Shelton Company purchased a parcel of land six years ago for $869,500. At that time, the firm invested $141,000 in 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 $52,000 a year. The company is now considering building a warehouse on the site as the rental lease is expiring. The current value of the land is $921,000. What value should be included in the initial cost of the warehouse project for the use of this land?
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- Marwa & Co purchased a parcel of land six years ago for $756005. At that time, the firm invested $173780 in 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 $53,500 a year. The company is now considering building a warehouse on the site as the rental lease is expiring. The current value of the land is $885990 What value should be included in the initial cost of the warehouse project for the use of this landShelton Co. purchased a parcel of land six years ago for $869, 500. At that time, the firm invested $141,000 in 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 $52,000 a year. The company is now considering building a warehouse on the site as the rental lease is expiring. The current value of the land is $921,000. What value should be included in the initial cost of the warehouse project for the use of this land? Group of answer choices $1,062,000 $ 921,000 $0 $869, 500 $1,010, 500Shelton Co. purchased a parcel of land six years ago for $871,500. At that time, the firm invested $143,000 in 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 $53,000 a year. The company is now considering building a warehouse on the site as the rental lease is expiring. The current value of the land is $923,000. What value should be included in the initial cost of the warehouse project for the use of this land?
- Better 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) $419,000Riley Co. purchased a parcel of land six years ago for $768,500. At that time, the firm invested $120,000 in 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 $41,500 a year. The company is now considering building a warehouse on the site as the rental lease is expiring. The current value of the land is $652,000. What value should be included in the initial cost of the warehouse project for the use of this land? O $858,500 O $642,000 O $888,500 O $0 O $652.000The Crying Onion 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? Group of answer choices $299,500 $355,000 $363,500 $419, 000
- Shelton Co. purchased a parcel of land six years ago for $870,500. At that time, the firm invested $142,000 in 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 $52,500 a year. The company is now considering building a warehouse on the site as the rental lease is expiring. The current value of the land is $922,000. What value should be included in the initial cost of the warehouse project for the use of this land? Multiple Choice $870,500 $922,000 $1,064,000 $0 $1,012,500In 2018, the Marion Company purchased land containing a mineral mine for $1,600,000. Additional costs of$600,000 were incurred to develop the mine. Geologists estimated that 400,000 tons of ore would be extracted.After the ore is removed, the land will have a resale value of $100,000.To aid in the extraction, Marion built various structures and small storage buildings on the site at a cost of$150,000. These structures have a useful life of 10 years. The structures cannot be moved after the ore has beenremoved and will be left at the site. In addition, new equipment costing $80,000 was purchased and installed atthe site. Marion does not plan to move the equipment to another site, but estimates that it can be sold at auctionfor $4,000 after the mining project is completed.In 2018, 50,000 tons of ore were extracted and sold. In 2019, the estimate of total tons of ore in the mine wasrevised from 400,000 to 487,500. During 2019, 80,000 tons were extracted.Required:1. Compute depletion and…Carey Company owns a plot of land on which buried toxic wastes have been discovered. Since it will require several years and a considerable sum of money before the property is fully detoxified and capable of generating revenues, Carey wishes to sell the land now. It has located three potential buyers: Buyer A, who is willing to pay $1,000,000 for the land now, Buyer B, who is willing to make 20 annual payments of $110,000 each starting from today. Buyer C, who is willing to make 10 annual payments of $220,000, but the payments will begin two years from today. Assuming that the appropriate rate of interest is 9%, to whom should Carey sell the land? Why? Please show your calculations to compare the present values of the three options.
- Dell is considering replacing one of its material handling systems. The old system was purchased 7 years agofor $130,000 and was depreciated as MACRS-GDS 5-year property since the system is used in the manufactureof electronic components. It has an annual O&M cost of $48,000, a remaining operational life of 8 years, and anestimated salvage value of $6,000 at that time. A new system can be purchased for $175,000. It will be worth$50,000 in 8 years, and it will have annual O&M costs of only $17,000 per year due to new technology. If thenew system is purchased, the old system will be traded in for $55,000, even though the old system can be sold536 CHAPTER 11 / REPLACEMENT ANALYSISfor only $45,000 on the open market. Leasing a new system will cost $31,000 per year, payable at the beginningof the year, plus operating costs of $15,000 per year payable at year-end. If the new system is leased, theexisting material handling system will be sold for its market value of $45,000.Use an…Zelda Company owns a plot of land on which buried toxic wastes have been discovered. Since it will require several years and a considerable sum of money before the property is fully detoxified and capable of generating revenues, Zelda wishes to sell the land now. It has located two potential buyers: Buyer A, who is willing to pay $800,000 for the land now, and Buyer B, who is willing to make 20 annual payments of $120,000 each, with the first payment to be made 5 years from today. Assuming that the appropriate rate of interest is 9%, which should Zelda sell the land?Nguyen, Inc., is considering the purchase of a new computer system (ICX) for $130,000. The system will require an additional $30,000 for installation. If the new computer is purchased, it will replace an old system that has been fully depreciated. The new system will be depreciated under the MACRS rules applicable to 7-year class assets. If the ICX is purchased, the old system will be sold for $20,000. The ICX system, which has a useful life of 10 years, is expected to increase revenues by $32,000 per year over its useful life. Operating costs are expected to decrease by $2,000 per year over the life of the system. The firm is taxed at a 40 percent marginal rate.a. What net investment is required to acquire the ICX system and replace the old system?b. Compute the annual net cash flows associated with the purchase of the ICX system.
