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SCORPION-xisa [38]
4 years ago
12

Beloit Co. is a manufacturer of mini-doughnut machine makers. Early in 2015 a customer asked Beloit to quote a price for a custo

m-designed doughnut machine to be delivered by the end of 2015. Once purchased, the customer intends to place the machine in service in January 2016 and will use it for four years. The expected annual operating net cash flow is estimated to be $120,000. The expected salvage value of the equipment at the end of four years is about 10% of the initial purchase price. To expect a 15% required rate of return on investment, what would be the maximum amount that should be spent on purchasing the doughnut machine
Business
1 answer:
aliina [53]4 years ago
5 0

Answer:

$363,375.20

Explanation:

initial outlay = X

useful life = 4 years

salvage value = 0.1X

NCF years 1 - 4 = $120,000

discount rate = 15%

NPV = 0

X = $120,000/1.15 + $120,000/1.15² + $120,000/1.15³ + ($120,000 + 0.1X)/1.15⁴ =

X = $104,347.83 + $90,737.24 + $78,901.95 + $68,610.39 + 0.05718X

X = $342,597.41 + 0.05718X

0.94282X = $342,597.41

X = $342,597.41 / 0.94282 = $363,375.20

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Perch Co. acquired 80% of the common stock of Float Corp. for $1,600,000. The fair value of Float's net assets was $1,850,000, a
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Complete question:

Perch Co. acquired 80% of the common stock of Float Corp. for $1,600,000. The fair value of Float's net assets was $1,850,000, and the book value was $1,500,000. The non-controlling interest shares of Float Corp. are not actively traded. What amount of goodwill should be attributed to the non-controlling interest at the date of acquisition?

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A non-controlling interest (NCI) is a role in which a owner holds less than 50% of remaining and has little control over decisions. A minority ownership is often known as the minority interest. Non-controlling interests are calculated by their net worth and are not eligible for future right to vote.

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