Chapter 10, Problem 10.17BE

An environmental consultant is considering the installation of a water storage tank for a client. The tank is estimated to have an initial cost of $426,000, and annual maintenance costs are estimated to be $6,400 per year. As an alternative, a holding pond can be provided a short distance away at an initial cost of $180,000 for the pond plus $90,000 for pumps and piping. Annual operating and maintenance costs for the pumps and holding pond are estimated to be $17,000. The planning horizon is 20 years, and at that time, neither alternative has any salvage value. Determine the preferred alternative based on a present worth analysis with a MARR of 20%/year.

During 2020, BLACKPINK INC. incurred costs to develop and produce a routine, low-risk computer software product as follows: • Completion of detailed program design or working model- 1,000,000 • Cost incurred for coding and testing to establish technological feasibility- 200,000 • Other coding costs after the establishment of technological feasibility- 2,000,000 • Other testing costs after the establishment of technological feasibility- 1,500,000 • Costs of producing product masters for training materials- 2,500,000 • Duplication of computer software and training materials from product master- 3,000,000 • Production overhead- 1,000,000 • Packaging product- 500,000 • Administrative overhead- 750,000 • Promotional cost of the finished software- 200,000 • Abnormal amount of wasted materials and labor costs- 250,000 In the December 31, 2020 balance sheet, what amount should be reported as inventory?

Bobwhite Laundromat is trying to enhance the services it provides to customers, mostly college students. It is looking into the purchase of new high-efficiency washing machines that will allow for the laundry's status to be checked via smartphone. Bobwhite estimates the cost of the new equipment at $191,000. The equipment has a useful life of 9 years. Bobwhite expects cash fixed costs of $77,000 per year to operate the new machines, as well as cash variable costs in the amount of 5% of revenues. Bobwhite evaluates investments using a cost of capital of 10%. Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements. Requirement 1. Calculate the payback period and the discounted payback period for this investment, assuming Bobwhite expects to generate $150,000 in incremental revenues every year from the new machines. (Round your answer to two decimal places.) The payback period in years, for the…

On September 30, 2021, Athens Software began developing a software program to shield personal computers from malware and spyware. Technological feasibility was established on February 28, 2022, and the program was available for release on April 30, 2022. Development costs were incurred as follows: September 30 through December 31, 2021$2,400,000January 1 through February 28, 20221,000,000March 1 through April 30, 2022600,000 Athens expects a useful life of four years for the software and total revenues of $7,000,000 during that time. During 2022, revenue of $1,540,000 was recognized. Required: Prepare a journal entry in each year to record development costs for 2021 and 2022.

MHA Medical Center is starting a new lab test center on its third floor. The expected patient volume demands will generate $500,000 per year in revenues for the next five years. The new center will incur operating expenses, excluding depreciation, of $300,000 per year for the next five years. The initial cost of the new equipment is $700,000. Straight-line depreciation is used to estimate depreciation expense, and the equipment will be depreciated over a five-year life to their salvage value. The expected salvage value of the equipment at year five is $80,000. Compute the NPV (at 10 percent cost of capital) and IRR to determine the financial feasibility of this project if this were a tax-paying entity with a tax rate of 30 percent. Use the following tables. * LOOK at Image                                      Givens:         Years 0 1 2 3 4 5         Initial investment                   $0 $0         Net revenue             $0 $0 $0 $0 $0         Operating expenses…

Temporary Housing Services Incorporated (THSI) is considering a project that involves setting up a temporary housing facility in an area recently damaged by a hurricane. THSI will lease space in this facility to various agencies and groups providing relief services to the area. THSI estimates that this project will initially cost $4.87 million to setup and will generate $20 million in revenues during its first and only year in operation (paid in one year). Operating expenses are expected to total $12 million during this year and depreciation expense will be another $3 million. THSI will require no working capital for this investment. THSI's marginal tax rate is 35%. Assume that THSI's cost of capital is 14.6% p.a. Compute the NPV of the temporary housing facility to the nearest dollar

During 2020, TULIP Corporation incurred costs to develop and produce a routine, low-risk computer software product as follows: Packaging product (500 units) -₱90,000; Duplication of computer software and training materials from product masters (1,000 units) -₱250,000; Completion of detailed program design -₱130,000; Cost of producing product masters for training materials -₱150,000; Other testing costs after establishment of technological feasibility -₱200,000; Costs incurred for coding and testing to establish technological feasibility -₱100,000; Other coding costs after establishment of technological feasibility -₱240,000. In TULIP's December 31, 2020 statement of financial position, what amount should be capitalized as software cost subject to amortization? * ₱ 540,000 ₱ 590,000 ₱ 570,000 ₱ 690,000

During 2020, TULIP Corporation incurred costs to develop and produce a routine, low-risk computer software product as follows: Packaging product (500 units) -₱90,000; Duplication of computer software and training materials from product masters (1,000 units) -₱250,000; Completion of detailed program design -₱130,000; Cost of producing product masters for training materials -₱150,000; Other testing costs after establishment of technological feasibility -₱200,000; Costs incurred for coding and testing to establish technological feasibility -₱100,000; Other coding costs after establishment of technological feasibility -₱240,000. In TULIP's December 31, 2020 statement of financial position, what amount should be capitalized as software cost subject to amortization? * a. ₱ 570,000 b. ₱ 690,000 c. ₱ 540,000 d. ₱ 590,000

During 2020, TULIP Corporation incurred costs to develop and produce a routine, low-risk computer software product as follows: Packaging product (500 units) -₱90,000; Duplication of computer software and training materials from product masters (1,000 units) -₱250,000; Completion of detailed program design -₱130,000; Cost of producing product masters for training materials -₱150,000; Other testing costs after establishment of technological feasibility -₱200,000; Costs incurred for coding and testing to establish technological feasibility -₱100,000; Other coding costs after establishment of technological feasibility -₱240,000. In TULIP's December 31, 2020 statement of financial position, what amount should be capitalized as software cost subject to amortization?