Suppose BSA Corporation projected to generate the following for the next five years, in million pesos:OperatingExpense(excludingdepreciation)YearRevenueТахes150.0030.006.00255.0033.006.60360.0036.307.26466.5539.937.99573.2143.928.78A property was purchased for Php150 Million. The terminal value was assumed based on the growth rate of the cash flows.The outstanding loan is Php16.62 Million. The required rate of return for this business is 12%. Given the information above,answer the following:1. How much is the Terminal Value?2. How much is the Discounted Net Cash Flows to the Firm?3. How much is the Net Cash Flow to the Equity?4. Assuming there are no outstanding loans, how much is the Discounted Net Cash Flows to the Equity?5. Assuming that the required rate of retum is 10%, how much is the Discounted Net Cash Flows to the Equity?

(1) Calculation of % change in Revenue Years Revenue Change in Revenue % Change 1 50 0 0 2 55…

Answered: Suppose BSA.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Suppose BSA Corporation projected to generate the following for the next five years, in million pesos: Operating Expense (excluding depreciation) 30.00 Year Revenue Тахes 1 50.00 6.00 2 55.00 33.00 6.60 3 60.00 36.30 7.26 4 66.55 39.93 7.99 73.21 43.92 8.78 A property was purchased for Php150 Million. The terminal value was assumed based on the growth rate of the cash flows. The outstanding loan is Php16.62 Million. The required rate of return for this business is 12%. Given the information above, answer the following: How much is the Terminal Value? Assuming there are no outstanding loans, how much is the Discounted Net Cash Flows to the Equity? Assuming that the required rate of return is 10%, how much is the Discounted Net Cash Flows to the Equity?
A lessor made an investment of ₱550,000 in equipment with an expected life of 5 years. He expects and incremental revenue of ₱460,000 while costs to be incurred are: Costs of sales→₱120,000; Marketing, admin, and maintenance→ ₱150,000. Tax rate is 25%. Annual depreciation is ₱110,000. Cost of capital is 11%. The NPV would be?
Columbia Comp. invests RM 270,000 in a project that is depreciated on a straight-line basis over three years to zero disposal value. The relevant details for the project over its 3-year life are shown below. 2 Calculate the accounting rate of return for the project. Year 1 Year 2 Year 3 Sales RM 220,000 RM 190,000 RM 200,000 Cash expenses 50,000 40,000 60,000 Depreciation 90,000 90,000 90,000 Earnings before taxes 80,000 60,000 50,000 Taxes @ 30% 24,000 18,000 15,000 Operating income after taxes 56,000 42,000 35,000
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Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, Year 1, to June 30, Year 2 Expenditures on project: Year 1: January 1 $ 576,000 May 1 357,000 October 1 540,000 Year 2: March 1 1,476,000 June 30 708,000 Amounts borrowed and outstanding: $1.3 million borrowed at 12%, specifically for the project $7 million borrowed on January 1, Year 1, at 14% $18 million borrowed on January 1, Year 1, at 8% Round all final numeric answers to two decimal places. Compute the amount of interest costs capitalized each year. Capitalized interest, Year 1 $ Capitalized interest, Year 2 $ If it is assumed that the production complex has an estimated life of 20 years and a residual value of $0, compute the straight-line depreciation in Year 2.
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A potential project involves an initial investment in machinery of RO.1,000,000 and has the following cash inflows:Year 1 – RO.250,000Year 2 – RO.350,000Year 3 – RO.200,000Year 4 – RO.400,000At the end of year 4, the machinery will be sold for RO.600,000.Calculate the accounting rate of return based on average investment.NOTE (DEDUCT THE DEPRECIATION TO ARRIVE AT THE CORRECT AVERAGE PROFIT) a. None of the options b. 35% c. 20% d. 25% Clear my choice
The NUBD Co. acquired a new machine for P160,000 which will be depreciated on a straight-line basis over ten year period. A full year’s depreciation was taken in the year of acquisition. The accounting rate of return is expected to be 15% on the initial increase in required investment. If we assume a uniform cash inflow, the annual cash flow from operations, net of income taxes, will be
A lessor made an investment of ₱550,000 in equipment with an expected life of 5 years. He determined that he will incur the following annual costs: Costs of sales₱120,000; Marketing, admin, and maintenance ₱150,000. Tax rate is 25%. Annual depreciation is ₱110,000. Cost of capital is 11%. The breakeven lease per year would be? ₱ 460,000 ₱ 503,717 ₱ 521,756 ₱ 468,203 ₱ 436,127 ₱ 324,846

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