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Fudgin [204]
3 years ago
13

Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery with a b

ook value of $282,400 (original cost of $400,700 less accumulated depreciation of $118,300) for $275,700, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $284,900 for five years, after which it is expected to have no residual value. During the period of the lease, Granite Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $24,600.
Required:
Prepare a differential analysis, dated November 7 to determine whether Granite should lease (Alternative 1) or sell (Alternative 2) the machinery.
Business
1 answer:
jeka57 [31]3 years ago
8 0

Answer and Explanation:

The preparation of the differential analysis is presented below:

<u>Particulars   Lease Machinery Sell Machinery Differential Effect on Income </u>

Revenues     $284,900             $275,700              $9,200

Costs            $24,600                $13,785                 $10,815

Income (Loss) $260,300          $261,915              -$1,615

It is better to sell the machinery as it has a loss of $1,615

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Shauna Lewis Company expects the following for 2018​: times Net cash provided by operating activities of $ 140 comma 000. times
mihalych1998 [28]

Answer:

Explanation:

Net cash provided by operating activities 140,000

Less: Capital expenditures -81,000

Less: Cash dividends paid -10,000

Free cash flow 49,000

3 0
3 years ago
SDJ, Inc., has net working capital of $2,060, current liabilities of $5,550, and inventory of $1,250.
alexandr1967 [171]

Answer:

1.

Current ratio = 1.37 times

2.

Quick Ratio = 1.15 times

Explanation:

The current ratio and quick ratios both are measures to assess the liquidity position of businesses. These are useful indicators of how well the business is equipped to meet its current obligations using its liquid assets.

To calculate these ratios, we must first determine the value of current assets. We are given the value of net working capital. The net working capital is the difference between the current assets and the current liabilities.

Net Working capital = Current assets - Current Liabilities

2060 = Current Assets - 5550

2060 + 5550 = Current Assets

Current assets = $7610

<u>Requirement 1.</u>

The current ratio is calculated as follows,

Current Ratio = Current Assets / Current Liabilities

Current ratio = 7610 / 5550

Current Ratio = 1.3711 rounded off to 1.37 times

<u />

<u>Requirement 2.</u>

The quick ratio is calculated as follows,

Quick Ratio = (Current Assets - Inventories) / Current Liabilities

Quick Ratio = (7610 - 1250) / 5550

Quick Ratio = 1.1459 rounded off to 1.15 times

6 0
3 years ago
During a recession, a number of workers have their hours reduced by their employers. All else the same, the unemployment rate wi
devlian [24]

Incomplete question. I answered from a general economic standpoint.

Answer:

<u>stay the same; decrease</u>

Explanation:

<em>Remember</em>, in this scenario, it wasn't as though the mentioned workers lost their jobs, they only had their hours reduced by their employers; so they are not <u>unemployed</u>. This, therefore, implies that the unemployment rate will stay the same.

The labor force participation rate in simple words refers to the percentage of those who are currently employed or looking for a job within an economy. If the working hours are reduced, it may diminish the zeal among the workforce of an economy to work or find work because <u>they may perceive they''ll earn less.</u>

6 0
2 years ago
the covenant whereby one warrants that he is the possessor and owner of property being conveyed is the covenant of: select one:
Sophie [7]

The covenant whereby one warrants that he is the possessor and owner of property being conveyed is the covenant of seizen.

A covenant is a two-party promise, agreement, or contract. The two parties agree that certain activities will or will not be carried out as part of the covenant.

Covenants in finance typically refer to terms in a financial contract, such as a loan document or bond issue, that specify the maximum amount that the borrower can lend. In religion, covenants frequently convey the binding relationship between a deity and humanity.

Covenants are frequently expressed in terms of financial ratios that must be met, such as a maximum debt-to-asset ratio or other such ratios. Covenants can cover anything from minimum dividend payments to working capital levels that must be maintained to key employees remaining with the company.

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7 0
1 year ago
uan Pablo and Zak are competitors in a local market. Each is trying to decide if it is better to advertise on TV, on radio, or n
Colt1911 [192]

Answer: Advertise on radio and earn $14,000

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6 0
3 years ago
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