acc 206 week 5 assignment
Chapter Eight Problems
Please complete the following 5 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.
Chapter 8 Exercise 1:
1. Basic present value calculations
Calculate the present value of the following cash flows, rounding to the nearest dollar:
a.
A single cash inflow of $12,000 in five years, discounted at a 12% rate of return.
b.
An annual receipt of $16,000 over the next 12 years, discounted at a 14% rate of return.
c.
A single receipt of $15,000 at the end of Year 1 followed by a single receipt of $10,000 at the end of Year 3. The company has a 10% rate of return.
d.
An annual receipt of $8,000 for three years followed by a single receipt of $10,000 at the end of Year 4. The company has a 16% rate of return.
Chapter 8 Exercise 4:
4. Cash flow calculationsand net present value
On January 2, 20X1, Bruce Greene invested $10,000 in the stock market and purchased 500 shares of Heartland Development, Inc. Heartland paid cash dividends of $2.60 per share in 20X1 and 20X2; the dividend was raised to $3.10 per share in 20X3. On December 31, 20X3, Greene sold his holdings and generated proceeds of $13,000. Greene uses the net-present- value method and desires a 16% return on investments.
a.
Prepare a chronological list of the investment's cash flows. Note: Greene is entitled to the 20X3 dividend.
b.
Compute the investment's net present value, rounding calculations to the nearest dollar.
c.
Given the results of part (b), should Greene have acquired the Heartland stock? Briefly explain.
Chapter 8 exercise 5:
5. Straightforwardnet present value and internal rate of return
The City of Bedford is studying a 600-acre site on Route 356 for a new landfill. The startup cost has been calculated as follows:
Purchase cost: $450 per acre
Site preparation: $175,000
The site can be used for 20 years before it reaches capacity. Bedford, which shares a facility in Bath Township with other municipalities, estimates that the new location will save $40,000 in annual operating costs.
a.
Should the landfill be acquired if Bedford desires an 8% return on its investment? Use the net-present-value method to determine your answer.
Chapter 8 Problem 1:
1. Straightforward net-present-value and payback computations
STL Entertainment is considering the acquisition of a sight-seeing boat for summer tours along the Mississippi River. The following information is available:
Cost of boat |
$500,000 |
Service life |
10 summer seasons |
Disposal value at the end of 10 seasons |
$100,000 |
Capacity per trip |
300 passengers |
Fixed operating costs per season (including straight-line depreciation) |
$160,000 |
Variable operating costs per trip |
$1,000 |
Ticket price |
$5 per passenger |
All operating costs, except depreciation, require cash outlays. On the basis of similar operations in other parts of the country, management anticipates that each trip will be sold out and that 120,000 passengers will be carried each season. Ignore income taxes.
Instructions:
By using the net-present-value method, determine whether STL Entertainment should acquire the boat. Assume a 14% desired return on all investments- round calculations to the nearest dollar.
Chapter 8 Problem 4:
4. Equipment replacement decision
Columbia Enterprises is studying the replacement of some equipment that originally cost $74,000. The equipment is expected to provide six more years of service if $8,700 of major repairs are performed in two years. Annual cash operating costs total $27,200. Columbia can sell the equipment now for $36,000; the estimated residual value in six years is $5,000.
New equipment is available that will reduce annual cash operating costs to $21,000. The equipment costs $103,000, has a service life of six years, and has an estimated residual value of $13,000. Company sales will total $430,000 per year with either the existing or the new equipment. Columbia has a minimum desired return of 12% and depreciates all equipment by the straight-line method.
Instructions:
a.
By using the net-present-value method, determine whether Columbia should keep its present equipment or acquire the new equipment. Round all calculations to the nearest dollar, and ignore income taxes.
b.
Columbia's management feels that the time value of money should be considered in all long-term decisions. Briefly discuss the rationale that underlies management's belief.
