What is Erma NPV

Assignment Help Financial Accounting
Reference no: EM132462815

Problem - Emmas Beauty Supply is considering expanding the existing store. Erma wants to lease the office space next door to her business. Erma must spend, $120,000 on equipment to expand. The equipment is expected to have a zero-salvage value and will be retired in 8 years. Erma expects to increase networking capital by $10,000 right now if she goes through with the expansion. Erma spent $12,000 last month on a survey of the area surrounding the shop to see if there was sufficient demand for a larger store. Erma estimates she will increase revenues by $100,000 per year in the new store for eight years. The direct expenses incurred to make those sales are $65,000, including rent. The lease she is considering signing is for 8 years. She will liquidate the $10,000 networking capital when the lease is complete in 8 years. Erma's Beauty Supply pays 40.0% in taxes, and has a cost of capital of 10.0%. What is Erma's NPV if she decides to expand the business?

1) $12,158.43

2) $15,492.37

3) $18,708.08

4) $21,686.99

5) $24,359.04

Reference no: EM132462815

Questions Cloud

Calculate the amount that linden should record as note : Calculate the amount that Linden should record as note receivable and sales revenue on April 1, 2020.The collection of the note receivable
What amount of conversion costs is assigned to the ending : What amount of conversion costs is assigned to the ending Work-in-Process account for March?month of March 2017 for the Assembly department.
Estimate the current cost of capital for Kris : Kris Corporation: Variance in Income 40% R&D/Sales 12% Marginal Tax Rate 40%. Estimate the current cost of capital for Kris
Determine kunze corporation par value common stock : The journal entry to record? Kunze's purchase of 1000 shares of common stock at $ 4 per share would? be??Determine Kunze Corporation par value Common Stock
What is Erma NPV : Erma's Beauty Supply pays 40.0% in taxes, and has a cost of capital of 10.0%. What is Erma's NPV if she decides to expand the business
Find the project terminal year total cash flow : The direct expenses incurred to make those sales are $65,000, Based on this information, find the project's terminal year (year 8) total cash flow
What is the total of the quarterly operating expenses : If there had not been any accrued salaries and wages for the period, what would have been the balance of the Salaries and Wages Expense account?
Find the project operating cash flow : Erma's Beauty Supply is considering expanding the existing store. Find the project's operating cash flow in each of the first seven years
What is her tax basis in the LLC interest : If Connie receives a 5 percent capital and profits interest, how much income must she report and what is her tax basis in the LLC interest

Reviews

Write a Review

Financial Accounting Questions & Answers

  Question annie carla and betty formed the abc partnership

question annie carla and betty formed the abc partnership. they contributed the subsequent assets.annie contributed

  Schedule of interest bond and revenue discount amortization

Prepare a 3-year schedule of interest bond and revenue discount amortization, applying the straight-line method ?

  Purpose inventory return portion of the entry

Purpose inventory return portion of the entry for this sales return on Randy's books and Record this return of purchases on Janet's books.

  If the order is accepted incremental profit or loss will be

If the order is accepted, unit variable costs will increase by $2 for additional freight costs. - If the order is accepted, incremental profit (loss) will be?

  Prepare the journal entry to record the change in fair value

In 2015, the earnings did not meet the earnout target and the estimated fair value of the contingent consideration was zero. Prepare the journal entry to record the change in the fair value of the contingent consideration.

  Admission of shaw into the partnership

Prepare the journal entry that was made to record the admission of Shaw into the partnership - shaw purchased 20 percent of the respective capital balances of Miller and Davis, paying $20,000 cash directly to each of them.

  Lessee-lessor entries and sales-type lease

(Lessee-Lessor Entries, Sales-Type Lease) Rookie Leasing Company agrees to lease machinery toPro Corporation on January 1, 2014. The following information relates to the lease agreement. The term of the lease is 6 years with no renewal option, and th..

  Do you agree with your friends analysis

Your friend computes that, at the rate of $17.84 per month, it will take over 233 years to pay off the $50,000 mortgage.-  Do you agree with your friend's analysis?

  Calculate the amount of cash that would be available

Calculate the amount of cash that would be available upon Ann's retirement if the other assets were sold and the liabilities were paid off.

  Production with respect to conversion cost

Bennett Company uses the FIFO method in its process costing system. During April the equivalent units of production with respect to conversion costs totaled 32,600 units. Work in process inventory on April 1 consisted of 5,000 units, 50% complete wit..

  Calculate the depreciation expense and book value

October 1, 2014, Pizza Pete buys a truck to deliver pizza for $40,000. The truck has a salvage value of $1,500 and useful life of 7 years. Calculate the Depreciation expense and book value for 2014 and 2015 using straight line method.

  Prepare an incremental analysis for the life of machine

Darcy Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on large homes and commercial properties. Last year, Darcy Roofing spent $70,800 refurbishing the lift. It has just determined t..

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!

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