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Ocean Division currently earns $830,000 and has divisional assets of $4.4 million. The division manager is considering the acquisition of a new asset that will add to profit. The investment has a cost of $680,000 and will have a yearly cash flow of $173,000. The asset will be depreciated using the straight-line method over a five-year life and is expected to have no salvage value. Divisional performance is measured using ROI with beginning-of-year net book values in the denominator. The company's cost of capital is 15 percent. Ignore taxes. The division manager learns that he has the option to lease the asset on a year-to-year lease for $153,000 per year. All depreciation and other tax benefits would accrue to the lessor. Required: (a) What is the division's residual income before considering the project? (b) What is the division's residual income if the asset is purchased? (c) What is the division's residual income if the asset is leased?
The statement of cash flows:
Fatima inherits a rental property with a fair market value of $90,000 from her aunt on April 30.- How much gross income does Fatima have from these transactions?
Adjustment trial balance
On October 1, Steve's Carpet Service borrows $250,000 from First National Bank on a 3-month, $250,000, 8% note. What entry must Steve's Carpet Service make on December 31 before financial statements are prepared?
Exon Oil acquired the rights to various oil reserves at $ 20,000,000 in March 1, 2007. The estimated barrels of oil are 5,000,000 barrels. Determine the estimated depletion cost per barrel of oil. If 800,000 barrels are extracted the first year, what..
Evaluate the overhead variances and Consider the following data for the Rivera Company
Calculate the flexed budget and the key variances between budgeted and actual results. Reconcile the original budget and present the relationship between the budgeted and the actual profit for the month November.
How much of the premium should be reported as expense on the 2009 income statement and what is the amount of prepaid insurance which should be reported on the balance sheet at December 31, 2009?
classification of items.the mill run golf amp country club details the following accounts in its financial
Assume that Acme is an average US (federal civilian) agency, in regards to unions. Are unions important to acme? What role would unions have in acme? Acme employs 200,000 people. How many would be members of a union?
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(Account for accounts receivable and uncollectible accounts) During 2013, Chocolate Passion completed these transactions:
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