ACC 206 week 5 assignment A+ work
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xxxxxxxxxxxxxxxxx1. xxxxx xxxxxxx value xxxxxxxxxxxx | ||
xxxxxxxxx xxx xxxxxxx xxxxx of xxx following cash xxxxxx rounding xx the xxxxxxx dollar: | ||
a. A single cash xxxxxx of $12,000 xx five years, discounted at x 12% xxxx of return. | ||
b. xx xxxxxx xxxxxxx of $16,000 xxxx xxx xxxx xx years, xxxxxxxxxx at x 14% rate of return. | ||
xx A single xxxxxxx of $15,000 xx xxx end of xxxx x followed xx x single receipt xx xxxxxxx xx the xxx of Year 3. xxx xxxxxxx xxx a xxx xxxx xx return. | ||
xx An annual xxxxxxx xx $8,000 for xxxxx years xxxxxxxx xx x single xxxxxxx xx xxxxxxx xx the xxx xx xxxx xx xxx company xxx x 16% rate xx return. | ||
xxxxxxxxx | ||
xx A single cash xxxxxx of $12,000 in five years, discounted at a 12% xxxx of xxxxxxx | ||
xxxx xxxx | xxxxx | |
xxxxxxxx Rate | 12% | |
Period | 5 | years |
xxxxxxx xxxxx | * xxxxxxxx | |
b. An xxxxxx receipt of $16,000 xxxx the xxxx 12 years, xxxxxxxxxx at x xxx rate of return. | ||
Annual cash xxxx | x 16,000 | |
Period | 12 | xxxxx |
xxxxxxxx Rate | xxx | |
xxxxxxx |
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ACC 206 Week 5 Exercise Assignment__100% CORRECTLY DONE
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xxx 8 xxx x
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx x xxxxxxxx x | ||
1. xxxxx present xxxxx calculations | ||
x | xxxxxx Value | xxxxxxxxxx |
Years | x | years |
Rate | xxx | |
xxxxxxx xxxxx | xxxxxx | |
x | Annual Cash Flow | xxxxxxxxxx |
Duration | 12 | xxxxx |
Rate | xxx | |
xxxxxxx Value | xxxxxxx | |
x | Rate | 10% |
xxxx | Cash Flows | xxxxxxx xxxxx |
x | xxx | 0.0 |
x | xxxxxxxxxx | $13,636.36 |
x | 0.0 | xxx |
x | $10,000.00 | $7,513.15 |
Present value | $21,150 | |
x | Rate | xxx |
xxxx | Cash Flows | Present Value |
0 | xxx | 0.0 |
x | $8,000.00 | $6,896.55 |
x | xxxxxxxxx | $5,945.30 |
x | xxxxxxxxx | $5,125.26 |
x | $10,000.00 | xxxxxxxxx |
xxxxxxx xxxxx | xxxxxxx |
Ch. x Ex. x
xxxxxxxxxxxxxxxxxxxxxxxxxxxChapter 8 Exercise 4: | ||||
xx xxxx xxxx xxxxxxxxxxxx and net present xxxxx | ||||
1.) | Year | Date | xxxxxxxxxxx | xxxx xxxx |
19X1 | xxxxx | Mr. Greene invested in stocks | xxxxxxxxx | |
xxxx | Unspecified | Heartland xxxx cash xxxxxxxxx | xxxxxx | |
19X2 | Unspecified | xxxxxxxxx paid xxxx dividends | xxxxxx | |
19X3 | Unspecified | xxxxxxxxx paid cash xxxxxxxxx | xxxxxx | |
19X3 | 31-Dec | Mr. Greene xxxx xxx xxxxxxxx | $13,000 | |
xxx | Rate | 16% | ||
NPV | xxxx | |||
xxx | xxxx xxx xxxxxx xxxxxx xxxx xxxxxxxx xxx Heartland stocks, xxxxxxx xxx NPV xxxxx out xx xx positive, which xxxxx that this xxxxxxxxxx xxxx prove xx be profitable. |
xxx 8 xxx 5
xxxxxxxxxxxxxxxxxxxxxChapter x xxxxxxxx 5: | ||
xx Straightforward xxx present value xxx xxxxxxxx rate xx xxxxxx | ||
Startup xxxxx | ||
xxxxxxxx xxxx | $270,000.00 | |
xxxx Preparation | $175,000.00 | |
xxxxxxxx xx Use | 20 | years |
Annual Savings | $40,000.00 | |
xxx | xxxx | xx |
xxxxx |
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ACC206 week x Problems |
xxxxxx
xxxxxxxxxxxxxxxxxxhapter x Exercise xx | ||
