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The Ocean City water park is considering the purchase of a new log flume ride. The cost to purchase the equipment is 1,800,000, and it will cost an additional 180,000 to have it installed. The equipment has an expected life of 6 years, and it will be depreciated using a MACRS 5-year class life. Management expects to run about 150 rides per day, with each ride averaging 16 riders. The season will last for 120 days per year. In the first year, the ticket price per rider is expected to be $4.00, and it will be increased by 4% per year. The variable cost per rider will be $1.40, and total fixed costs will be $275,000 per year. After six years, the ride will be dismantled at a cost of $75,000 and the parts will be sold for $650,000. The cost of capital is 12%, and its marginal tax rate is 35%. a) Calculate the initial outlay, annual after-tax cash flow for each year and the terminal cash flow. b) Calculate the NPV, IRR, and MIRR of the new equipment. Is the project acceptable? c) Using the Goal Seek tool, calculate the minimum ticket price that must be charged in the first year in order to make the project acceptable.
Shelton Engineering completed the following transactions in the month of June. Prepare a trial balance as of the end of this month's operations
George Fine, owner of Fine Manufacturing, is considering the introduction of a new product line. George has considered factors such as costs of raw materials, new equipment, and requirements of a new production process.
What is the internal rate of return? What is the accounting rate of return based on the initial investment? What is the payback period?
Why did Congress establish favorable treatment for 1231 assets?
Discuss why a buyer may want to order on a bill and hold basis. Why might a seller want to classify an order as bill and hold if it does not meet the above criteria?
Fiduciary funds are accounted for differently than permanent funds, even though both may account for nonexpendable resources.
What important information, related to the accounting equation, is captured by accounting information systems? How does this information get translated to the financial statements? Is it necessary for the accounting information systems to record d..
Tucker Drillin Corp. plans to borrow $200,000. Northern National Bank will lend the money at one-half percentage point over the prime rate of 8.5% (9 percent total) and requires a compensating balance of 20 percent.
Wertz Corporation decided at the beginning of 2010 to change from the completed-contract method to the percentage-of-completion method for financial reporting purposes.
Record the payroll for the two employees at December 31 and record the employer's share of payroll tax expense for the December 31 payroll. Two journal entries required.
Give an example of one accrual-based ratio and one cashbased ratio to measure these characteristics of a company:(a) liquidity, (b) solvency, and (c) profitability.
Assuming Karen is single, what are the amount and character of the loss recognized on the sale of the Central Corporation stock?
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