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avanturin [10]
3 years ago
8

McCann Co. has identified an investment project with the following cash flows.

Business
1 answer:
larisa [96]3 years ago
5 0

Answer:

McCann Co.

Present value

a. At 9$ =      $2,017.38

b. At 16% =   $3,379.42

c. At 25% =   $2,798.71

Explanation:

a) Data and Calculations:

Year Cash Flow         Discount         Present

                               Factor at 9%       Value

1         $840                0.917               $770.28

2         1,170               0.842                   143.14

3        1,430               0.772                1,103.96

4        1,575               0.708                 1,115.10

Total Present value =                     $2,017.38

Year Cash Flow         Discount         Present

                               Factor at 16%       Value

1         $840               0.862               $724.08

2         1,170               0.743                  869.31

3        1,430               0.641                  916.63

4        1,575              0.552                 869.40

Total Present value =                    $3,379.42

Year Cash Flow         Discount         Present

                               Factor at 25%      Value

1         $840               0.800               $672.00

2         1,170               0.640                 748.80

3        1,430               0.512                  732.16

4        1,575               0.410                 645.75

Total Present value =                    $2,798.71

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Answer:

Marilyn County

1. Journal Entries:

1. January 1, 2013,

Debit Capital Projects Fund $1,000,000

Credit General Obligation Bonds Payable $1,000,000

To record the issuance of bonds, payable in 20 equal semiannual installments of $50,000 over a 10-year period commencing October 1, 2013, with interest of 4 percent per annum paid on the outstanding debt.

2. May 1,

Debit Capital Projects Fund $20,000

Credit General Fund $20,000

To fund the additional project costs.

3. July 1

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Credit Capital Projects Fund $1,020,000.

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4. September 30, 2013

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Credit General Fund $70,000

To transfer funds for debt service.

5. October 1:

Debit Bonds Payable $50,000

Debit Interest on Bonds Expense $20,000

Credit Debt Service Fund $70,000

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Related debt                              (950,000)

Invested capital assets, net       $70,000

4. December 31, 2014, government-wide statement of net position

Investment in capital assets, $1,020,000

Related debt                              (850,000)

Invested capital assets, net      $170,000

Explanation:

a) Data and Analysis:

1. January 1, 2013, Capital Projects Fund $1,000,000 General Obligation Bonds Payable $1,000,000

2. May 1, Capital Projects Fund $20,000 General Fund $20,000

3. July 1 Construction Contract $1,020,000 Capital Projects Fund $1,020,000.

4. September 30, 2013 Debt Service Fund $70,000 General Fund $70,000  

5. October 1, Bonds Payable $50,000 Interest on Bonds Expense $20,000 ($1,000,000 * 4% * 6/12) Debt Service Fund $70,000

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