xx Basic xxxxxxx value xxxxxxxxxxxx | ||
xxxxxxxxx xxx xxxxxxx xxxxx xx xxx xxxxxxxxx cash flows, xxxxxxxx xx the nearest dollar: | ||
xx A xxxxxx xxxx inflow xx xxxxxxx in five xxxxxx xxxxxxxxxx xx x 12% rate of return. | 6809.12 | |
xx xx xxxxxx receipt xx $16,000 xxxx xxx xxxx 12 years, xxxxxxxxxx at x xxx rate xx return. | 5.6602921255 | xxxxxxxxxxxxxxxx |
xx A single xxxxxxx of $15,000 xx the end of xxxx 1 followed by a single xxxxxxx of $10,000 xx xxx end of Year xx The xxxxxxx has x xxx rate xx xxxxxxx | ||
13636.3636363636 | ||
xxxxxxxxxxxxxxx | ||
21149.5116453794 | ||
xx An xxxxxx xxxxxxx xx xxxxxx xxx xxxxx years followed by x single receipt xx $10,000 at xxx end of Year xx xxx company xxx a 16% xxxx of xxxxxxx | ||
xxxxxxxxxxxx | 17967.1163229325 | |
xxxxxxxxxxxxxxx | ||
23490.0273017372 | ||
xxxxxxx 8 xxxxxxxx xx | ||
xx Cash xxxx calculations and net xxxxxxx xxxxx | ||
xx xxxxxxx 2, 19X1, xxxxx xxxxxx xxxxxxxx xxxxxxx xx xxx stock xxxxxx xxx purchased xxx xxxxxx of Heartland Development, Inc. Heartland xxxx xxxx dividends of $2.60 xxx xxxxx xx xxxx xxx xxxxx xxx dividend xxx raised to xxxxx per share xx 19X3. xx December 31, 19X3, Greene xxxx xxx holdings and generated xxxxxxxx xx xxxxxxxx Greene uses xxx xxxxxxxxxxxx value method xxx xxxxxxx a xxx xxxxxx xx investments. | ||
xx Prepare a xxxxxxxxxxxxx xxxx xx the investment's cash flows. Note: Greene is xxxxxxxx to the 19X3 |
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acc 206 week 5 assignment_Solution
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Ch8_Ex1
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxComputation xx Present xxxxx | |||||
a. A single xxxx inflow xx $12,000 xx five years, discounted xx a xxx rate of xxxxxxx | |||||
Inflow | Rate | Term | xx Factor | Present Value | |
$12,000 | xxx | x | 0.56699999999999995 | xxxxxxxxx | |
b. xx annual xxxxxxx of $16,000 xxxx the xxxx xx xxxxxx discounted at a xxx rate of xxxxxxx | |||||
Inflow | Rate | xxxx | xx xxxxxx | Present xxxxx | |
xxxxxxx | 14% | xx | xxxx | $90,560.00 | |
xx A xxxxxx xxxxxxx of xxxxxxx xx xxx end of xxxx x followed xx x single xxxxxxx xx $10,000 at xxx end xx Year 3. The xxxxxxx has a 10% xxxx xx return. | |||||
Inflow | xxxx | Term | xx Factor | Present Value | |
First xxxx | xxxxxxx | xxx | xx | xxxxxxxxxxxxxxxxxxx | xxxxxxxxxx |
Third xxxx | xxxxxxx | xxx | xx | xxxxx | xxxxxxxxx |
xxxxx | xxxxxxxxxx | ||||
d. An xxxxxx receipt xx xxxxxx for three xxxxx followed by x xxxxxx receipt xx xxxxxxx at xxx end xx Year xx The company has a xxx xxxx xx xxxxxxx | |||||
Inflow | Rate | Term | xx Factor | xxxxxxx xxxxx | |
First xxxxx xxxxx | xxxxxx | 16% | xxx | 2.246 | $17,968.00 |
xxxxxx |
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ACC 206 Week 5 Assignment/Exercise: Chapter Eight Problems (100% accurate answers with excel sheet)
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xxxxxxx xxxxx Problems
Chapter 8 Exercise xx
xx xxxxx present value xxxxxxxxxxxx
Calculate the present xxxxx xx xxx following cash xxxxxx rounding to the nearest dollar:
x single cash xxxxxx of xxxxxxx xx five years, discounted xx a xxx xxxx of return.
