Prepare per year to make it an attractive investment

Assignment Help Financial Accounting
Reference no: EM136158

(a) Five years ago, the City spent $30,000 to buy a computerized radar system. Currently, a sales rep told the city manager about a new and better radar system that will be purchased for $50,000. The rep also told the manager that the company would provide the city $10,000 in trade on the old system. The new system will last 10 years. The old system may also last that long but only if a $4,000 upgrade is done in 5 years. The manager assembled the subsequent information to use in the decision as to which system is more desirable:

                                                           Old System            New System

Cost of radar system ...................... $30,000               $50,000

Current salvage value .................... $10,000                       -

Salvage value in 10 years .............. $5,000                    $8,000

Annual operating costs .................. $34,000                 $29,000

Upgrade required in 5 years .......... $4,000                        -

Discount rate .................................. 14%                          14%

Required: Should the City buy the new system or keep the old system (prove it)?

(b) The management of an amusement park is allowing for purchasing a new ride for $40,000 that would have a useful life of 10 years and a salvage value of $5,000. The ride would need annual operating costs of $21,000 throughout its useful life. The company's discount rate is 13 percent. Management is unsure about how much additional ticket revenue the new ride would prepare particularly since customers pay a flat fee when they enter the park that entitles them to unlimited rides. optimistically, the presence of the ride would attract new customers.

Required:

How much additional revenue could the ride have to prepare per year to make it an attractive investment?

Reference no: EM136158

Questions Cloud

Evaluate common stock outstanding : Adcock Corp. had $500,000 net loss in 2012. On 1 st January, 2012 there were 200,000 shares of common stock outstanding.
Explain new hampshire courts have jurisdiction : he had no relatives in New Hampshire, he neither owned property nor possessed investments in New Hampshire and he had never conducted business in New Hampshire. Did the New Hampshire courts have jurisdiction. Explain
Analytical procedures as risk assessment procedures : Identify and briefly describe three ways you could use analytical procedures as risk assessment procedures, Identify and briefly describe three ways you could use analytical procedures as substantive procedures through the audit.
Evaluate the direct materials price and efficiency variances : Evaluate the direct materials price and efficiency variances for the year and evaluate the direct labor price and efficiency variances for the year and determine the efficiency variances and variable overhead spending for the year
Prepare per year to make it an attractive investment : Should the City buy the new system or keep the old system and how much additional revenue could the ride have to prepare per year to make it an attractive investment?
Discuss injunction to be the proper form of remedy : Sandler thereupon made an oil and gas lease as well as the oil company set up its machinery to begin drilling operations. Rubin then filed suit to enjoin the operations. Presumptuous an injunction to be the proper form of remedy what is the decisi..
Prepare a properly formatted, multi-step income statement : Prepare a properly formatted, multi-step Income Statement (i.e. showing intermediate profit lines Gross Profit, NOI, EBITDA, EBIT, EBT, and NI, as required). Per Share presentation of income data is not being requested.
Establish lawful ownership of the driveway approaches : An appropriate action to establish his lawful ownership of the strip on which the driveway approaches to enjoin its use by Dale, and to require Dale to eliminate the overlap
Determine unit contribution margin for hawaiian fruit pizza : Determine unit contribution margin for Hawaiian fruit pizza and Aloha seafood pizza? Evaluate the new breakeven in units and in sales dollar of each pizza?

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

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