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Semmy [17]
3 years ago
13

A project is expected to create operating cash flows of $22,500 a year for three years. The initial cost of the fixed assets is

$50,000. These assets will be worthless at the end of the project. An additional $3,000 of net working capital will be required throughout the life of the project. What is the project’s net present value if the required rate of return is 10%?
Business
1 answer:
astra-53 [7]3 years ago
6 0

Answer:

Net Present Value = $58,188 - $53,000 = $5,188

Explanation:

Net Present Value = Net Cash Inflow - Net Cash Outflow

Computing Net Cash Inflow Discounted @10% PV factor for each year =  \frac{1}{(1 + r){^n}} Where, r = interest rate = 10%, and n = period that is for year 1 = 1 for year 2 = 2 and for year 3 = 3

Year            Cash Inflow           PV Factor        PV

1                    $22,500                0.909              $20,452.5

2                   $22,500                0.826              $18,585

3                   $22,500                0.751                $16,897.5

3                   $3,000                   0.751               $2,253 (Working capital will be realized at end of project)

Net Cash inflow                                                  = $58,188

Net Cash outflow = Cost of fixed asset + Cost of working capital initially incurred

                      = $50,000 +  $3,000 = $53,000

Net Present Value = $58,188 - $53,000 = $5,188

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Sam has two options this weekend. He could work at his job and earn $9/hour for three hours, or he could go to a show at the the
taurus [48]

Answer: $57

Explanation:

Opportunity cost is the benefit that is foregone for an individual by choosing one alternative over other alternatives available to him.

If the opportunity cost is lower for an individual then this will benefit him whereas if the opportunity cost is higher then this will not benefit the individuals.

Opportunity cost of going to the theater:

Earning at work = $9 per hour × 3 hours

                          = $27

Theater ticket cost = $30

Therefore, total opportunity cost of going to the theater is as follows;

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4 0
3 years ago
Scott Company has 5 sales employees, each of whom earns $16,000 per month and is paid on the last working day of the month. Each
pogonyaev

Answer:

Scott Company

Journal Entries:

January 31:

Debit Payroll $80,000

Credit Salaries Payable $57,200

Credit Payroll Taxes Payable $22,800

To record the salaries and taxes payable.

Debit Salaries Payable $57,200

Debit Payroll Taxes Payable $22,800

Credit Cash $80,000

To record the payment of the salaries and taxes.

Explanation:

a) Data and Calculations:

Number of sales employees = 5

Salary per month = $16,000 each

Withholding taxes:

FICA social security taxes of 6.2% = $992

Medicare taxes  1.45% = $232

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Monthly Medical Insurance = $440

FUTA = 0.8% of the first $7,000 = $56

SUTA = 4.0% of the first $7,000 = $280

Total withholding tax deductions = $4,560

Payroll total ($16,000 * 5) = $80,000

Withholding taxes for each:

FICA social security taxes of 6.2% = $992 * 5 - $4,960

Medicare taxes  1.45% = $232 * 5 - $1,160

Federal income tax = 16% = $2,560 * 5 - $12,800

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FUTA = 0.8% of the first $7,000 = $56 * 5 - $280

SUTA = 4.0% of the first $7,000 = $280 * 5 - $1,400

Total withholding tax deductions = $4,560 * 5 = $22,800

Net pay = $57,200

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Allowance, I believe.
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