An xxxxxx receipt xx xxxxxxx over xxx xxxx 12 years, discounted xx x 14% rate xx xxxxxxx
A xxxxxx xxxxxxx xx xxxxxxx at the xxx xx Year 1 followed xx x xxxxxx receipt of $10,000 xx the end xx Year 3. xxx company has x 10% xxxx of return.
xx annual receipt of $8,000 for xxxxx years xxxxxxxx by a single xxxxxxx of $10,000 xx xxx end xx xxxx xx The company xxx a 16% xxxx of return.
Answer:
xxxxx
xxxx Flow xxxx x xxxxxxx
Discount rate xxx x 0.12
Time xxx = 5
Present xxxxx x x x xxxxxx
xxxxx
Cash xxxx (CF) = $16,000
xxxxxxxx xxxx (r) = 0.14
xxxxxx of period xxx x 12
xxxxxxx xxxxx x CF x
x $16,000 x
xxx $90,565
xxxxxxx xxxxx x +
= xxxxxxx
xxxxxxx xxxxx = x x x
= xxxxxxx
Chapter 8 xxxxxxxx 4:
xx xxxx flow
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Ex xx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxCF | xxxxxxx | 12% | ||||||||||
PV | xxxxxx | |||||||||||
Year | x | 2 | x | x | 5 | 6 | x | 8 | x | xx | xx | xx |
CF | $16,000 | xxxxxxx | $16,000 | $16,000 | xxxxxxx | xxxxxxx | xxxxxxx | $16,000 | xxxxxxx | xxxxxxx | $16,000 | xxxxxxx |
Rate | xxx | |||||||||||
xx | $90,565 | |||||||||||
Year | x | x | 3 | |||||||||
xx | xxxxxxx | xx | xxxxxxx | |||||||||
xxxx | 10% | |||||||||||
PV | $21,150 | |||||||||||
Year | 1 | x | 3 | x | ||||||||
xx | $8,000 | $8,000 | xxxxxx | xxxxxxx | ||||||||
Rate | 16% | |||||||||||
PV | xxxxxxx |
EX -4
xxxxxxxxxxxxxxxxxxxxxxxxxxxx | $10,000 | ||
xxx xx xxxxxx | xxx | ||
Rate | 16% | ||
x | 2 | 3 | |
20X1 | xxxx | 20X3 | |
xxxxxxxx xxx xxxxx | xxxxx | xxxxx | xxxxx |
xxxxx xxxxxxxx | xxxxxx | xxxxxx | $1,550 |
CF | $13,000 | ||
xxxxx CF | xxxxxx | $1,300 | xxxxxxx |
xx x 16% | $1,121 | $966 | xxxxxx |
xxxxx PV | xxxxxxx | ||
NPV | $1,408 |
xx -5
xxxxxxxxxxxxxxxxxx$40,000 | ||
$40,000 | ||
xxxxxxx | ||
xxxxx Purchase xxxx | xxxxxxxx | xxxxxxx |
Site xxxxxxxxxxx | $175,000 | $40,000 |
xxxxx Cost | $445,000 | xxxxxxx |
xxxxxxx | ||
Annual Savings | $40,000 | $40,000 |
Maturity | xx | xxxxxxx |
Rate | 8% | xxxxxxx |
PV of Savings | $392,726 | $40,000 |
xxxxxxx | ||
NPV | xxxxxxxxx | xxxxxxx |
$40,000 | ||
xxxxxxx | ||
xxxxxxx | ||
$40,000 | ||
xxxxxxx | ||
$40,000 | ||
$40,000 |
Pro-1
xxxxxxxxxxxxxxxxxxxxxxxxxx xx xxxx | xxxxxxxx | |||||||||
Service life | xx | |||||||||
xxxxxxxx xxxxx at xxx end of xx seasons | xxxxxxxx | |||||||||
xxxxxxxx xxx trip | 300 | |||||||||
xxxxx xxxxxxxxx costs per season xxxxxxxxxx straight-line xxxxxxxxxxxxx | xxxxxxxx | |||||||||
xxxxxxxx operating xxxxx per xxxx | xxxxxx | |||||||||
Ticket xxxxx (per passenger) | $5 | |||||||||
Passengers will xx xxxxxxx each season | xxxxxxx | |||||||||
xxx xx trip xxxx season | xxx | |||||||||
Depreciation xxx season | xxxxxxx | |||||||||
Rate | xxx | |||||||||
xxxx | x | 2 | 3 | 4 | 5 | 6 | x | 8 | 9 | xx |
xxxxxxx | $600,000 | xxxxxxxx | xxxxxxxx | xxxxxxxx | xxxxxxxx | xxxxxxxx | $600,000 | $600,000 | xxxxxxxx | xxxxxxxx |
Fixed operating |
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ACC 206 Week 5 Assignment for you
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Assignment xxxx 5
Principles xx Accounting 206
Chapter xxxxx Problems
Please xxxxxxxx the following 5 xxxxxxxxx xxxxx xx either Excel or a xxxx document (but xxxx xx xxxxxx document). You xxxx xxxx xxxx work xxxxx appropriate xxxxxxxx the xxxxxxxxxxxx xxxxxx xxxxx xxxxx is acceptable). Save xxx xxxxxxxxx xxx submit xx xx the appropriate xxxx using the xxxxxxxxxx Submission button.
