CapitalBudgeting Decision Here is Project 2:

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CapitalBudgeting Decision<?xml:namespace prefix = o ns =

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Here is Project 2:

Company: The production department hasbeen investigating possible ways to trim total production costs. Onepossibility currently being examined is to make the cans instead of purchasingthem. The equipment needed would cost $1,000,000, with a disposal value of $200,000,and would be able to produce 27,500,000 cans over the life of the machinery.The production department estimates that approximately 5,500,000 cans would beneeded for each of the next 5 years.

The company would hire six newemployees. These six individuals would be full-time employees working 2,000hours per year and earning $15.00 per hour. They would also receive the samebenefits as other production employees, 15% of wages in addition to $2,000 ofhealth benefits.

It is estimated that the raw materialswill cost 30¢ per can and that other variable costs would be 10¢ per can. Becausethere is currently unused space in the factory, no additional fixed costs wouldbe incurred if this proposal is accepted.

It is expected that cans would cost 50¢each if purchased from the current supplier. The company’s minimum rate ofreturn (hurdle rate) has been determined to be 11% for all new projects, andthe current tax rate of 35% is anticipated to remain unchanged. The pricing forthe company’s products as well as number of units sold will not be affected bythis decision. The unit-of-production depreciation method would be used if thenew equipment is purchased.

Required:

1. Based on the above information andusing Excel, calculate thefollowing items for this proposed equipment purchase.

    • Annual cash flows over the expected life of the equipment
    • Payback period
    • Simple rate of return
    • Net present value
    • Internal rate of return

The check figure for the total annualafter-tax cash flows is $271,150.

 
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What are the requirements of issuing an unqualified opinion? MUST BE ORIGINAL WORK!!!!

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What are the requirements of issuing an unqualified opinion?

MUST BE ORIGINAL WORK!!!!

 
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1.Wrigley’s Wrecker Service is considering the purchase of a specialized tow truck for its smallFeet

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I would like help in my week 7 homework please? Thanks!

ACCT346 Week 7 Homework AssignmentQues±on 1.Wrigley’s Wrecker Service is considering the purchase of a specialized tow truck for its smallFeet. This new piece of equipment will cost $100,000 and should be serviceable for 10 years, with anexpected residual value of $20,000 at the end of its service life. Wrigley’s believes this specialized towtruck will grow some new business by enabling the company to respond to extra heavy duty towing jobson the nearby interstate highway, and it’s es±mated this will add another $40,000 to annual net cashFow. The table below summarizes the per±nent data suppor±ng the analysis for this acquisi±on.Investment in new tow truck$ 100,000Useful life10 yearsEs±mated annual netcash inFows for next 10 years$ 40,000Residual value of equipment$ 20,000Deprecia±on methodstraight-lineRequired rate of return10%Part A.Calculate thepayback periodfor this investment.Part B.Calculate theaccountng raTe of reTurnfor this investment.Ques±on 2.Wally White is considering the purchase of a new automa±c car wash system that could beinstalled on an open, unused sec±on of the parking lot of his drug store business. The new system willcost $40,000, and with an 8-year useful life will have an es±mated residual value of $10,000. It’s alsoes±mated that this car wash unit will generate net cash inFows of $12,000 per year over its 8-year life. IfWhite requires a 10% return on his money, what is the net present value (NPV) of this project?
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Student Exam   On January 1,

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Student Exam <table><tbody><tr><td>

<table><tbody><tr><td>On January 1, Year 1, Acorn Financial Corp. issued 800 convertible bonds. Each $1,000 face value bond is convertible into five shares of common stock. The bonds have a 10-year term to maturity and pay interest semiannually. Acorn’s common stock has a par value of $20.00 per share. The bonds have a stated interest rate of 4% and pay interest semiannually. The convertible bonds were sold for $875,500. Bond issue costs of $50,000 will be subtracted from the bond sale proceeds to be received by Acorn. The bonds were sold to yield a market interest rate of 3%. Acorn will use the effective interest method to amortize the bond discount or premium. Round all amounts to the nearest dollar.<br /> Required:<br /> 1. Record the journal entry for the issuance of the convertible bonds on January 1, Year 1<br /> 2. Record the journal entries on June 30, Year 1 to recognize interest expense and the amortization of the bond issue cost for the first six months of Year 1.</td> </tr></tbody></table></td> </tr></tbody></table>

 
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