U.S. Steel is considering a plant expansion to produce austenitic, precipitation hardened, duplex, and martensitic stainless steel round bars that is expected to cost $13 million now and another $10 million 1 year from now. If total operating costs will be $1.2 million per year starting 1 year from now, and the estimated salvage value of the plant is virtually zero, how much must the company make annually in years 1 through 10 to recover its investment plus a return of 15% per year

Answer:

$5.5228 million

Or

$5,522,800

Explanation:

First, calculate the present value of all cash outflows

Present value of cash outflow = Initial Cost + ( Year 1 cost x Discount factor 15%, 1 year ) + ( Annual Cost x Annuity factor 15%, 10 years )

Where

Initial cost = $13 million

Year 1 cost = $10 million

Discount factor 15%, 1 year = 1 / ( 1 + 15% )^1 = 0.8696

Annual Cost = $1.2 million

Annuity factor 15%, 10 years = 1 - ( 1 + 15% )^-10 / 15% = 5.019

Placing value sin the formula

Present value of cash outflow = $13 million + ( $10 million x 0.8696 ) + ( $1.2 million x 5.019 )

Present value of cash outflow = $13 million + $8.696 million + $6.0228 million

Present value of cash outflow = $27.7188 million

Now use the following formula to calculate the annual revenue required to recover its investment plus a return of 15% per year

Present value of Annual revenue = Annual Revenue x Annuity factor 15%, 10 years

Annual Revenue = Present value of Annual revenue / Annuity factor 15%, 10 years

Where

Present value of Annual revenue = $27.7188 million

Annuity factor 15%, 10 years = 1 - ( 1 + 15% )^-10 / 15% = 5.019

Placing value sin the formula

Annual Revenue = $27.7188 million / 5.019

Annual Revenue = $5.5228 million

Annual Revenue = $5,522,800

Super Garage was started on June 1 by Mr. Peter Thomson . A summary of June transactions

is presented below.

June 1. Invested $25,000 cash to start the garage.

2. Purchased repair equipment for $5,000 cash.

4. Paid $500 cash for the space rent.

4. Hired an employee

5. Paid $700 for a one-year fire insurance policy.

6. Received $10000 in cash from customers for repair service.

10. Provided repair service on account to customers $1750.

21. Collected cash of $5000 for services provided on June 6.

27. Withdrew $1,000 cash for personal use.

30. Paid employee salaries $3,000.

30. Received an electricity bills $170.

Required:

i. Journalize the transactions

ii. Post and balance the transactions to ledger accounts

PET Co. owns 80% of the common shares of SAL Corp. PET has no other investments. Goodwill associated with the investment is nil, but there is a fair value increment of $62,500 relating to SAL's patent that is being amortized over 10 years. PET's and SAL's reported net income for 20X5 is as follows: PET Co. SAL Corp. Net income $200,000 $50,000 SAL declared $25,000 in dividends in 20X5. Assuming PET uses the cost method, what amount of consolidated net income attributable to the parent (ATP) would be reported in 20X5?
a) $210,000
b) $215,000
c) $223,750
d) $235,000

As of December 31, Drake Inc. reported the following (in millions): Current AssetsLong-term AssetsCurrent LiabilitiesTotal Liabilities $31,967$42,737$26,132$61,491 What amount did Drake Inc. report as equity on December 31

Floyd tells his daughter Glenda that she can have his Harley Davidson when he dies, but he does not add this to his will, and he is not on his deathbed. This is

Define the KPI ‘rate of staff absenteeism’.

If the importer... the bill

Exercise 8-19 Amortization of intangible assets LO P4 Milano Gallery purchases the copyright on a painting for $418,000 on January 1. The copyright is good for 10 more years. The company plans to sell prints for 11 years. Prepare entries to record the purchase of the copyright on January 1 and its annual amortization on December 31.

Pop owns 87% of the common stock of Sugar. On December 31, 2017, Pop's Receivables include $296,880 that Pop advanced to Sugar. What portion (stated in dollars) of the intercompany receivable should be eliminated in preparing Pop's consolidated financial statements

ABC Company uses the allowance method for estimating bad debts. Record the following journal entries:
12/31 ABC Company estimates that $5,000 of accounts receivable will be uncollectible.
3/5 ABC Company wrote off a $1,200 account of a customer, B. Brown.

