QUESTION 3 A retailer, Lewis John constructed a new store at cost of RM50 million over 6 months from 1 Jan to 30 June 20x9. To assist the financing of the project the company raised a RM40 million 10% loan on 1 Jan. The loan was repaid on 30 Sept. The store did not open until the following year. Required: Calculate the initial cost valuation of the store
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- Assume a broker has listed a grocery-anchored shopping center with 100,000 sf of total retail space for lease, at a price of $9 million at an advertised 7.0% cap rate in a suburban market approximately 30 miles northwest of Pittsburgh. a. Calculate the price in dollars per square feet (show your work). b. Calculate the net operating income (NOI) (show your work)? C. If you purchase this asset and hold it for five years, what is a reasonable exit cap rate you could obtain for the sale, assuming no major investment in the property while you own it, only routine maintenance (no roof replacement or mechanical upgrades)?Cash payback period for a service company Janes Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of 975,000 and each with a seven-year life and expected total net cash flows of 1,050,000. Location 1 is expected to provide equal annual net cash flows of 150,000, and Location 2 is expected to have the following unequal annual net cash flows: Determine the cash payback period for both location proposals.Assume Home Garden Inc. in MAD 26-5 assigns the following probabilities to the estimated construction cost of the warehouse and annual net cash flows: a. Compute the expected value of the construction cost. b. Compute the expected value of the annual net cash flows. c. Determine the expected net present value of building the distribution warehouse, assuming a desired rate of return of 14% and using the expected values computed in parts (a) and (b). Use the present value tables provided in Appendix A. Round to the nearest dollar. d. Based on your results in part (c), should Home Garden Inc. build the distribution warehouse?
- Entity A has the following loan finance in place during the year: $2,560,000 of 7.50% loan finance $3,550,000 of 9.50% loan finance Entity A constructed a new factory which cost $5,655,000 and this was funded out of the existing loan finance. The factory took 9 months to complete within the same reporting year. REQUIRED: Measure the borrowing costs should be capitalised. The borrowing costs should be capitalised is _________?Differential Analysis Involving Opportunity Costs On August 1, Rantoul Stores Inc. is considering leasing a building and purchasing the necessary equipment to operate a retail store. Alternative company could use the funds to invest in $1,000,000 of 4% U.S. Treasury bonds that mature in 15 years. The bonds could be purchased at face The following data have been assembled: Cost of store equipment $1,000,000 Life of store equipment 15 years Estimated residual value of store equipment $50,000 Yearly costs to operate the store, excluding depreciation of store equipment $200,000 Yearly expected revenues-years 1-6 $300,000 Yearly expected revenues-years 7-15 $400,000 Required: 1. Prepare a differential analysis as of August 1 presenting the proposed operation of the store for the 15 years (Alternative 1) as compared with investing in U.S. Treasury bonds (Alternative 2). If an amount is zero, enter "0". Differential Analysis Operate Retail (Alt. 1) or Invest in Bonds (Alt. 2) August 1 Invest…Question1: A company is planning to purchase a new machine to expand the range of its products. There are two brands available in the market: A and B. Both machines are costing 70,000 OMR. The cash inflows given in the table are expected to be generated by both machines. Based on NPV and IPP, identify the better machine if the discounting rate is 7.5% and write aconclusion. Year Machine A Machine B 1 12000 13100 2 14200 13900 3 16100 15800 4 19000 18600 5 21700 20000 6 22200 22800
- USE MANUAL SOLUTIONA machine has a first cost of ₱100,000 and salvage value of ₱10,000 after 10 years. The annual maintenance of the machine is ₱4,000. If interest rate is 10%, find the annual cost of the machine. A. ₱17,000.34 B. ₱19,647.08 ( ANSWER) C. ₱21,083.56 D. ₱32,074.56Differential Analysis Involving Opportunity Costs On October 1, Matrix Stores Inc. is considering leasing a building and purchasing the necessary equipment to operate a retail store. Alternatively, the company could use the funds to invest in $149,100 of 6% U.S. Treasury bonds that mature in 16 years. The bonds could be purchased at face value. The following data have been assembled: Cost of store equipment $149,100 Life of store equipment 16 years Estimated residual value of store equipment $17,900 Yearly costs to operate the store, excluding depreciation of store equipment $56,100 Yearly expected revenues—years 1-8 $74,800 Yearly expected revenues—years 9-16 $71,000 Required: 1. Prepare a differential analysis as of October 1 to determine whether to Operate Retail Store (Alternative 1) or Invest in Bonds (Alternative 2). If an amount is zero, enter zero "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign.…еВook Show Me How Print Item Average Rate of Return The following data are accumulated by Lone Peak Inc. in evaluating two competing capital investment proposals: 3D Printer Truck Amount of investment $76,000 $48,000 Useful life 4 years 7 years Estimated residual value Estimated total income over the useful life $7,600 $12,600 Determine the expected average rate of return for each proposal. If required, round your answers to one decimal place. 3D Printer % Truck
- Subject : Accounting Samson Ltd is considering replacing equipment. The cost on 1.1.2023 will be £3m. The expected economic life of the equipment will be 4 years. The company depreciates its equipment using the straight-line methods. The company expects to sell this equipment for £400,000, after the end of its useful economic life. There are expected cost savings arising from this investment of £1,200,000 in each of years 1 and 2 and £800,000 in each of years 3 and 4. What is the payback of this investment? Select one answer: 2 years 3 years 2 years and 9 months 3 years and 2 monthsDifferential Analysis Involving Opportunity CostsOn July 1, Coastal Distribution Company is considering leasing a building and buying the necessaryequipment to operate a public warehouse. Alternatively, the company could use the funds to invest in$740,000 of 5% U.S. Treasury bonds that mature in 14 years. The bonds could be purchased at face value.The following data have been assembled:Cost of store equipment $740,000Life of store equipment 14 yearsEstimated residual value of store equipment $75,000Yearly costs to operate the warehouse, excludingdepreciation of store equipment $175,000Yearly expected revenues—years 1-7 $280,000Yearly expected revenues—years 8-14 $240,000Required:1. Prepare a differential analysis as of July 1 presenting the proposed operation of the warehouse for the14 years (Alternative 1) as compared with investing in U.S. Treasury bonds (Alternative 2). If an amount iszero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a…Required information A potential investment has a cost of $425,000 and a useful life of 5 years. Annual cash sales from the investment are expected to be $225.225 and annual cash operating expenses are expected to be $88,725. The expected salvage value at the end of the investment's life is $45,000. The company has a before-tax discount rate of 18%. Required: Calculate the following. (Round dollar amounts to the nearest whole dollar and IRR to one decimal place (.e. 055-5.5%). Enter negative amounts with a minus sign) Annual PMT of the investment FV of the investment NPV of the investment IRR of the investment