6BE11-9 Everly Corporation acquires a coal mine at a cost of $400,000. Intangible development costs total$100,000. After extraction has occurred, Everly must restore the property (estimated fair value of the obli-gation is $80,000), after which it can be sold for $160,000. Everly estimates that 4,000 tons of coal can beextracted. If 700 tons are extracted the first year, prepare the journal entry to record depletion.BE11-10 In its 2011 annual report, Campbell Soup Company reports beginning-of-the-year total assets of$6,276 million, end-of-the-year total assets of $6,862 million, total sales of $7,719 million, and net income of$805 million. (a) Compute Campbell's asset turnover. (b) Compute Campbell's profit margin on sales.(c) Compute Campbell's return on assets using (1) asset turnover and profit margin and (2) net income.

Depletion refers to a non-cash expense that reduces the cost value for asset incrementally with a…

BE11-9 Everly Corporation acquires a coal mine at a cost of $400,000. Intangible development costs total $100,000. After extraction has occurred, Everly must restore the property (estimated fair value of the obli- gation is $80,000), after which it can be sold for $160,000. Everly estimates that 4,000 tons of coal can be extracted. If 700 tons are extracted the first year, prepare the journal entry to record depletion.

BE11-9 Everly Corporation acquires a coal mine at a cost of $400,000. Intangible development costs total $100,000. After extraction has occurred, Everly must restore the property (estimated fair value of the obli- gation is $80,000), after which it can be sold for $160,000. Everly estimates that 4,000 tons of coal can be extracted. If 700 tons are extracted the first year, prepare the journal entry to record depletion.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 2E

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8. Saudi Post can sell envelopes for $0.2 per envelope. These envelopes are made using machines that cost $100,000 and have no salvage value at the end of 10 years. The equipment's annual operating costs will be $7,000 per year plus $0.11 per envelope produced. MARR is 12%lyear. Determine the minimum number of envelopes that Saudi Post must produce to breakeven. (select the closest answer) a. 196,649 b. 54,885 c. 274,427 d. 315,964
Song's Inc. is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that if a project's projected NPV is negative, it should be rejected. WACC: 10.25% Year 0 1 2 3 4 5 Cash flows ($1,000) $200 $300 $400 $300 $500
A process plant making 5000kg /day of a product selling for $1.75 per kg has annual directproduction costs of $2 million at 100 percent capacity and other fixed costs of $700,000. What isthe fixed charge per kg at the break-even point? If the selling price of the product is increased by10 percent, what is the dollar increase in net profit at full capacity if the income tax rate is 35percent of gross earnings?
3. The annual worth method An office supply company has purchased a light duty delivery truck for $15,000. It is anticipated that the purchase of the truck will increase the company’s revenue by $10,000 annually, whereas the associated operating expenses are expected to be $3,000 per year. The truck’s market value is expected to decrease by $2,500 each year it is in service. If the company plans to keep the truck for only 2 years, what is the annual worth of this investment? The MARR = 18% per year
eBook Net Present Value Method—Annuity Take a Load Off Hotels is considering the construction of a new hotel for $12,000,000. The expected life of the hotel is 6 years with no residual value. The hotel is expected to earn revenues of $12,400,000 per year. Total expenses, including straight-line depreciation, are expected to be $10,000,000 per year. Take a Load Off's management has set a minimum acceptable rate of return of 12%. a. Determine the equal annual net cash flows from operating the hotel.$fill in the blank 1 b. Calculate the net present value of the new hotel, using the present value factor of an annuity of $1 table below. If required, round to the nearest dollar. If the net present value is negative, enter the amount using a minus sign. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791…
11:36 00 VOLTE 76% expert.chegg.com/qna/auth Chegg Hide student question Time Left: 01:51:59 A 8 ✓ Student question A machine has a first cost of $24,000. Its market value declines by 20% annually. The repair costs are covered by the warranty in Year 1, and then they increase $900 per year. The firm's MARR is 12%. Find the minimum EUAC for this machine and its economic life. Skip G Exit Σ Q 2 Submit ... Training
XYZ company has been presented with an opportunity to invest in a project for 10 years. If management expects to make 10% on its investments before taxes, would you recommend this project? Use exact IRR The facts on the project are presented below Investment Required = $60,000,000 Annual Gross Income = $14,000,000 Annual Operating Costs = S 5,500,000 Salvage value after 10 years = 0 Find IRR = ?
1. Given: Assume i= 8.0% A new tractor costs $200,000. Annual O&M costs and salvage values are given below: Year Salvage Value O&M Cost 1$ 35,000.00$ 100,000.00 2 $ 38,000.00 $ 3$ 43,000.00 $ 4 $ 90,000.00 80,000.00 70,000.00 50,000.00 $ 59,000.00 $ 60,000.00 5 $ 6 $ 70,000.00S 7$ 81,000.00S 8 $ 92,000.00 S 9$ 104,000.00 $ 50,000.00 40,000.00 30,000.00 20,000.00 10,000.00 10 $ 120,000.00 $ Find: a. Calculate the NPV for all 10 years b. Calculate the EUAC for all 10 years c. Plot EUAC vs. Time d. What year should the tractor be retired for the best economic life?
Consider a project to supply Detroit with 27,000 tons of machine screws annually for automobile production. You will need an initial $4,600,000 investment in threading equipment to get the project started; the project will last for 5 years. The accounting department estimates that annual fixed costs will be $1,100,000 and that variable costs should be $205 per ton; accounting will depreciate the initial fixed asset investment straight-line to zero over the 5-year project life. It also estimates a salvage value of $475,000 after dismantling costs. The marketing department estimates that the automakers will let the contract at a selling price of $308 per ton. The engineering department estimates you will need an initial net working capital investment of $440,000. You require a return of 12 percent and face a tax rate of 23 percent on this project. a. Suppose you’re confident about your own projections, but you’re a little unsure about Detroit’s actual machine screw…
Assume the purchase price of a combine is $250,000. It is estimated to have a salvage value of $68,000 and a useful life of 8 years. The cost of capital is 7 percent. Compute the average annual depreciation and interest costs.
5 A chemical plant is considering installing a new water purification system that costs $X. The expected life is A years and the salvage value is computed using the declining-balance method with a depreciation rate of B%. The operating costs are estimated at $Y per hour of operation. The expected savings are $Z per operating hour. MARR = X= Y= Z= A= B= C= 10% $15,300 $5 per hour $15 per hour 5 years 10% 1500 hours What is the salvage value at the end of A years? Try Again What is the annual worth of the new system if the current operating hours are C per year on average? Try Again What is the break-even level of operating hours? Try Again
3. A machine is purchased for S70,000. Life is 10 years with a S10,000 salvage. MARR is 10 and the tax rate is 50%. Cash operating costs are $4500 per year. Five year MACRS (20, 32, 19.2, 11.52, 11.52,5.76) depreciation will be used. Calculate the annual equivalent revenue requirements for this machine.