User Account

All Pages

Demonstrate what is the present value of each offer

Assignment Help Financial Accounting
Reference no: EM132618426

McCormick & Company is considering building a new factory in Largo, Maryland. James Francis, a landowner, is selling a 4.35-acre parcel of industrial zoned land with a listed sale price of $3,000,000.00 for the land. McCormick & Company is interested in the land and so is another manufacturing company. The competing manufacturing company has made an offer of $2,300,000.00 in cash and $300,000 each year for 15 years for the land. McCormick & Company knows it can make an offer to outbid the competitor to obtain the land. So, McCormick & Company decided to offer $4,424,000.00 in cash.

Now, the land owner, James Francis, must make a decision between the two competing offers. To make this decision, James should first identify the Present Value (PV) of each offer. James's bank is offering a 12 percent (12%) interest rate if the competing manufacturing company borrows money to pay its annual payment. Let's help James make his decision by answering the following questions using the template to the right.

Problem 1. What is the Present Value (PV) of each offer?

Problem 2. Based on your Present Value calculations, which offer should James accept?

Reference no: EM132618426

Questions Cloud

What adjustment should be made to consolidated shareholders : What adjustment should be made to the consolidated shareholders' equity to reflect Peter's additional purchase of shares
What impact has the adopted policy changes of the rba : What impact has the adopted policy changes of the RBA (researve bank australia) on the Australian economy and the effectiveness of these policies.
How psychological theories resonated with you : Write how Psychological theories resonated with you, and why? Why do you think that a particular theory or model would be beneficial in working.
What is zenith price-earnings ratio : Zenith Propulsion, Inc. is expected to pay a dividend next year of $2.45 per share. Investors think that Zenith will continue to increase its dividend
Demonstrate what is the present value of each offer : Demonstrate What is the Present Value (PV) of each offer? Based on your Present Value calculations, which offer should James accept?
Describe the techniques for establishing empathy : Write a 750-1,000-word paper outlining the importance of empathy, probing, and summarizing in the counseling process. Include the following in your paper.
Determine the fair value of the debentures : At the time of issuing the securities the market requires a rate of return of 8 per cent. Determine the fair value of the debentures
How companies could use checks-balances to be more effective : How companies could use checks, balances to be more effective. explain if a company could function under these checks/balances.
Current stock price-groningen distillers inc : One year from today, investors anticipate that Groningen Distillers Inc. stock will pay a dividend of $3.25 per share.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd