An offer to manage the business for 10 years that would

Assignment Help Accounting Basics

Reference no: EM13571906

1. The board of Samad Corp., a family-owned corporation, wishes to sell the business and is considering three offers:

Get paid $568,000 immediately.
$200,000 cash now plus an annual installment for 10 years at the end of the year, or a total of $800,000.
An offer to manage the business for 10 years that would yield $96,000 cash at the end of the year for 10 years. The company would have to make a $20,000 investment upfront to make certain changes for the management agreement. The total cash Samad would receive is $940,000.

Samad wants an 11% rate of return on its investments.

Based on the numbers, which offer should Samad's board accept? Show your supporting computations.

2.the two options are as follows:

	Correa Co.	Grant Inc
Cost (cash price)	$100,000	$90,000
Operating costs per year	$7,000	$8,000
Estimated useful life	8	8
Estimated residual (salvage) value as percent of cost	20%	10%

Assume all other variables are identical for the two machines.

2a. Analyze and compare the relative cost of the two machines. Costwise, which is better?

2b. What other factors should O'Donnell consider besides the numbers?

Reference no: EM13571906

Questions Cloud

Design a disaster recovery plan that addresses these : design a disaster recovery plan that addresses these potential hazards. assume that you are the emergency operations

Brad and angelina are a wealthy couply who have three : brad and angelina are a wealthy couply who have three children fred bridget and lisa. two of the three children fred

New equipment was purchased for 59000 with payment made as : prepare a statement of cash flows indirect method in good form for lynch foundries inc. for 2014.information in

Read the topic carefully write a three to four 3-4 page : the project paper focuses on a suggested topic related to art architecture history music or literature. the project

An offer to manage the business for 10 years that would : 1. the board of samad corp. a family-owned corporation wishes to sell the business and is considering three offersget

I you deposit 45000 in a savings account that pays 10 : if you deposit 45000 in a savings account that pays 10 interest compounded monthly for 5 years. what is the future

Describe the importance of process mapping in a supply : 1.describe how you would identify bottlenecks in your value stream? how would you ensure sustained flow through those

If you can earn 13 on similar-risk investments what is the : elk county telephone has paid the dividends shown in the following table over the past 6 years.year dividend per

The nelson company has 1690000 in current assets and 650000 : the nelson company has 1690000 in current assets and 650000 in current liabilities. its initial inventory level is

User Account

All Pages