Answer:
(a) What is the cost per square foot of the 2000 ft lodge?
- construction cost per sq foot = $150,000 / 2,000 = $75 per square foot
(b) If you arc also considering a. 4000 ft layout option, estimate your construction costs if: i. All cost items (in the table) change proportionately to the size increase.
- total construction costs for a 4,000 sq ft layout = $150,000 x 2 = $300,000 since all costs vary proportionally to the size of the cabin
ii. The first two cost items do not change at all: all others are proportionate.
- total construction costs = (23% x $150,000) + (77% x $300,000) = $34,500 + $231,000 = $265,500
Answer:
The list of items are as follows:
A. Mutual agency - Partnership
B. Original cost - Straight line method
C. Ten-column worksheet - merchandising corporation
D. A worksheet - organizing all of the data to update the accounts
E. Closely held corporation - corporation owned by a few persons or by a family
Answer:
1) the payment over time ( $2833.39 )
2) the payment over time ( $2759.11 )
Explanation:
We get the lump sum today of $2750 which is exactly the value of this amount today and there is no need to discount this amount. We will compare this amount with the present value of the cash flows we will receive over time. If the present value of over time cash flows is more than lump sum payment, we will choose over time cash flows and vice versa.
1) The present at 6% for over time cash flows is,
- PV = 1000 + 1000/1.06 + 1000/1.06^2 = $2833.392
- As 2833.392 is more than 2750, we will choose payment over time.
2) The present at 9% for over time cash flows is,
- PV = 1000 + 1000/1.09 + 1000/1.09^2 = $2759.11
- As 2759.11 is more than 2750, we will choose payment over time.