1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
posledela
3 years ago
7

Margarite's Enterprises is considering a new project that will require $345,000 for new fixed assets, $160,000 for inventory, an

d $35,000 for accounts receivable. Short-term debt is expected to increase by $110,000. The project has a 5-year life. The fixed assets will be depreciated straight-line to zero over the life of the project. At the end of the project, the fixed assets can be sold for 25 percent of their original cost. The net working capital returns to its original level at the end of the project. The project is expected to generate annual sales of $550,000 and costs of $430,000. The tax rate is 35 percent and the required rate of return is 15 percent.What is the amount of the aftertax cash flow from the sale of the fixed assets at the end of this project?
Business
1 answer:
atroni [7]3 years ago
6 0

Answer:

NPV = (53,222.44)

Explanation:

Net fixed asset                              345,000

Working capital

160,000 inventory + 35,000 Ar =   195,000

short term deb                                 (110,000)

net working capital                           85,000

Total investment                            430,000

salvage value 345,00 x 25% = 86,250

release of the working capital  85,000

Cash flow at end of project      171,250

annual cash flow

sales             550,000

cost              (430,000)

depreciation    69,000

EBT                   51,000

tax expense 35%

                        (17,850)

net income       33,150

+ dep                 69,000

cash flow           102,150

Now we calculate the present value of the net cash flow and the present alue fothe end of the project

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 102150

time 4

rate 0.15

102150 \times \frac{1-(1+0.15)^{-4} }{0.15} = PV\\

PV $291,636.04

\frac{Principal}{(1 + rate)^{time} } = PV  

Principla (sum of salvage and released Working capital   171,250.00

time   5.00

rate   0.15

\frac{171250}{(1 + 0.15)^{5} } = PV  

PV   85,141.52

NPV = 291,636.04 + 85,141.52 - 430,000 = (53,222.44)

You might be interested in
A mixed cost: A. Requires the future outlay of cash and is relevant for future decision making. B. Does not change with changes
Ket [755]

Answer:

6. D. Contains a combination of fixed costs and variable costs.

7. B. Does not change with changes in the volume of activity within the relevant range.

8. C. Direct materials, direct labor, and factory overhead.

9. A. Finished goods inventory.

10. D. Work-in-Process inventory.

11. B. Cost of goods purchased.

Explanation:

6. Mixed cost is a combination of fixed costs and variable costs. Therefore, the option "D" is the correct answer. However, it is not directly traceable to a cost object. The mixed cost has not been incurred until the manufacturer uses it. It cannot change up to a specific volume, but mixed cost increases after that limit — for example - Telephone bill or Electric bill.

7. Fixed cost is the cost that does not change as the volume changes within the relevant range. Therefore, option <em>B</em> is right, and option <em>D</em> is incorrect. Because it does not require the future outlay of cash for decision making, it is not directly traceable to a cost object. If the manufacturer does not rent a house for administrative purposes, it can be avoided.

8. The three major cost components of a manufactured product are-

Direct materials, direct labor, and factory overhead. Those are the combination of manufacturing cost. So, <em>C</em> is the answer. Indirect labor and materials are not major cost components, so <em>B</em> is incorrect. Opportunity cost and sunk costs are decision-making costs, so <em>D</em> is wrong. Selling, administrative, and marketing costs are non-manufacturing costs, so <em>A</em> and <em>E</em> are wrong.

9. When the manufacturing firm has completed the production of a specific product but has not yet sold to the customers or third parties, it is termed as the finished goods inventory. In short, it states that the number of manufactured products that are available for sale. It is a current asset for the manufacturer because those can be sold within a year.

10. Work-in-process inventory is such a type of manufacturing inventory or cost that has not yet been manufactured or partially manufactured or in the process of manufacturing. It is not a conversion costs because it may incur the direct labor and manufacturing overhead. It cannot be a finished good or cost of goods sold.

11. A manufacturing firm's cost of goods manufactured is equivalent to a merchandising firm's cost of goods purchased. Therefore, the option "B" is correct.

The cost of goods sold is measured with the help of the cost of goods purchased. So, option <em>A</em> is incorrect. After adding the costs of goods manufactured with the beginning finished goods inventory, we can get the costs of goods available for sale. Therefore, <em>C</em><em>, </em><em>D</em><em>, </em>and<em> </em><em>E</em> cannot be the answer.

3 0
3 years ago
Which of the following should occur when assessing a safety and health program’s effectiveness?
HACTEHA [7]
C. maintain physical protections in work areas.......
3 0
2 years ago
Knowledge Check 01 Which of the following is deducted from the total selling and administrative expense budget to determine the
makvit [3.9K]

Answer:

Knowledge Check 01 Which of the following is deducted from the total selling and administrative expense budget to determine the cash disbursements for selling and administrative expense budget?

  • Depreciation expense

Depreciation expense is a non cash charge since there is no cash outflow associated to it. The same applies for amortization expense, asset impairments, stock based compensation and asset depletion (similar to depreciation but used by extracting companies like mines and oil companies).

Knowledge Check 02 A company determines that the number of units sold is the cost driver for its variable selling and administrative expense budget. The product of its variable selling and administrative rate and budgeted unit sales will be ________.

  • total budgeted variable selling and administrative expenses

Since we are dealing with budgets, any calculation is also a budget or forecast. We are calculating here the total budgeted variable selling and administrative expense since we are multiplying the predetermined variable S&A per unit x budgeted units.

8 0
3 years ago
What is accounting principles​
Scorpion4ik [409]

Answer:

Accounting principles are the laws and regulations that must be followed by businesses when reporting financial results.

Explanation:

The basic 5...

The Revenue Principle

The Expense Principle

The Matching Principle

The Cost Principle

The Objectivity Principle

If this helped please give answer brainliest :-)

8 0
3 years ago
Which of the following is a long-run adjustment? A firm lays off two workers. Two firms exit the asbestos removal industry.
Paladinen [302]

Answer:

Two firms exit the asbestos removal industry.

Explanation:

This is a long-run adjustment because, the firm left one industry to focus on other part of their business. For example, it could be due to lack of finance or profit margin been small that made the firm to quit asbestos removal industry.

7 0
3 years ago
Other questions:
  • To persuade my audience that colleges should adhere to stricter standards when investigating and deciding cases of sexual assaul
    10·1 answer
  • Harry wants to save money in a bank account. He decides to open a _______ account with a five-year maturity date because it offe
    5·2 answers
  • LO 1.4How can having a bonus system based purely on sales goals create an environment that encourages unethical behavior?
    8·1 answer
  • ________ are a vital part of the public health assessment function and are used to identify special risk groups, to detect new h
    7·1 answer
  • Classical economists traditionally believed that:
    13·1 answer
  • If during the process of negotiating a transaction a real estate licensee discourages a buyer from seeking legal advice on the g
    12·1 answer
  • Which practice should you follow while interfacing with customers?
    12·2 answers
  • 20. A company is in its first month of operations. On January 1, the company borrows $10,000 from the bank. The bank charges ann
    12·1 answer
  • The profit earned from the sale of stock that has increased in value is known as
    15·2 answers
  • A drag racer is speeding down the track at 150 m/s. At the finish line it deploys its parachute and applies the brakes to slow d
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!