A business purchases a new building for $250,000, and also spends $20,000 on renovations. What is the total capital expenditure?
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Capital Expenditure?
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- Which of the following is an example of capital expenditure for a company? a. Spending money on construction of new building and Machinery b. Paying employee salaries c. Purchasing groceries for office d. Paying electricity billsAll of the following are capital investment decisions except: A. paying $600,000 to renovate a restaurant.B. acquiring $100,000 of common stock.C. purchasing equipment for $80,000. D. buying a $5,000,000 manufacturing plant.The only capital investment required for a small project is investment in inventory. Profits this year were $11,000, and inventory increased from $4,500 to $6,000. What was the cash flow from the project? Total Cash flow is ________
- The Fleming Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 25 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Investment Sales revenue Operating costs Depreciation Net working capital spending Net income Cash flow $ Year 1 NPV 3,975 $ $ Year 0 Year O 34,000 $ 400 a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.) Year 1 $ 17,500 3,700 8,500 450 Year 2 4,275 $ Year 1 5,300 $18,000 Year 2 Year 3 b. Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.) Year 3 4,575 $ Year 2 3,800 3,900 8,500 8,500 500 400 $18,500 $15,500 3,100 8,500 ? Year 4 Year 4…Jacob has an opportunity to invest in a new retail development in his building. The initial investment is $50,000 and the expected cash flows are as follows: Year 1: $2,500; Year 2: $5,000; Year 3: $5,000; Year 4: $7,500; Year 5: $10,000; Year 6: $10,000; Year 7: $15,000 and Year 8: $15,000. What is Jacob's IRR on this investment? Select one: Select one: O 7.67% O 6.34% O 5.56% O 4.99%An investment by the owner of a business entity in a building, at a cost of RM100,000 with a RM40,000 outstanding loan would:
- Solve the math in a detailed way.A man planned of building a house. The cost of construction is P 500,000, while annual maintenance cost is estimated at P 10,000. If the interest rate is 6%, what is the capitalized cost of the house?The Fleming Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 23 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Investment Sales revenue Operating costs Depreciation Net working capital spending Net income $ Year 1 Year O 42,000 480 Year 1 Year 2 Year 3 Year 2 22,500, $21,500 $ 22,000$ 4,500 4,600 4,700 10,500 10,500 10,500 530 580 480 a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.) Year 3 Year 4 Year 4 $19,500 3,900 10,500 ?
- Distinguish between capital and revenue expenditure The following costs were also incurred by Napa Ltd during the financial year ended 30June 20X7: Interest on loan to purchase microcomputer. Cost of software for use with the microcomputer. Cost of customizing the software for use in Napa Ltd.'s business. Cost of paper used by the computer printer. Wages of computer operators. Cost of ribbons used by the computer printer. Cost of adding extra memory to the microcomputer. Cost of floppy disks used during the year. Costs of adding a manufacturer’s upgrade to the microcomputer equipment. Cost of adding air conditioning to the computer room. Required: Classify each of the above as capital expenditure or revenue expenditure.Sunshine Corporation is reviewing an investment proposal. The initial cost of the investment is R52 500. The estimated cash flows and net profit for each year are presented in the schedule below. All cash flows are assumed to take place at the end of the year. Year Net cash flows Net profit1 R20 000 R2 5002 R17 500 R3 5003 R15 000 R4 5004 R12 500 R5 5005 R10 000 R6 500 The cost of capital is 12%.Required:Calculate the following:1. Payback Period 2. Net Present value 3. Accounting rate of returnThe Fancy Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 21 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Year 1 Year 2 a. Investment Sales revenue Operating costs Depreciation Net working capital spending 305 Year 0 $ 26,400 C. $ 13,500 2,950 6,600 205 Year 3 $15,100 3,125 4,300 6,600 6,600 235 $16,500 155 Year 4 $13,000 2,900 6,600 ? Compute the incremental net income of the investment for each year. (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Compute the incremental cash flows of the investment for each year. (A negative amount should be b. indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole number,…