Home Properties is developing a subdivision that includes 470 home lots. The 170 lots in the Canyon section are below a ridge and do not have views of the neighboring canyons and hills; the 300 lots in the Hilltop section offer unobstructed views. The expected selling price for each Canyon lot is $51,000 and for each Hilltop lot is $98,000. The developer acquired the land for $2,400,000 and spent another $2,000,000 on street and utilities improvements. Assign the joint land and improvement costs of $4,400,000 to the Canyon section and the Hilltop section using the value basis of allocation. Note: Do not round your intermediate calculations. Canyon section Hilltop section Totals Sales Value Numerator Percent of Sales Value Denominator % of Sales Value Cost to Allocato Allocated Cost
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- Home Properties is developing a subdivision that includes 320 home lots. The 150 lots in the Canyon section are below a ridge and do not have views of the neighboring canyons and hills; the 170 lots in the Hilltop section offer unobstructed views. The expected selling price for each Canyon lot is $42,000 and for each Hilltop lot is $105,000. The developer acquired the land for $2,100,000 and spent another $3,000,000 on street and utilities improvements. Assign the joint land and improvement costs of $5,100,000 to the Canyon section and the Hilltop section using the value basis of allocation. (Do not round your intermediate calculations.) Canyon section Hilltop section Totals Sales Value Numerator Percent of Sales Value Denominator % of Sales Value 0 0 0 Cost to Allocate Allocated Cost Quantity of LotsHome Properties is developing a subdivision that includes 360 home lots. The 240 lots in the Canyon section are below a ridge and do not have views of the neighboring canyons and hills; the 120 lots in the Hilltop section offer unobstructed views. The expected selling price for each Canyon lot is $43,000 and for each Hilltop lot is $105,000. The developer acquired the land for $2,400,000 and spent another $1,200,000 on street and utilities improvements. Assign the joint land and improvement costs of $3,600,000 to the Canyon section and the Hilltop section using the value basis of allocation. Note: Do not round your intermediate calculations. > Answer is not complete. Sales Value Percent of Sales Value Cost to Allocate Allocated Cost Numerator Denominator Canyon section Hilltop section $ 10,320,000 12,600,000 $ 10,320,000 $ 4,800,000 % of Sales Value 215.00% 12,600,000 4,800,000 (115.00)% Totals $ 22,920,000orangutan Corp purchases land worth $2,500,000 to be developed into lottle home lots. The lots will be allocated into one of three categories: lakefront, lakeview, and standard. Lakeside expects that half of the little home lots will be lakefront and sell for $26,000, 30% are lakeview and sell for $10,000 and the remaining lots are priced at $4,500 each. The tract of land is expected to produce 300 lots. Instructions a) Using the relative sales value method calculate the total the inventory value that should be assigned to each category of lots. b) Assume that by the end of year one Lakeside has sold all of its lakefront and lakeview lots. What is the company's gross profit?
- EMILY CONSTRUCTION COMPANY is constructing a two (2) Tower residential condominiums. Tower 1 sells 20 units while tower 2 sells 30 units. Both towers will share in the common amenities and occupy the same land area. All units have been pre-sold at this time. The company estimates to spend: $210,000,000 on the land $200,000,000 on the common area $200,000,000 for developing tower 1 $300,000,000 for developing tower 2 The company already incurred the following costs: Land $210,000,000 Common Area (which is to be prorated to their saleable area) $100,000,000 Development cost for tower 1 $44,000,000 Development cost for tower 2 $150,000,000 Moreover, the company also incurred $10,000,000 as commissions to agents for tower 1 sales and $15,000,000 for tower 2 sales. The agents were already paid 50% of their commissions with the remaining 50% upon full payment from their clients. 1. What is the percentage of completion for tower 1? 2. How much should the company report as…Treetop Associated Group (TAG) is seeking financing for acquisition and development of 147 homesites. The land will cost $1.5 million, and TAG estimates direct development costs to be an additional $2.7 million. City Federal Bank will make a loan covering 40 percent of the land acquisition cost, 100 percent of direct improvement cost, and interest carry at 11 percent interest with a 3 percent loan origination fee. TAG has decided to split the development into two parcel types, standard and deluxe, with the standard parcels comprising 87 of the 147 total homesites. Also, TAG thinks that the deluxe sites will be priced at a $2,000 premium over the standard parcel price of $36,000. The total project revenue will be $5,412,000. After making a 60 percent down payment for the land and incurring closing costs of $50,000, TAG believes that the remaining development costs will be