tax return on investments of similar risk. What are its NPV and IRR of leasing under these conditions? (2) What do you think the lessors NPV would be if the lease payment were set at 260,000 per year? (Hint: The lessors cash flows would be a mirror image of the lessees cash flows.)
- An investor is under contract to buy a 2,000,000 square foot fully leased industrial park in Charleston, South Carolina as an investment at a price of $60,000,000. There are 12 tenants, each of which has a fifteen-year lease at a flat rental rate of $0.25 per square foot per month with an expense stop of $0.05 per square foot per month. Total annual operating expenses for the building are currently $1.20 per square foot per year. There is a ten-year interest-only mortgage loan with a principal balance of $40,000,000 at a 4.5% fixed annual interest rate that has six years remaining until the maturity date. The building/land ratio for tax depreciation purposes is 75/25. What is the annual tax depreciation? a.$1,636,362 b.$1,538,462 c.$384,616 d.$1,153,846An investor is under contract to buy a 2,000,000 square foot fully leased industrial park in Charleston, South Carolina as an investment at a price of $60,000,000. There are 12 tenants, each of which has a fifteen-year lease at a flat rental rate of $0.25 per square foot per month with an expense stop of $0.05 per square foot per month. Total annual operating expenses for the building are currently $1.20 per square foot per year. There is a ten-year interest-only mortgage loan with a principal balance of $40,000,000 at a 4.5% fixed annual interest rate that has six years remaining until the maturity date. The building/land ratio for tax depreciation purposes is 75/25. What is the acquisition cap rate? a.7.00% b.6.00% c.8.00% d.10.00%An investor is under contract to buy a 2,000,000 square foot fully leased industrial park in Charleston, South Carolina as an investment at a price of $60,000,000. There are 12 tenants, each of which has a fifteen-year lease at a flat rental rate of $0.25 per square foot per month with an expense stop of $0.05 per square foot per month. Total annual operating expenses for the building are currently $1.20 per square foot per year. There is a ten-year interest-only mortgage loan with a principal balance of $40,000,000 at a 4.5% fixed annual interest rate that has six years remaining until the maturity date. The building/land ratio for tax depreciation purposes is 75/25. What is the property’s taxable income? $1,846,154 $1,292,308 $2,923,076 $3,000,000
- Mowbot Company is evaluating the production of a new part. It would require the acquisition of a special CNC lathe costing $375,000. The machine would be used for five years then sold for $135,000. Mowbot’s MARR is 18%. In addition to the sales quotation, the sales representative has quoted a five year lease for $81,000 per year, with the first year’s payment due on delivery. Based on pretax analysis, should Mowbot choose leasing or buying?Canada M. manufactures special equipment with an estimated economic life of 12 years and leases it to Phranka for a period of 10 years commencing January 1, 2021. The unguaranteed residual value at the end of the lease term is estimated to be $15,000. Phranka will make annual payments of $25,000 at the beginning of each year and pay for all maintenance and insurance costs. Canada M. incurred costs of $105,000 in manufacturing the equipment but is looking to make a profit on the sale of equipment. In addition, Phranka incurred $7000 in costs tied to negotiating and closing the lease. Canada M. has determined that the collectability of the lease payments is reasonably predictable, that no additional costs will be incurred, and that the implicit interest rate is 8%. Phranka has a borrowing rate of 8%. How should Canada M. classify this lease transaction? a. Classify as an operating lease. b. Classify as a capital, sales type lease. c. Classify as a capital, direct finance type lease.…The equipment, which manufactures Easter baskets, costs $74,000 and can be leased over seven years with payments being made at the beginning of each year The lessor calculates the lease payments based on an expected return of 11% over the seven years. (Ignore possible residual value of equipment to lessor.) The lease is a net lease. The firm is in the 40% marginal tax bracket.If bought, the equipment is expected to have a final salvage value of $7,500.The purchase of the equipment will result in a depreciation schedule of 20%, 32%, 19.2%, 11.52%, 11.52%, and 5.76% for the first six years (5-year property class) based on a $74,000 depreciable base. Loan payments are based on a 12% loan with payments occurring at the beginning of each period.Also require analysis that this equipment should Buy or Take on leases?