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Question - Dwight Donovan, the president of Vernon Enterprises, is considering two investment opportunities. Because of limited resources, he will be able to invest in only one of them. Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of five years and no salvage value. Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for Project A are $109,000 and for Project B are $30,000. The annual expected cash inflows are $28,023 for Project A and $8,739 for Project B. Both investments are expected to provide cash flow benefits for the next five years. Vernon Enterprises' desired rate of return is 6 percent.
Required -
a. Compute the net present value of each project. Which project should be adopted based on the net present value approach?
b. Compute the approximate internal rate of return of each project. Which one should be adopted based on the internal rate of return approach?
Complete the following table, using the single machine hour rate to determine the"per-unit factory overhead for each refrigerator (Column A) and the threeactivity-basedrates to determine the activity-based factory overhead per unit (Column B).
'X' Ltd. has been measuring a Machine on Balance Sheet based on the historical cost of $50,000. Critical analysis between fair value and historical costs
Four firms have roughly equal shares of the market for farm-raised catfish. The price elasticity of demand for the market as a whole is estimated at -1.5.
On May 15, 2009, Brent purchased new farm equipment for $40,000. Brent used the equipment in connection with his farming business. Brent does not elect to expense assets under § 179. Brent does elect not to take additional first-year depreciation...
the entity's loss was $5,000. Calculate her at-risk amount at the end of the second year
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Miller's policy is to pay a $1 per share cash dividend every April 1. Prepare a schedule computing the equity income to be recognized by Gibson during 2007
The exercise price of the options was $20 while the average market price for the shares was $25. What is Jalisco corporation's diluted EPS for the year ended
Buddy Dupree is the accounting manager for On-Time Geeks, a tech support company for individuals and small businesses. As part of his job, Buddy is responsible.
MacPherson and Dunn share income and losses equally. Determine the amount received by MacPherson as a final distribution from liquidation of the partnership
Mr. Benedict is starting Belmont Abbey Corporation (BAC). How much can Mr. Benedict deduct in the current year if business starts on July 17
Hunter Company uses a standard cost system when accounting for its sole product. Calculate the budget and volume variances for fixed overhead
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