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____ [38]
2 years ago
14

Welcome Inn Hotels is considering the construction of a new hotel for $90 million. The expected life of the hotel is 30 years, w

ith no residual value. The hotel is expected to earn revenues of $26 million per year. Total expenses, including depreciation, are expected to be $15 million per year. Welcome Inn management has set a minimum acceptable rate of return of 14%.
a. Determine the equal annual net cash flows from operating the hotel.
b. Calculate the net present value of the new hotel. Use 7.003 for the present value of an annuity of $1 at 14% for 30 periods.
c. Does your analysis support construction of the new hotel?
Business
1 answer:
steposvetlana [31]2 years ago
3 0

Answer:

a. Annual Net cash flows:

= Revenue - Expenses + Depreciation

= 26,000,000 - 15,000,000 + (90,000,000 / 30 years)

= 11,000,000 + 3,000,000

= $14,000,000

b. Net present value:

= Present value of cashflows - Investment cost

= (Annual cashflow * present value of an annuity, 14%, 30 periods) - Investment cost

= (14,000,000 * 7.003) - 90,000,000

= $8,042,000

c. Company should construct the hotel as it would bring a positive Net Present Value

Note: In "b" the cashflow was treated as an annuity because it is constant.

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Wally and Sally want to go into business together and plan on offering a tutoring service to high school and college students. W
sashaice [31]

Answer:

A. Yes, because the corporation would be required to pay tax on its profits, and the shareholders would also be required to pay taxes on dividends

4 0
3 years ago
Where's the best place for a 17 year old to work at.<br> ps. im 17
mars1129 [50]

Finding the right place to be a waitress at could be really good :) But if you're not too inclined to rely mostly on tips here's a list of good places that have some benefits (free food, flexible schedule, etc.)


  1. McDonalds
  2. Lifeguard
  3. Babysitter
  4. Chipotle
  5. Gas stations (I know someone who works there who says they offer a very flexible schedule)
  6. Gap
  7. Subway
  8. Sonic
  9. Little Cesar's
  10. Rue 21 (or other stores similar to that)
  11. Starbucks (they offer amazing benefits!)
  12. Target
  13. Apple support (I believe they send you a computer and all to be able to work and you also get discounts)

You can find plenty more online. Keep in mind that at 17, you can practically work anywhere! Good luck & hopefully this helped!! :))

4 0
3 years ago
Read 2 more answers
In previous years, Cox Transport reacquired 2 million treasury shares at $22 per share and, later, 1 million treasury shares at
Hoochie [10]

Answer:

24 million shares  ; $16 million

Explanation:

The computation of the weightage number of treasury shares are shown below:

             Number of shares       Price       Total

                   2                              $22         $44 million

                   1                               $28         $28 million

Total           3                                               $72 million

So, the weighted average number of shares would be

= $72 ÷ 3 = 24 million shares

Now the journal entry would be

Cash A/c Dr $64 million                  (2 million treasury shares × $32)

          To Paid in capital - share repurchase A/c $16 million

          To Treasury stock $48 million    (24 million treasury shares × $2)

(Being the treasury shares are sold)

4 0
3 years ago
Garla Company reports the following financial information before adjustments. Dr. Cr. Accounts Receivable $145,600 Allowance for
Bond [772]

Answer:

The following journal entries apply:

a) Debit Bad debt expense                                    $33,692.4  

   Credit Allowance for doubtful accounts           $33,692.4

b) Debit Bad debt expense                                    $38,612.4  

   Credit Allowance for doubtful accounts            $38,612.4

Explanation:

All the sales revenue are on credit to the tune of $834,000, however, there was sales return and allowance of $53,540, which has to be deducted from credit sales to arrive at the net credit sales of $780,460. This amount would be added to the accounts receivable of $145,600 to arrive at the total accounts receivable of $926,060.

a) 4% of $926,060 is $37,042.4. With credit balance of $3,350 in allowance for doubtful accounts, bad debt expense (addition) is $33,692.4  ($37,042.4 - $3,350).

b) 4% of $926,060 is $37,042.4 and there is a debit balance of $1,570 in allowance for doubtful accounts, bad debt expense (to reinstate allowance account to $37,042.4) is $38,612.4 ($37,042.4 + $1,570).

8 0
3 years ago
A. Draw a production possibilities curve for a hypothetical economy producing capital and consumer goods.
solniwko [45]

Answer:

See the attached and the explanation below.

Explanation:

a.  A production possibility curve (PPC) refers to a curve that displays different combinations of the maximum output of two goods that can be produced from a given or fixed amount of input and technology.  

An example of PPC is figure (A) in the attached document.

b.  When there is a major technical breakthrough in the capital goods industry and the new technology is widely adopted only in this industry, it will make the PPC to rotate outward at the capital good axis only, while consumer good axis will remain the same (see the curve and the arrow in Figure B in the attached). This implies that the break has enabled the economy to produce more of capital goods while consumer goods production level remains the same.

c.  When there is a technological advance in consumer goods production, but not in capital goods production, it will make PPC to rotate outward at the consumer good axis only, while capital good axis will remain the same (see the curve and the arrow in Figure C in the attached). This implies that the break has enabled the economy to produce more of consumer good while capital good production level remains the same.

8 0
3 years ago
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