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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.
Seventy percent of Diamond Beauty Supply shop sales are on credit with 60 percent of receivables collected in the month after the sale and the rest of receivables collected in the second month after the sale. Prepare a monthly schedule of cash rece..
how much liability for outstanding premiums should be recorded at the end of 2008?
The SEC and its European equivalent are trying to merge their respective views of GAAP (Generally Accepted Accounting Principles). What are the easy points and what are the stumbling blocks?
Indicate whether each of the following independent situations should be treated as a temporary difference or as a permanent difference and explain why.
Use the three divisional income statements in the Pinnacle_Financials Excel file on the Web site to prepare a common-size income statement for each of the three divisions for all three years.
Prepare all journal entries in all funds and the GCA and GLTL accounts to record the following transactions and events.
Using the successful efforts method of accounting for oil and gas exploration costs, how much exploration expense would be shown in Exploratory's income statement for 2013?
In each case, compute the amount that should be reported in the operating activities section of the statement of cash flows under the direct and indirect method.
Analyze the need for changing to a new system and the potential benefits and risks associated with this change. Identify three (3) advantages and three (3) disadvantages for each of the following choices:
Make notes on the following two items to help your manager to understand their meaning: The balanced scorecard and its perspectives on performance
Create a cost-benefit analysis to evaluate the project
Last year, Katt Co. reduced the carrying amount of its long-lived assets used in operations from 120,000 to 100,000, in connection with its annual impairment review. During the current year, Katt determined that the fair value of the same assets h..
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