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Questions -
Q1) A company is considering the purchase of some equipment. In the second year of operation, it is expected that the equipment will cause an increase in sales revenue of $200,000 and an increase in cash expenses of $120,000. CCA for the equipment will be $60,000. The tax rate for the company is 40%. What is the effect on cash flow from the equipment in Year 2? With Explanation
a) $0
b) $12,000
c) $48,000
d) $72,000
Q2) The Dress Company wants to purchase a new cutting machine. The investment is expected to generate annual cash flows of $250,000. The required rate of return is 10%. The machine is expected to have a useful life of four years. What is the maximum amount the company should pay for the machine?
a) $170,750
b) $546,400
c) $759,000
d) $792,475
Q3) The net initial investment for a new integrated computer system is $2 million. Annual cash flows are expected to increase by $800,000 per year. The system has a five-year useful life. What is the payback period?
a) 2.00 years
b) 2.50 years
c) 3.00 years
d) 4.00 years
The value of the land net of taxes is estimated at $21.2 million. The tax rate is 20%. What is the initial investment outlay (IO) for the NPV evaluation
Cole Company has 303,000 shares of common stock authorized, 252,000 shares issued, What is the total amount of the dividend that will be paid
How the transaction has commercial substance. On January 1, 2017, Frostburg Company purchased for $68,500, equipment having a service life of six years
Focus Company accounts for its 10% interest in Bee Company using the cost method. What is the carrying amount of the investment
The structure of a typical organization is similar to a pyramid, Explain a typical corporation organization and their roles
Assuming this is the best information available regarding the future of this firm, what would be the most economically rational value of the stock today
Amortization Payment. ABC Company agrees to pay a $50,000 loan in eight equal year-end payments. The interest rate is 12 percent. - What is the annual payment and what is the total interest on the loan?
The fixed overhead for the past year was budgeted at $90,000, Calculate the fixed overhead volume variance and the fixed overhead volume variance
What other information would be useful to have before deciding to take out the loan? Is the borrowing a good idea for the business?
wheeler company issued 5000 shares of its 5 par value common stock having a fair value of 25 per share and 7500 shares
During the current quarter, the company operated at 80% of capacity and produced 32,000 units of product; direct labor hours worked were 100,000.
Analyze the effects of each transaction on total assets, liabilities, and stockholders equity. Prepare journal entries to record each transaction. Enter the January 1 balances into T-accounts, post the journal entries from requirement 2, and determin..
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