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Marina CMI [18]
2 years ago
10

The management of Helberg Corporation is considering a project that would require an investment of $203,000 and would last for 6

years. The annual net operating income from the project would be $103,000, which includes depreciation of $30,000. The scrap value of the project's assets at the end of the project would be $23,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to:
Business
1 answer:
levacccp [35]2 years ago
7 0

Answer:

Helberg Corporation

The payback period of the period is closest to:

1 year and 6 months (1 1/2 years).

Explanation:

a) Data and Calculations:

Required project investment = $203,000

Scrap value of project's assets = $23,000

Depreciable amount of project's assets = $180,000

Period of project = 6 years

Annual depreciation = $30,000 ($180,000/6)

Annual net operating income = $103,000

Annual cash inflow = $133,000 ($103,000 + $30,000)

b) The payback period of the project = $203,000/$133,000 = 1.53 or 1 year and 6 months.  This shows that the project will break-even in a year and six months, when the project's cash outflow equals the cash inflow.

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Answer:

The recognized gain or loss is -$4000.

Explanation:

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3 years ago
Exercise 8-3 (Algo) Lump-sum purchase of plant assets LO C1 Rodriguez Company pays $389,610 for real estate with land, land impr
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Answer:

1.  Land  $175,324.50

   Land improvements $38,961

   Building  $175,324.50

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   Cr Cash   $175,324.50

   Being entries to recognize cost incurred in the purchase of Land

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   Cr Cash   $38,961

   Being entries to recognize cost incurred in the purchase of Land improvements

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   Cr Cash   $175,324.50

   Being entries to recognize cost incurred in the purchase of Building

Explanation:

Using the appraisal method to apportion the cost of an asset to the components of the asset involves the consideration of the appraised cost of each individual item as a portion of the total cost of the asset.

Thus, given that  Rodriguez Company pays $389,610 for real estate with land, land improvements, and a building

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Land improvements = $55,000

Building = $247,500

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Cr Cash   $175,324.50

Being entries to recognize cost incurred in the purchase of Land

For journal entries, we debit each of the individual assets account and credit cash to recognize the cost incurred in the purchase of the asset.

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