The Wasala Corporation leases an airplane on January 1, Year One for eight years for payments of $20,000 per year beginning immediately. The plane has an expected life of 10 years. The prime rate of interest is 6 percent but Wasala has an incremental borrowing rate of 8 percent. The present value of an ordinary annuity of $1 at 6 percent for 8 years is 6.22 and the present value of an ordinary annuity of $1 at 8 percent for 8 years is 5.75. The present value of an annuity due of $1 at 6 percent for 8 years is 6.58 and the present value of an annuity due of $1 at 8 percent for 8 years is 6.19.
ACCT 550 Week 7 Homework Chapter 11: E11-4, E11-9, E11-11, E11-17 E11-4 (Depreciation Computations—Five Methods) Wenner Furnace Corp. purchased machinery for $279,000 on May 1, 2012. It is estimated that it will have a useful life of 10 years, salvage value of $15,000, production of 240,000 units, and working hours of 25,000. During 2013, Wenner Corp. uses the machinery for 2,650 hours, and the machinery produces 25,500 units. Instructions From the information given, compute the depreciation charge for 2013 under each of the following methods. (Round to the nearest dollar.)
Therefore, the cost of fixed rate debt equals 8.95% plus 1.1% risk premium, which totaled to 10.5% Cost of Debt = (0.5 x 0.08) + (0.5 x 0.105) = 0.095 = 9.25% [since floating rate and fixed rate debt both weigh 50%, we use the weighted average approach to calculate the total cost of debt rate] Based on historical data analysis below, we get an average income tax rate of 42%. | 1978 | 1979 | 1980 | 1981 | 1982 | 1983 | 1984 | 1985 | 1986 | 1987 | Income before income taxes | 83.5 | 105.6 | 103.5 | 121.3 | 133.7 | 185.1 | 236.1 | 295.7 | 360.2 | 398.9 | Income tax | 35.4 | 43.8 | 40.6 | 45.2 | 50.2 | 76.7 | 100.8 | 128.3 | 168.5 | 175.9 | Tax rate | 42% | 41% | 39% | 37% | 38% | 41% | 43% | 43% | 47% | 44% | | | | | | | | | | | | Average tax rate | 42% | | | | | | | | | | After-tax cost of debt = (1 - 0.42) x 0.0925 = 0.05365 = 5.365% Cost of Equity From Table B and Exhibit 5, * Risk free rate (1-year)= 6.9% Premium = 8.47% * Risk free rate (10-year)= 8.95% Premium = 7.43% ** ** Since A rated bond is considered upper medium grade and the company is A rated, we assume long-term
Assets=Liabilities + Stockholder’s Equity (b) The total assets of Haldeman Company are $170,000 and its stockholder’s equity is $90,000. What is the amount of its total liabilities: $80,000 (c) The total assets of Dain Co. are $800,000 and its liabilities are equal to one-fourth of its total assets. What is the amount of Dain Co.’s stockholder’s equity? $600,000 BE1-9 At the beginning of the year, Fuqua Company had total assets of $800,000 and total liabilities of $500.000. (a) If total assets increased of $150,000 during the year and total liabilities decreased $80,000, what is the amount of stockholder’s equity at the end of the year?
Net income dropped from $63,125 to $38,197.50 which cuts losses by $24,927.50. Losses were cut by 61%. 2. A firm needs $100 to start and has the following expectations: Sales $200 Expenses $185 Tax rate 33% of earnings o What are earnings if the owners invest the $100? $10.05 o If the firm borrows $40 of the $100 at an interest rate of 10%, what are the firm's net earnings?
Margin of Safety (DOLLARS) Budgeted – break even = 100,000-62500= 37500 (Percentage) 37.500/100.000= 37.5% (Units) 37500/250= 150 3.Compute the company’s margin of safety in units assuming the proposal is accepted. Margin of Safety (Dollars) 137500-58929= 78571 (Units) 78571/275= 286 4. Compute the increase or decrease in profit assuming the proposal is accepted, show the contribution Income Statement for current and proposed. Present Proposed Sales 100,000 137500 Variable expense 64000 80000 CM 36000 57500 Fixed cost 22500 244750 Net income 13500 32750 difference: 19250 4a. What is the operating leverage for the current and proposed?
From the details provided above you will note that Retail Banking occupies 60% of the area which includes allocation of shared areas. Commercial Banking occupies 30% and Financial Planning 10%. This converts directly to the proportion of electricity costing that each department will be responsible for, being 60% Retail Banking, 30% Commercial Banking and 10% Financial Planning bringing the total allocation to 100%. Actual $ cost allocation For the reporting period of 1st July 2013 to 30th June 2014 the total cost of electricity charged to ANZ Warrnambool and paid for in the first instance by Retail Banking was $45,000. The electricity cost was charged on a quarterly basis and charged back to each department on a quarterly basis also.
BRIEF EXERCISE 19-8 Income before income taxes $195,000 Income tax expense Current $48,000 Deferred 30,000 78,000 Net income $117,000 BRIEF EXERCISE 19-10 Year | Future taxable amount | X | Tax Rate | = | Deferred tax liability | 2013 | $ 42,000 | 34% | $ 14,280 | 2014 | 244,000 | 34% | 82,960 | 2015 | 294,000 | 40% | 117,600 | | | | $214,840 | BRIEF EXERCISE 19-14 Income Tax Refund Receivable ($350,000 X. 40) 140,000 Benefit Due to Loss Carryback 140,000 Deferred Tax Asset ($500,000 – $350,000) X .40 60,000 Benefit Due to Loss Carryforward 60,000 Benefit Due to Loss Carryforward 60,000 Allowance to Reduce Deferred
5.3] Assume that a Radiologist group practice has the following cost structure - Fixed Costs $500,000; Variable Cost per procedure $25 and Charge per procedure $100. Furthermore, assume that the group expects to perform $7500 procedures in the coming year. a) Construct the group's base case projected P & L statement. b) What is the group's contribution margin? What is it's breakeven point?
Niles Co. has the following data related to an item of inventory: Inventory, March 1 100 units @ $2.10 Purchase, March 7 350 units @ $2.20 Purchase, March 16 70 units @ $2.25 Inventory, March 31 130 units 100. The value assigned to ending inventory if Niles uses LIFO is a. $290. b. $276.