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VMariaS [17]
3 years ago
5

Our company is deciding whether to invest in a new machine. The new machine will increase cash flow by $324,000 per year. You be

lieve the technology used in the machine has a 10-year life; in other words, no matter when you purchase the machine, it will be obsolete 10 years from today. The machine is currently priced at $1,740,000. The cost of the machine will decline by $110,000 per year until it reaches $1,190,000, where it will remain.
a. If your required return is 13 percent, calculate the NPV today?

b. If your required return is 13 percent, calculate the NPV if you wait to purchase the machine until the indicated year. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

NPV

Year 1 $

Year 2 $

Year 3 $

Year 4 $

Year 5 $

Year 6 $
Business
1 answer:
Elza [17]3 years ago
7 0

Answer:

Initial Investment= -1740000

Year 1 324,000/1.13= 286725

Year 2 324,000/1.13^2= 253740

Year 3 324,000/1.13^3= 224548

Year 4 324,000/1.13^4=198715

Year 5 324,000/1.13^5= 175854

Year 6 324,000/1.13^6= 155623

Year 7 324,000/1.13^7=137720

Year 8 324,000/1.13^8= 121876

Year 9 324,000/1.13^9=  107855

Year 10 (324,000+1,190,000)/1.13^10= 446007

=2,108,663-1,740,000= 368663

Explanation:

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For each separate case below, follow the 3-step process for adjusting the prepaid asset account at December 31. Step 1: Determin
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PART A

Answer:

Insurance expense debit for 3,800

        Insurance prepaid credit for 3,800

Explanation:

a.- Prepaid Insurance. The Prepaid Insurance account has a $4,700 debit balance to start the year. A re- view of insurance policies and payments shows that $900 of unexpired insurance remains at year-end.

Step 1:  Currently equals to $4,700

Step 2: It should equal $900

In this Case: It is giving us the begining balance, and then it proceeds to tell us the ammount unexpired, which means the ending balance. So the <em>diference will be the adjuting entry</em>

Step 3: $4700 - $900 = $3,800

insurance expense debit for 3,800

  insurance prepaid credit for 3,800

PART B

Answer:

insurance expense 1040  debit

        prepaid insurance               1040credit

Explanation:

b.- Prepaid Insurance. The Prepaid Insurance account has a $5,890 debit balance at the start of the year. A review of insurance policies and payments shows $1,040 of insurance has expired by year-end.

Step 1: Curently equals to $5,890

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In this Case: It is giving us the begining balance, and then it proceeds to tell us the ammount expired, which means the adjusting entry. So the <em>diference will be the ending balance</em>

Step 3

The adjusting entry must be made for 1,040 which is the expired portion

insurance expense 1040  debit

       prepaid insurance               1040credit

PART C

Answer:

rent expense   4,000 debit

        prepaid rent                4,000 credit

Explanation:

C.- PrepaidRent. On September 1 of the current year, the company prepaid $24,000 for 2 years of rent for facilities being occupied that day. The company debited Prepaid Rent and credited Cash for $24,000.

Step 1 Current balance is 24,000

In this Case: It is giving us the begining balance, and then it proceeds to tell us <em>information about the contract,</em> which means <em>we are going to work to get the expired portion</em> and with that calculate the ending balance like on part B

Step 2 We are at December 31th the expired portion will be 4 months (September, October, November and December) so:

        24,000

-----------------------------   x 4 months expired = 4,000 expired portion

24 month of contract

24,000 - 4,000 = 20,000

<em>begining - expired = ending AKA "unexpired"</em>

<em>The balance should be equal to 20,000</em>

<em />

Step 3: the adjusting entry should be done for 4,000 which is the expired portion of the rent.

rent expense   4,000 debit

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On December 31, 2016, Ditka Inc. had Retained Earnings of $270,800 before its closing entries were prepared and posted. During 2
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Answer:

<u>Required a</u>

Closing Retained Earnings Balance

Retained Earnings $270,800 (debit)

Statement of Changes in Shareholders Equity $270,800 (credit)

<u>Required b</u>

Closing Service Revenue Balance

Sales Revenue $171,100 (debit)

Statement of Profit and Loss $171,100 (credit)

Closing Interest Revenue Balance

Interest Revenue $82,800 (debit)

Statement of Profit and Loss $82,800 (credit)

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Supplies Expenses $89,400 (debit)

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Advertising expenses $16,700 (debit)

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Statement of Profit and Loss $18,750 (debit)

Salaries and wages expenses $18,750 (debit)

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Revenues and Expenses are Closed off to the Statement of Profit and Loss.

Dividends are Closed off to the Retained Income Statement.

Adjusting Supplies Account

Supplies Expenses $89,400 (debit)

Supplies Account $89,400 (credit)

Adjusting dividend Account

Dividend $6,300 (debit)

Cash $6,300 (credit)

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Influencer can be regarded as those that are found in life that involve themselves in endorsements and product placement .

These people are found in different  organizations and have purported expert level of knowledge , however They are not focused on earning the respect of others.

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