drawn down at $600,000 a month for the first three months and $300,000 a month for the next three months. Parcel…1 inces Home Properties is developing a subdivision that includes 370 home lots. The 160 lots in the Canyon section are below a ridge and do not have views of the neighboring canyons and hills, the 210 lots in the Hilltop section offer unobstructed views. The expected selling price for each Canyon lot is $45,000 and for each Hilltop lot is $106,000. The developer acquired the land for $1,600,000 and spent another $3,100,000 on street and utilities improvements. Assign the joint land and improvement costs of $4,700,000 to the Canyon section and the Hilltop section using the value basis of allocation (Do not round your intermediate calculations.) Canyon section Hilltop section Totals Sales Value U Numerator Percent of Sales Value Denominator % of Sales Value 0 0 0 Cost to Allocate Allocated Cost Quantity of Lots 160 210
- The Getaway Resort purchased 20 acres of land next to their current property for $250,000 in 2010. After a marketing survey was done last year costing $50,000, the owners are trying to decide whether to build an addition for $15,000,000 plus $500,000 for additional working capital, or sell the land for $2,000,000. What would their net investment be if they decide to build the project? 17,750,000 18,000,000 17,500,000 17,800,000Ogren Corporation is considering purchasing a new spectrometer for the firm’s R&D department. The purchase price is $70,000 and it would cost another $15,000 to install it. The spectrometer which falls into the MACRS 3-year property class (Year 1 - 33.33%, Year 2 - 44.44%, Year 3 - 14.82%, and Year 4 - 7.41%) is projected to be sold after three years for $30,000. Use of this equipment would result in an increased net working capital of $4,000 over the life of the machine. The spectrometer would have no effect on revenues, but it is expected to save the firm $35,000 per year in before-tax operating costs, mainly labor. The firm’s tax rate is 40%, and the required rate of return on the project is 11%. What amount should be used as the initial cash flow for this project? Why?Ogren Corporation is considering purchasing a new spectrometer for the firm's R&D department. The purchase price is $70,000 and it would cost another $15,000 to install it. The spectrometer which falls into the MACRS 3-year property class (Year 1-33.33%, Year 2 - 44.44%, Year 3 - 14.82%, and Year 4 - 7.41%) is projected to be sold after three years for $30,000. Use of this equipment would result in an increased net working capital of $4,000 over the life of the machine. The spectrometer would have no effect on revenues, but it is expected to save the firm $35,000 per vear in before-tax operating costs, mainly labor. The firm's tax rate is 40%, and the required rate of return on the project is 11%. What is the after-tax salvage value for the spectrometer?
- Ogren Corporation is considering purchasing a new spectrometer for the firm's R&D department. The purchase price is $70,000 and it would cost another $15,000 to install it. The spectrometer which falls into the MACRS 3-year property class (Year 1-33.33%, Year 2 - 44.44%, Year 3 - 14.82%, and Year 4 - 7.41%) is projected to be sold after three years for $30,000. Use of this equipment would result in an increased net working capital of $4,000 over the life of the machine. The spectrometer would have no effect on revenues, but it is expected to save the firm $35,000 per year in before-tax operating costs, mainly labor. The firm's tax rate is 40%, and the required rate of return on the project is 11%. What amount should be used as the initial cash flow for this project? Why? Short Answer Toolbar navigationBetter Buildings purchased a parcel of land six years ago for $299,500. At that time, the firm invested $64,000 grading the site so that it would be usable. Since the firm wasn't ready to use the site itself at that time, it decided to lease the land for $28,000 a year. The company is now considering building a hotel on the site as the rental lease is expiring. The current value of the land is $355,000. The firm has no loans or mortgages secured by the property. What value should be included in the initial cost of the hotel project for the use of this land? a) $299,500 b) $355,000 c) $363,500 d) $419,000Ogren Corporation is considering purchasing a new spectrometer for the firm's R&D department. The purchase price is $70,000 and it would cost another $15,000 to install it. The spectrometer which falls into the MACRS 3-year property class (Year 1- 33.33%, Year 2- 44.44%, Year 3 - 14.82%, and Year 4 - 7.41%) is projected to be sold after three years for $30,000. Use of this equipment would result in an increased net working capital of $4,000 over the life of the machine. The spectrometer would have no effect on revenues, but it is expected to save the firm $35,000 per year in before-tax operating costs, mainly labor. The firm's tax rate is 40%, and the required rate of return on the project is 11%. What is the NPV of the project? Should the firm accept or reject this project?