Assume, for this question only, the following: During the negotiations Juan guaranteed Sarita that the business had turned a profit in each of the past 5 years. Actually, it lost money in each of those years, although Juan did not know that. When Juan made the statement about the business's profitability, however, Sarita was conferring with her attorney and did not hear it. Her friend Harry, who was observing the negotiations, heard Juan's statement. Before long, when Sarita realizes what a bad deal she's made, she laments the fact to Harry. When Harry inquires how a business that had been profitable under Juan was suddenly losing money, Sarita is confused. They finally realize that Harry heard Juan's misstatement about the business's profitability and Sarita did not. Even so, Sarita is thrilled. With Harry as her key witness, she seeks to rescind the sale agreement claiming innocent misrepresentation. Which of the following is true?
A. Rescission, because Juan intended to defraud Sarita.
B. No rescission, because Juan's claims of the business's profitability would not have been material to Sarita if she had heard them.
C. No rescission, because Juan lacked sufficient knowledge of the false nature of his statement and did not intend to trick Sarita.
D. Rescission, because Juan's claims of the business's profitability would have been material to Sarita if she had heard them. E. No rescission, because Sarita did not actually rely on Juan's false statement about the business's profitability.

The company has net sales revenue of $3.6 million during 2018. The company's records also included the following information: Assets 12/31/17 12/31/18 Property, plant and equipment $ 2.3 million $ 2.5 million Licensing agreements $ 0.5 million $ 0.4 million Goodwill $ 0.3 million $ 0.3 million Investments $ 0.4 million $ 0.5 million What is the company's fixed asset turnover ratio for 2018

This year, Gogo Inc. granted a nonqualified stock option to Mrs. Mill to buy 10,000 shares of Gogo stock for $8 per share for five years. At date of grant, Gogo stock was selling on a regional securities market for $7.87 per share. Gogo recorded $26,700 compensation expense for the estimated value of the option. Five years after Gogo granted the option to Mrs. Mill, she exercised it on a day when Gogo stock was selling for $10.31 per share. Required: How much income must Mrs. Mill recognize in the year of exercise

Polarix is a retailer of ATVs (all-terrain vehicles) and accessories. An income statement for its Consumer ATV Department for the current year follows. ATVs sell for $4,000 each. Variable selling expenses are $230 per ATV. The remaining selling expenses are fixed. Administrative expenses are 70% variable and 30% fixed. The company does not manufacture its own ATVs; it purchases them from a supplier for $1,880 each.
POLARIX
Income Statement—Consumer ATV Department
For Year Ended December 31, 2017
Sales $619,200
Cost of goods sold 311,320
Gross margin 307,880
Operating expenses
Selling expenses $160,000
Administrative expenses 42,500 202,500
Net income $105,380
Required:
1. Prepare an income statement for this current year using the contribution margin format.
2. For each ATV sold during this year, what is the contribution toward covering fixed expenses and earning income?

Cash Short and Over Entries
Listed below are the weekly cash register tape amounts for service fees and the related cash counts during the month of July. A change fund of $100 is maintained.
Date Change Fund Cash Register Actual Cash
Receipt Amount Counted
July 2 $100 $281.80 $379.00
July 9 100 311.50 411.50
July 16 100 304.10 406.90
July 23 100 318.20 416.00
July 30 100 293.60 397.50
1. Determine the ending balance of the cash short and over account.
2. Does it represent an expense or revenue?

Aureolin Company manufactures toothpaste and packs them in tubes of 250 grams. Standard variable overhead rate (SVOR) $3.90 per direct labor hour Actual variable overhead $79,721 Actual hours worked (AH) 22,290 hours Hours allowed for production (SH) 18,000 hours Determine the variable overhead spending variance.

Jebali Company reports gross income of $340,000 and other property-related expenses of $229,000 and uses a depletion rate of 14%. Calculate Jebali's depletion allowance for the current year. $fill in the blank 1

A new employee, John Chapman, earns $10 per hour and gets time-and-a-half over 40 hours per week. His first week he worked 45 hours. Deductions from his check were $30 for OASDI, $7 for Medicare, $ 61 for federal income tax withholding, and $15 for a United Way contribution. What was his gross pay for the period

American Corp. is currently an all-equity firm that has 22,000 shares of stock outstanding with a market price of $27 a share. The current cost of equity is 12 percent and the tax rate is 35 percent. The firm is considering adding $225,000 of debt with a coupon rate of 6.25 percent to its capital structure. The debt will sell at par. What will be the levered value of the equity

You have been tasked with advising the dictator of a nation over what he should do to increase the countries GDP. He suggests printing money and increasing the growth rate of the money supply. He wants to give this newly printed currency to his soldiers and best political supporters. You know this will not increase GDP in the long run because:

I. Money is neutral
II. Increasing the growth of the money supply only causes inflation in the long run
III. He would only increase GDP in the long run if he distributed the money equally to all citizens
IV. He would only increase GDP in the long run only if he printed a large enough sum of money

a. I and II only I
b. II, and III only
c. I, II, III, and IV
d. III only

Wisconsin Snowmobile Corp. is considering a switch to level production. Cost efficiencies would occur under level production, and aftertax costs would decline by $30,000, but inventory would increase by $250,000. Wisconsin Snowmobile would have to finance the extra inventory at a cost of 13.5 percent.

a. Should the company go ahead and switch to level production?
b. How low would interest rates need to fall before level production would be feasible?

