Uses the completed contract method

Assignment Help Financial Management
Reference no: EM131535531

Housing Construction Company (HCC) has agreed to build a housing project for the city of New York. On January 1st, 2006 the company and the city agreed on the following terms: the construction should take no more than three years, and HCC would be paid a total of $100 million for the project; the $100 million would be paid in three payments of $40 million at the end of year 2006, 2007, and 2008. HCC expects contractions costs to be $40 million in year 2006, $40 million in year 2007, and $5 million in year 2008.

If HCC uses the completed contract method, what revenues and expenses would HCC recognize in year 2006, 2007, and 2008?

If HCC uses the percentage of completion method, what revenues and expenses would HCC recognize in year 2006, 2007, and 2008?

Reference no: EM131535531

Questions Cloud

Firm issued and sold pound denominated bond : A Japanese firm issued and sold a pound denominated bond in the United Kingdom.
Calculate starbucks corporations stocks intrinsic value : Using the Gordon Model, calculate Starbucks Corporations Stock's Intrinsic Value.
Assuming there is no compensating balance requirement : Calculate the loan’s APR and assuming there is (a) no compensating balance requirement
What is constant dividend payout ratio policy : What’s constant dividend payout ratio policy? advantages? disadvantages? Any real-world example?
Uses the completed contract method : If HCC uses the completed contract method, what revenues and expenses would HCC recognize in year 2006, 2007, and 2008?
Weighted average cost of capital and flotation cost : Calculate the weighted average cost of capital and the weighted average flotation cost for a company with the following data:
What is the tax on the disposal transaction : What is the tax on the disposal transaction? What is the maximum price the company can pay for the purchase to be economically justified?
Exchange rate movement relationship and interest rate parity : Which of the following is true according to the expected exchange rate movement relationship and interest rate parity, respectively?
Explain how a stop-loss hedging scheme : Explain how a stop-loss hedging scheme can be implemented for a writer of an out-of-the-money call option.

Reviews

Write a Review

Financial Management Questions & Answers

  Annual worth of an asset that costs nothing

What is the annual worth of an asset that costs nothing and gives you benefits of $3 in years gone through 10? Assume your MARR is 20%. Show work please

  Preferred shares under current market conditions

Deltona issued preferred shares four years ago at $60 per share, with a promised dividend of $5 per share. The company's tax rate is 35%, and its common stock beta is 0.80. Yields on comparable risk preferred stocks are 9%. The floatation expense per..

  What is the total savings you could accrue at retirement

If you went to fewer movies and reduced expenses by $50 monthly, how much extra could you save by retirement?

  Compute the cost of capital for the firm

Compute the cost of capital for the firm for the following: A bond that has a $1,000 par value and a coupon interest rate of 11.3% with interest paid simiannually. A new issue would sell for $1,148 per bond and mature in 20 years. The firm's tax rate..

  Implied value of the roe on future investment opportunities

The FI Corporation's dividends per share are expected to grow indefinitely by 5% per year. If this year's year-end dividend is $10.00 and the market capitalization rate is 12% per year, what must the current stock price be according to the DDM? If th..

  Broussard skateboards sales are expected to increase

Use the AFN equation to forecast Broussard's additional funds needed for the coming year.

  Company will maintain this dividend for the next year

Pasta Corp. pays a constant $6.95 dividend on its stock. The company will maintain this dividend for the next 12 years and will then cease paying dividends forever. If the required return on this stock is 10 percent, what is the current share price?

  What would be the investment proportions of your portfolio

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.5%. What would be the investme..

  Dividend discount model-what is the company wacc

Using the dividend discount model, what is the company’s WACC?

  Evaluate their various price sensitivities

A $20 Million 8-year bond pays 6.25% coupon with a 6% yield. Use the model to construct a 70% synthetic floater and 30% inverse-floater. The required synthetic has a 4% basis + 2% spread. Summarize your results including prices, price durations and c..

  Using the P-E ratio approach to valuation

Using the P/E ratio approach to valuation, calculate the value of a share of stock under the following conditions: The investor's required rate of return is 13 percent. the expected level of earnings at the end of this year is $4. Now show that you g..

  Valuation–convertible bond

You purchased one of Big Corp.’s 8%, 10-year convertible bonds at its $1,000 par value a year ago when the company’s common stock was selling for $20. Similar bonds without a conversion feature returned 12% at the time. What would your return have be..

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