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Pine & Oak have spent €20,000 researching the prospects for a new range of products. If it were decided that production is to go ahead an investment of €240,000 in capital equipment will be required. The accounts department has produced budgeted profit and loss statements for each of the next five years for the project. At the end of Year 5 the capital equipment will be sold and production will cease. The capital equipment is expected to be sold for scrap at the end of Year 5 for €40,000. Projected Profit/loss (in €000s) Year 1 Year 2 Year 3 Year 4 Year 5 Sales 400 400 400 320 200 Materials 240 240 240 192 120 Other variable costs 40 40 40 32 20 Overheads 20 20 24 24 24 Depreciation 40 40 40 40 40 Net profit/(loss) 60 60 56 32 (4) When production start it will be necessary to raise material stock levels by €30,000 and other working capital by €20,000. Both the additional stock and other working capital increases will be released at the end of the project. Customers receive one year's credit from the company. The overhead figures in the budgeted accounts have two elements - 60% is due to a reallocation of existing overheads, 40% is directly incurred because of the take-up of the project. For the purposes of this appraisal, regard all receipts and payments as occurring at the end of the year to which they relate. The company's cost of capital is 12%. Ignore inflation or tax. Appraise the project using NPV approach. Should the company go ahead? Why or why not?
Wonder Dog Leash Company is seeking to raise cash and is in negotiation with Big Bucks finance company (BB) to pledge theirreceivables.BB is willing to loan funds against 75 percent of current
Sarah incurred employee business expenses of $5,000 consisting of $3,000 business meals and $2,000 customer entertainment. She provided an adequate accounting to her employer's accountable plan and received reimbursement for one-half of the total ..
Calculate the increase or decrease in net operating income if an 8,300 increase in the monthly advertising budget would increase monthly sales by 14,300
Written, Inc. has outstanding xxx,000 shares of $x par common stock and xx,000 shares of no-par x% preferred stock with a stated value of $x. The preferred stock is cumulative and nonparticipating.
They made major capital improvements through their 10-year ownership, which totaled $50,000. What is their recognized gain
Robert Brown age 21 is a full time student at Marshall college and a degree candidate for a bachelor's degree. During 201 he received the following payments. what is robert's adjusted gross income for 2010
beginning finished goods inventory, $252,000; ending work in process inventory, $220,000; and ending finished goods inventory, $264,000. Utley Manufacturing Company's cost of goods sold for the year is which of the following?
Fred deals with more than one supplier and often places orders for multiple items at the same time. Fred takes inventory and places orders every Monday.
Why is it difficult to develop accounting reporting categories that are uniform for governments within the same type of entity (e.g. cities) and even more difficult to develop them for governments within different types of entities
Production records show that there were 400 units in thebeginning inventory, 30% complete. What is the unit materials cost for May?
Prepare the journal entry for Sorter Company to write off the Ordonez receivable. When writing the journal entry use Dr. for debit and Cr. for credit.
The economic entity assumption states that economic events:
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