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White raven [17]
3 years ago
6

Domebo Corporation has entered into a 7 year lease for a piece of equipment. The annual payment under the lease will be $3,000,

with payments being made at the beginning of each year. If the discount rate is 12%, the present value of the lease payments is closest to (Ignore income taxes:__________. a) $21,000 b) $8692 c) $13,692 d) $18,049 e) $15.333
Business
1 answer:
Leviafan [203]3 years ago
5 0

Answer:

The correct answer is:

$18,049 (d)

Explanation:

First, let us lay out the information given clearly:

Period of lease = 7 years

annual payments = $3,000

discount rate = 12% = 12/100 = 0.12

Note the the present value of lease payments is the same thing as total value of the lease payment, before any payments have been made.

Next, without the interest, the total value of the lease payment is calculated as:

Total amount to be paid = annual payments × period of lease (time)

= 3,000 × 7 = $21,000

Next, we are told that there is a discount rate of 12%, this will reduce the total amount to be paid by 12%, and this is calculated as:

discount on lease payment = 12% of total amount  

= 0.12 × 21,000 = $2,520

Finally the new amount to be paid is calculated by subtracting the discount from the total value, and this is calculated thus:

present value of lease payments = Total payments - discount

= 21,000 - 2,520 = $18,480 ( closest to $18,049)

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Based on the following information, determine the amount of equipment on the balance sheet. Total liabilities and owner's equity
hammer [34]

Answer:

$9,950

Explanation:

The amount of equipment shall be determined through accounting equation which is given as follows:

Total Assets=Total liabilities+Total equity

Total assets=Current+Non current assets

Current assets+Non current assets=Total liabilities+Total equity

Non current assets=Cost of land+Cost of equipment-accumulated depreciation on equipment

Current assets+Cost of land+Cost of equipment-accumulated depreciation on equipment=Total liabilities+Total equity

Applying given data in the question to the above equation

$19,800+$15,000+Cost of equipment-$1,550=$44,750

$33,250+Cost of equipment=$44,750

Cost of equipment=$44,750-$33,250=$11,500

Amount of equipment on balance sheet=$11,500-$1,550=$9,950

6 0
3 years ago
Read 2 more answers
Frost Enterprises buys a warehouse for $ 510,000 to use for its East Coast distribution operations. On the date of the​ purchase
12345 [234]

Answer:

$510,000.00

Explanation:

Since the historical cost principle states that business must account and record most assets at their purchase or acquisition price which means the data put into record on the balance sheet would reflect amount paid for asset.

That is why it is $510000.

6 0
3 years ago
Assume the XYZ Corporation is producing 20 units of output. It is selling this output in a purely competitive market at $10 per
IgorC [24]

Answer:

Economic profit will be $40

So option (d) will be correct option

Explanation:

We have given number of units produced = 20 units

Price of per unit = $10 per unit

So revenue = 20×$10 = $200

Revenue :20 units * $10 = 200

Fixed cost is given $100

Variable cost: 20 units ×$3 = 60

So total cost= Fixed cost + Variable cost = 100 + 60 =$160

So economic profit = Revenue - Total cost = 200 - 160 = $40

So option (d) will be correct answer

6 0
3 years ago
Novak Corp. bought equipment on January 1, 2022. The equipment cost $390000 and had an expected salvage value of $35000. The lif
nirvana33 [79]

Answer:

$177,000

Explanation:

In order to find the book value of the equipment we need to find the amount of depreciation per year. To do this we need to subtract the salvage value from the initial cost and then simply divide by 5 which is the life span of the equipment...

(390,000 - 35,000) / 5 = x

355,000 / 5 = x

71,000 = x

Now we see that the equipment will depreciate by $71,000 per year. In three years the depreciation would be

71,000 * 3 = 213,000

Now we simply subtract this value from the initial cost to get the book value in the third year

390,000 - 213,000 = 177,000

7 0
2 years ago
Q 12.4: chaz denver company has identified that the cost of a new computer will be $40,000, but with the use of the new computer
Anton [14]

Payback period is the length of time a project recovers back the money invested.

Payback period= invested cash/ Net annual cash flow

Therefore payback period =40,000/5000

                                               =8.0 years

Since depreciation is a non- cash expense it is ignored while calculating payback period.                

4 0
3 years ago
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