FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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General Accounting
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- 10-9A (New proiect analysis) The Chung Ch..nical Corporation is considering the purchase o chemical analysis machine. Although the machine being considered will result in an increase earnings before interest and taxes of S35,000 per year, it has a purchase price of $100,000, and i would cost an additional $5,000 after tax to properly install this machineln sddiaon, to proper operate this machine, inventory must be increased by S5,000. This machine has an expected of 10 years, after which it will have no salvage value. Also, assume simplified straight-line dep ciation and that this machine is being depreciated down to zero, a 34 percent marginal tax rate. and a required rate of return of 15 percent. 2. What is the initial outlay associated with this project? b. What are the annual after-tax cash flows associated with this project for years I through c. What is the terminal cash flow in year 10 (what is the annual after-tar cash flow in 10 plus any additional cash flows associated with…arrow_forwardDo not do any interim rounding, state your answer rounded to the nearest dollar, for example, 35,498.67 would be 35499. Consider the following information regarding Ariadne Fiberworks and the planned acquisition of a new weaving loom. The loom will cost 269,000 and will be fully depreciated over 12 years using straight-line depreciation. Operating cash flows in year 1 are anticipated to be 30,910 and will grow at 3.6% per year thereafter, and the initial investment in net working capital of 17,350 will be maintained throughout the life of the project. Assuming a 12-year life, the anticipated incremental cash flows in year 12 at the end of the project are:arrow_forwardA warehouse building was purchased 10 years ago for P300,000. Since then, the effective annual interest rate has been 8%, inflation has been steady at 2.5%, and the building has no deterioration or decrease in utility. What should the warehouse sell for today? (Take note that inflation in commodity increases its value)arrow_forward
- Company Y acquired The Seoul Post in February 2021 for $315 million. Suppose the yearly margin per Seoul Post reader is $1 per year (coming from advertising), and the yearly retention rate is 70%, and assume a yearly discount rate of 10%. What is the difference between the price for which Company Y acquired the Seoul Post and the CLV of the 120 million unique visitors who will visit the Seoul Post this month?arrow_forwardMarigold Company includes one coupon in each box of soap powder that it packs, and 10 coupons are redeemable for a premium (a kitchen utensil). In 2020, Marigold Company purchased 9,100 premiums at 75 cents each and sold 101,000 boxes of soap powder at $ 3.60 per box; 40,800 coupons were presented for redemption in 2020. It is estimated that 60% of the coupons will eventually be presented for redemption.Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2020. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)arrow_forwardThe D.J. Masson Corporation needs to raise $500,000 for 1 year to supplyworking capital to a new store. Masson buys from its suppliers on termsof 3/10, net 90, and it currently pays on the 10th day and takes discounts.However, it could forgo the discounts, pay on the 90th day, and therebyobtain the needed $500,000 in the form of costly trade credit. What is theeffective annual interest rate of this trade credit?arrow_forward
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