Estimates of investment costs operating expenses and sales

Assignment Help Financial Accounting
Reference no: EM134156

Question :

The Florina Mining organization has constructed a town at Jungilla, near the site of a rich mineral discovery in a remote part of Australia. The town may be abandoned when mining operations cease after an estimated 10 years. The subsequent estimates of investment costs, operating expenses and sales relate to the project to provide Jungilla with meat and agricultural manufacture over the ten year period by developing nearby land.

(a) Investment in land is $2million dollars, farm equipment $800,000 and farm buildings $400,000. The land is expected to have a realizable value of $1 million in ten years' time. The building have an evaluated useful life of 20 years, at which time their residual value would be zero, and they are to be depreciated on a straight line basis for tax purposes based on this life. The residual value of the buildings after 10 years is $100,000. The farm equipment has an evaluated life of ten years and a zero residual value. The equipment is to be depreciated on a straight line basis.

(b) Investment of $500,000 in present. This may be recovered at the end of the venture.

(c) Annual cash sales are expected to be $6 million.

(d) Annual operating expenses are expected to be $4.4 million.

(e) Consider tax is paid one year after the year of income.

Is the project worth doing given that the after tax cost of capital is 10 percent pa, with a company tax rate of 30%?

Reference no: EM134156

Questions Cloud

Evaluate the companys predetermined overhead rate : Evaluate the company's predetermined overhead application rate. Determine the additions to the work-in-process inventory account for the direct material used, manufacturing overhead and direct labor.
Evaluate net purchases at retail and net sales : Evaluate net purchases at retail and net sales for the month of September
Business emphasizes the providing of maintenance : Business emphasizes the providing of maintenance and service for customers
Short case study report : Short case study report - A summary of the reason for and nature of the contract
Estimates of investment costs operating expenses and sales : Estimates of investment costs, operating expenses and sales
Evaluate the initially reported earnings per share : Evaluate the initially reported earnings per share for 2009. Determine the restated cash dividend per share for 2009 reported in the 2011 annual report for comparative purposes.
Prepare the financing and investing activities sections : Create the operating activities section of the company's statement of cash flows, considering use of: Prepare the financing and investing activities sections of the statement of cash flows.
Establish a new factory in the panama city : How would your answer modify if Engco sold its goods with title passing at the customer's location?
Describe statistical data on participation rates : Describe statistical data on participation rates, education and employment and income levels of individuals with disabilities

Reviews

Write a Review

 

Financial Accounting Questions & Answers

  Evaluate subsequent income and expenses

Evaluate subsequent income and expenses

  Purpose statement of net assets

Purpose, in good form, a Statement of Net Assets for Southern State University as of 30 th June, 2012.

  Write the lower portion of corpus income statement

Write the lower portion of Corpus Christi's 2010 income statement

  What audit would be taken to evaluate the sale

Since it was shipped as of 31 st December, does this represent a sale for the year ended on that date? What additional audit steps would be taken to evaluate that the sale is valid?

  Determine the amount of research and development expense

Determine the amount of research and development expense Janson could report in its 2013 income statement related to this project.

  Determine her deductions and credits

Determine her deductions and credits allowed and the suspended credits and losses.

  Explain financial reporting

Could this lack of clarity in its financial reporting serve as a red flag in alerting you to the possibility of fraud at Enron?

  Prepare the lower portion of the 2013 income statement

Prepare the lower portion of the 2013 income statement beginning with pretax income from continuing operations. Ignore EPS disclosures.

  Audit report and financial statements for the system

Audit report and financial statements for the system

  Evaluate partnership interest

Which of the subsequent statements is accurate with respect to this transaction

  Choose a pps sample of the above inventory population

Prepare a scenario that is consistent with setting the risk of incorrect acceptance at 37 %. Choose a PPS sample of the above inventory population using the sample size determined in above.

  Show conceptual issues involved and the definition of assets

Show the conceptual issues involved and the definition of assets that can be applied in evaluating whether development expenditure should be treated as an asset or an expense.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd