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You are the CFO of SlimBody, Inc., a retailer of the exercise machine Slimbody6* and related accessories. Your firm is considering opening up a new store in Los Angeles. The store will have a life of 20 years. It will generate annual sales of 5,000 exercise machines, and the price of each machine is $2,500. The annual sales of accessories will be $600,000, and the operating expenses of running the store, including labor and rent, will amount to 50 percent of the revenues from the exercise machines. The initial investment in the store will equal $30 million and will be fully depreciated on a straight- line basis over the 20-year life of the store. Your firm will need to invest $2 million in additional working capital immediately, and recover it at the end of the investment. Your firm's marginal tax rate is 30 percent. The opportunity cost of opening up the store in 10 percent.
At the end of the store's life, the company expects to sell various fixtures and equipment for $2,000,000.
Required:a) Determine the payback period for the project.b) Determine whether or not the project should be undertaken using the net present value method
Recently, a group of university students decided to incorporate for the purposes of selling a process to recycle the waste product from manufacturing cheese.
An enterprise that holds a variable interest in a variable interest entity (vie) is required to consolidate the assets, liabilities, revenues, expenses, and noncontrolling interest of that entity if:
A consulting engineering firm is considering two models of SUVs for the company principals. A GM model will have a first cost of $26,000, an operating cost of $2000, and a salvage value of $12,000 after 3 years.
The Loebuck grocery sells milk. The grocer orders milk from a local farmer fro $13 per case and sells for $16 per case. Unsold cases are disposed for $1.5 per case, and each case of shortage causes $3.7 loss of profit.
TRM Corporation established a defined benefit pension plan in Year 5. In Year 8 the following information is available. Service cost = $45,000. Interest cost = $60,000.
Colgate-Palmolive Company has just paid an annual dividend of $0.96. Analysts are predicting an 11% per year growth rate in earnings over the next five years.
Discuss the relevance of budgeting as it relates to the accounting profession in general. Relate lessons learned from a self-selected reading or from something you learned while working on your accounting profession in general.
What is meant by the statement, "Assets are listed in order of liquidity"? Give an example using the typical current assets section of a balance sheet.
Fill in each of the blanks below with one of these: larger, smaller, unchanged, or insufficient (information given to answer question). Several years after the switch from FIFO to LIFO:
In which of the following situations is the taxpayer not allowed a deduction for moving expenses?
Buhl Corp. sponsors a defined benefit plan for its employees. On January 1, 2008, the following balances relate to his plan: Using the data above, compute pension expense for Buhl Corp. for the year 2008 by preparing a pension workheet that shows ..
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