On its December 31, 2017, balance sheet, Calgary Industries reports equipment of $470,000 and accumulated depreciation of $94,000. During 2018, the company plans to purchase additional equipment costing $100,000 and expects depreciation expense of $40,000. Additionally, it plans to dispose of equipment that originally cost $52,000 and had accumulated depreciation of $7,600. The balances for equipment and accumulated depreciation, respectively, on the December 31, 2018 budgeted balance sheet are:

Cheers Corporation purchased for $500,000 5,000 shares of Beer Corporation common stock (less than 5% of the outstanding Beer stock) at the beginning of the current year. It used $400,000 of borrowed money and $100,000 of its own cash to make this purchase. Cheers paid $50,000 of interest on the debt this year. Cheers received a $40,000 cash dividend on the Beer stock on September 1 of the current year. Cheers has $5 million of taxable income before any dividends-received deduction. a. What amount can Cheers deduct for the interest paid on the loan

Swifty Corporation manufactures a product with a unit variable cost of $100 and a unit sales price of $176. Fixed manufacturing costs were $480000 when 10000 units were produced and sold. The company has a one-time opportunity to sell an additional 1000 units at $145 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:
Income would increase by $45000.
Income would increase by $3000.
Income would increase by $145000.
Income would decrease by $3000.
Coronado Industries is using the target cost approach on a new product. Information gathered so far reveals:
Expected annual sales 350000 units
Desired profit per unit $0.35
Target cost $168000
What is the target selling price per unit?
a. $0.48
b. $0.35
c. $0.70
d. $0.83

On January 2, 2021, Cullumber Hospital purchased a $106,000 special radiology scanner from Bella Inc. The scanner had a useful life of 4 years and was estimated to have no disposal value at the end of its useful life. The straight-line method of depreciation is used on this scanner. Annual operating costs with this scanner are $104,000. Approximately one year later, the hospital is approached by Dyno Technology salesperson, Jacob Cullen, who indicated that purchasing the scanner in 2021 from Bella Inc. was a mistake. He points out that Dyno has a scanner that will save Cullumber Hospital $25,000 a year in operating expenses over its 3-year useful life. Jacob notes that the new scanner will cost $110,000 and has the same capabilities as the scanner purchased last year. The hospital agrees that both scanners are of equal quality. The new scanner will have no disposal value. Jacob agrees to buy the old scanner from Cullumber Hospital for $57,500.
(a) Your answer is correct.
If Twilight Hospital sells its old scanner on January 2, 2022, compute the gain or loss on the sale.
(b) Prepare an incremental analysis of Twilight Hospital. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Should Twilight Hospital purchase the new scanner on January 2, 2022?

Simone uses a predetermined overhead application rate of $8 per direct labor hour. A review of the company's accounting records for the year just ended discovered the following: Underapplied manufacturing overhead: $7,200 Actual manufacturing overhead: $392,000 Budgeted labor hours: 50,000 Simone's actual labor hours worked totaled:

On January 1, 2021, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this date was $101,600. The ending inventory, valued at year-end costs, and the relative cost index for each of the next three years is below:

Year-end Ending inventory at year-end costs Cost Index
2021 $131,040 1.05
2022 150,040 1.10
2023 160,320 1.20

In determining the inventory balance for Badger to report in its 12/31/2022 balance sheet: _____________-

a. An additional layer of $12,760 is added to the 12/31/2021 balance.
b. An additional layer of $24,760 is added to the 12/31/2021 balance.
c. An additional layer of $23,760 is added to the 12/31/2021 balance.
d. None of these answer choices are correct.

Buff is considering a new packaging machine. The initial cost is $10,000 and we would save $4,000 per year in labor costs. If our MARR is 12% and our projects must have a 3-year discounted payback period, should we purchase this packaging machine?
Yes
No
Not enough nformation to answer.

state and explain five (5) challenges you will encounter as a service marketer.

Blue Manufacturing produces lathes at an inventory cost of $25,000 each that sell for $32,000 each. For credit-approved customers, Blue leases the lathes for $8,500 per year for five years. The lathes are guaranteed to last four years and generally have a six-year life. Collection is predictable and reasonably assured. Additionally, the lessor is aware of all costs to be incurred under the lease that will not be reimbursed by the lessor. What is the financing profit of Blue Manufacturing on a leased lathe

A company like Motorola might establish a goal of reducing its inventory by 50 percent over the next year. To ensure that it reaches this goal, the company could monitor its progress on a quarterly or monthly basis. If the managers at Motorola discover that there is a danger of not achieving this goal, they can take corrective action to adjust for the deficiency. This is a description of the managers' ____ function.