Mitchell purchased a franchise agreement to distribute electronic gadgets for 7 years. The agreement cost $2,200,000 and he had to make investments of $875,000 for the first 2 years to set up his showroom. The franchise generated $1,025,000 in profits each year from the 1st year to 7 years afterwards. At the end of year 7, he sold the furniture in his showroom for $120,000.
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- OLA #11.3 Manvir purchased a franchise agreement to distribute electronic gadgets for 9 years. The agreement cost $1,700,000 and she had to make investments of $875,000 for the first 2 years to set up her showroom. The franchise generated $1,075,000 in profits each year from the 1st year to 9 years afterwards. At the end of year 9, she sold the furniture in her showroom for $110,000. a. What is the Internal Rate of Return (IRR)? b. Should she have proceeded with this plan if her cost of capital was 14%? Please reply using details with algebraJordan purchased a franchise agreement to distribute electronic gadgets for 8 years. The agreement cost $1,600,000 and she had to make investments of $875,000 for the first 2 years to set up her showroom. The franchise generated $1,050,000 in profits each year from the 1st year to 8 years afterwards. At the end of year 8, she sold the furniture in her showroom for $105,000. (5marks) a. What is the Internal Rate of Return (IRR)? b. Should she have proceeded with this plan if her cost of capital was 19% ? .Jowel Smithers and Sonda Richards merged all of their financial resources and opened a mobile phone sales and repair business in the upscale Domain Mall in Los Angeles 10 years ago with an initial investment of $2.5 million. As revenues increased significantly over the first 4 years, they took out salaries that totaled $500,000 each year for the two of them. With increased success, they decided to pay themselves a total of $1.7 million each year from years 5 through 10. They hoped at the initiation of the joint business venture to make 10% per year on the investment in terms of salaries. (a) Determine the equivalent future worth after 10 years of the salaries. (b) If they had been satisfied with a $5 million future worth, calculate the size that the initial investment could have been instead of the $2.5 million, provided they had the funds available.
- Randy rents commercial warehouses to various businesses. He purchased a warehouse in May of the current year. The cost of the warehouse was $250,000 The depreciation for the current year will be $ (rounded to the nearest dollar). If Randy continues to rent the warehouse for the next 40 years, the depreciation in the 40th year he owns the warehouse will be $ . (Please refer to the tables at the end of the chapter for the MACRS depreciation rates for this problem.) Please dont use any AI. It's strictly prohibited. Help me asap please.Jerry was working as a veternarian, and he earned an annual income of $135,000. He had savings of $86,000 in the bank, which was earning 3% interest per year. Then he decided to quit and start his own landscaping business. He used his $86,000 savings to purchase a truck and equipment. The values for his first year with his new business were: Revenue 265,000 Wages for employees 108,000 Insurance 2990 Depreciation 1920 Gasoline and vehicle 6125 maintenance Calculate Jerry's accounting profit for his first year. Answer:6. Last year Bill Bailey quit his $20,000 per year job and invested $200,000 to open the Bargain Bonanzas. This year he sold for $600,000 merchandise he bought for $400,000. He paid his sales clerks $50,000. Bill could have earned 10 percent interest on other investments. This year, Bill's: a. accounting and economic profit were both $150,000 b. economic loss was d. economic profit was $220,000 less than his accounting profit
- Rita is keen to grow her business and provided some information on two transactlons that she undertook during the year. The first was the purchase of an individual asset for the business called a Techpager. wwym ww The initial cost of the machine itself was $32,000 with several extra required fees and charges. Rita also decided to include a number of optional extras in the purchase. Installation of Techpager $1500 Transportation and Shipping Costs $600 Extended Warranty/Service Program $300 per year. This is an optional service offered by the company that covers all maintenance and repairs costs and is paid annually in advance Sorting and Stapling Unit $1200 (required to allow Rita to produce the booklets for her business) Custom Painting $400 (Rita does not need to have this done but has decided she wants the machine to match her office décor) Insurance $500 per year payable in advance Prepare a general Journal entry to record the individual of the purchase business called Techpager.Harvey quit his job where he earned $45,000 a year. He figures his entrepreneurial talent or foregone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 for each unit. Of the $75 per unit, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. The total revenues for the firm in the first year were: Multiple Choice O $605,000 $825.000 $50,000 $100,000 OTwo friends contributed 50,000 each to form a new business. The owners used the amounts contributed to purchase a machine for 100,000 cash. They estimated that the useful life of the machine was five years and the salvage value was 20,000. They rented out the machine to a customer for an annual rental of 25,000 a year for five years. Annual cash operating costs for insurance, taxes, and other items totaled 6,000 annually. At the end of the fifth year, the owners sold equipment for 22,000, instead of the 20,000 salvage value initially estimated. (Hint: Compute the total net income and the total cash flows other than cash flows with owners for the five-year period as a whole.)
- Two friends contributed 50,000 each to form a new business. The owners used the amounts contributed to purchase a machine for 100,000 cash. They estimated that the useful life of the machine was five years and the salvage value was 20,000. They rented out the machine to a customer for an annual rental of 25,000 a year for five years. Annual cash operating costs for insurance, taxes, and other items totaled 6,000 annually. At the end of the fifth year, the owners sold equipment for 22,000, instead of the 20,000 salvage value initially estimated. (Hint: Compute the total net income and the total cash flows other than cash flows with owners for the five-year period as a whole.) with text explaining your answer.Tom & Dick go into business together as partnership, selling computer software through the internet. On January 1, they each put in $6,000 as capital, and this goes into the Tom&Dick account at their local bank. They buy computer equipment for $10,000 (paid by cheque) and set up for business in Dick’s dad’s basement. The cost of the computer equipment will be amortized over the next three years, with a disposal value of $1,000. Dick’s dad has agreed to let them operate out of his basement if they pay him a rent of 10% of their annual profit, or $1,200 per year, whichever is greater. At this point the total asset is: A. $6,000.00 B. $12,000.00 C. $10,800.00 D. $22,000.00 E. There is no possible answerHarvey quit his job at State University, where he earned $62,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $4,000 a year. To start the business, he cashed in $50,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 10,000 units of software at $72 for each unit. Of the $72 per unit, $60 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building.