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Ocean Division currently earns $780,000 and has divisional assets of $3.9 million. The division manager is considering the acquisition of a new asset that will add to profit. The investment has a cost of $675,000 and will have a yearly cash flow of $168,000. The asset will be depreciated using the straight-line method over a six-year life and is expected to have no salvage value. Divisional performance is measured using ROI with beginning-of-year net book values in the denominator. The company's cost of capital is 15 percent. Ignore taxes. The division manager learns that he has the option to lease the asset on a year-to-year lease for $148,000 per year. All depreciation and other tax benefits would accrue to the lessor. Required: (a) What is the division's residual income before considering the project? (Enter your answers in dollars and not in millions of dollars.) (b) What is the division's residual income if the asset is purchased? (Enter your answers in dollars and not in millions of dollars.) (c) What is the division's residual income if the asset is leased?
the xtra appliance manufacturing corporation manufactures 2 vacuum cleaners the standard and the super. the subsequent
How (and why) individual remuneration packages of executives can be structured to motivate managers to maximize equity value?
What is the amount of contribution margin that will be obtained per machine hour on each product and which product would you recommend that the company work on next week ' the orders for product F, product G or product H? Show your computation
What is the companys CIK number - What is the companys Ticker Symbol and fiscal yearend?
Prepare a cash flow statement using the direct method for operating cash flows and prepare a reconciliation of the profit and cash provided by the operations
Ohio Corp. reported a deferred tax liability of $6,000,000 for year ended 31st December, 2012, when the tax rate was 40%. The deferred tax liability was related to a brief difference of $15,000,000 caused by an installment sale in 2012.
tark company a 90 percent owned subsidiary of parker inc. sold land to parker on may 1 2010 for 80000. the land
In connection with this contract, Mill incurred $2,000,000 of construction costs during 1996. Mill billed and collected $3,000,000 from Drew in 1996. Illustrate what amount should Mill recognize as gross profit for 1996?
evaluate the amount of funds ms.crawley needs to borrow for June, suppose that the beginning cash balance is zero and evaluate the amount of interest expense the restaurant will report on June pro forma income statement.
Brian gives Charles a machine with a basis of $3,500 (fair market value $3,000) plus $2,000 in cash. Charles gives Brian a machine with a basis of $5,000 and a fair market value of $5,000. What is Charles's recognized gain and his basis in the new..
1 listed below are account balances taken from the adjusted trial balance of alpha inc. as of december 31
Machinery purchased for $ 60,000 by Tom Brady Co. in 2010 was originally estimated to have a life of 8 years with a salvage value of $ 4,000 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2015, it is determined t..
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