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In eight years, Kent Duncan will retire. He is exploring the possibility of opening a self-service car wash. The car wash could be managed in the free time he has available from his regular occupation, and it could be closed easily when he retires. After careful study, Mr. Duncan has determined the following: A building in which a car wash could be installed is available under an eight-year lease at a cost of $1,700 per month. Purchase and installation costs of equipment would total $200,000. In eight years the equipment could be sold for about 10% of its original cost. An investment of an additional $2,000 would be required to cover working capital needs for cleaning supplies, change funds, and so forth. After. eight years, this working capital would be released for investment elsewhere. Both a wash and a vacuum service would be offered with a wash costing $2.00 and the vacuum costing $1.00 per use. The only variable costs associated with the operation would be 20 cents per wash for water and 10 cents per use of the vacuum for electricity. In addition to rent, monthly costs of operation would be: cleaning, $450; insurance, $75; and maintenance, $500. Gross receipts from the wash would be about $1,350 per week. According to the experience of other car washes, 60% of the customers using the wash would also use the vacuum. Mr. Duncan will not open the car wash unless it provides at least a 10% return. Assuming that the car wash will be open 52 weeks a year, compute the expected annual net cash receipts from its operation.
Would you advise Mr. Duncan to open the car wash?
Show computations using the net present value method of investment analysis. Round all dollar figures to the nearest whole dollar.
Eduardo Inc. was organized on July 1, 2009. A summary ofcash flows for July follows. Prepare a statement of cash flow for the month ended July 31,2009.
Record the 2011 entries for the purchase of the machine and the lease on the books of Grande machinery and for Sunshine Engineering.
Sara is a single tax payer with taxable income of$52,000. If the tax tables had 10% tax on the first $8,000 oftaxable income, 15% on income above $8,000 but less than 34,000,and 25% on income over $34,000 What is Sara's average tax rate?
Determine how the company Coca cola could best allocate costs to divisions, plants, departments, contracts, and / or products. Explain your rationale.
Would each of the following increase, decrease, or have an indeterminant effect on a firm's breakeven point (unit sales)?
one for $1,500 which represents a collection of an account receivable that the bank made for Osborn and one for $70 which represents the amount of interest that Osborn had earned on its interest-bearing checking account in June. Based on this info..
What are the issuer's cash proceeds from issuance of these bonds? What total amount of bond interest expense will be recognized over the life of these bonds? What amount of bond interest expense is recorded on the first interest payment date?
It is expected to increase net annual cash flows by $25,000. The company's borrowing rate is 8%. Its cost of capital s 10%. Calculate the net present value of this project to the company?
What is the need for elimination in the consolidation process? What accounts must be eliminated? Why? What are the ramifications of not eliminating journal entries?
What general business factors should be considered when choosing between the branch and subsidiary forms of doing business in the United States?
Show me the assumption and give the simple entry for explanation
How is the amount of the casualty loss determined in each case (both full and partial losses)? What type of deduction is available? What limits or hurdles or percentages of adjusted gross income must be considered?
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