Chapter 8 Exercise xxx
1. xxxxx xxxxxxx value calculations
Calculate the xxxxxxx value xx xxx following xxxx flows, xxxxxxxx xx the xxxxxxx xxxxxxx
x single cash inflow xx xxxxxxx xx five years, xxxxxxxxxx at x 12% xxxx xx xxxxxxx
xxxxxxxxxxx
x | xxxxxx Value | $ 12,000.00 | ||
Years | x | years | ||
xxxx | xxx | |||
Present xxxxx | x 6,809 | |||
xx xxxxxx xxxxxxx of $16,000 xxxx xxx next xx xxxxxx discounted xx x 14% xxxx of return.
xxxxxxxxxxxx
x | xxxxxx xxxx xxxx | x 16,000.00 | ||
Duration | xx | years | ||
Rate | xxx | |||
xxxxxxx Value | $ 90,565 | |||
x xxxxxx receipt of $15,000 at xxx xxx of Year 1 followed by a single receipt of xxxxxxx at xxx end xx Year xx xxx xxxxxxx has x xxx xxxx xx return.
xxxxxxxxxxxxxxxxxxx | xxxx | 10% | ||
Year | xxxx Flows | xxxxxxx xxxxx | ||
x | x x | $ - | ||
x | x 15,000.00 | $ xxxxxxxxx | ||
2 | $ - | $ - | ||
x | $ xxxxxxxxx | $ 7,513.15 | ||
Dean annual xxxxxxx xx xxxxxx xxx three years followed xx x single xxxxxxx of $10,000 at the xxx of xxxx xx xxx company has a 16% rate of xxxxxxx
xxxxxxxxxxxxxx | Rate | 16% | |
xxxx | Cash Flows | xxxxxxx Value | |
0 | $ - | x x | |
x | $ 8,000.00 | $ xxxxxxxx | |
2 | x 8,000.00 | x xxxxxxxx | |
3 | x 8,000.00 | $ |
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ACC 206 WEEK 5 Assignment 5 Chapter 8 Problems
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x
xxxxxxxxxxxxxxxxxxa) | |
FV | ($12,000) |
xxxxxxx | 5 |
xxxx of xxxxxx | 12% |
xx | $6,809.12 |
b) | |
xxxxxxxxx | $16,000 |
xxxxxxx | 12 |
xxxxxxxx xxxx | 14% |
PV | xxxxxxxxxxxx |
xx | |
Year | Cash xxxx |
1 | $15,000 |
2 | $0 |
x | xxxxxxx |
Discount Rate | 10% |
xx | xxxxxxxxxx |
xx | |
xxxx | xxxx xxxx |
x | xxxxxx |
2 | $8,000 |
3 | xxxxxx |
x | $10,000 |
Discount xxxx | 16% |
xx | xxxxxxxxxx |
x
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxBruce Greene | |||
xxxxxxxxxx | xxxxxxxxx | ||
xxxxxx xx xxxxxx xxxxxxxxx | 500 | ||
Div. xxxx | $2.60 | ||
xxxx 20X2 | xxxxx | ||
Div. 20X3 | $3.10 | $13,000 | |
xxxxxxxx Return | xxx | ||
xx | |||
xxxx | Cash xxxx | ||
x | xxxxxxxxx | ||
1 | xxxxxxxxx | ||
2 | xxxxxxxxx | ||
x | $1,550.00 | ||
x | xxxxxxx | ||
b) | |||
xxxx | xxxx xxxx | PV Factor x xxx | xx |
0 | xxxxxxxxx | x | ($10,000) |
x | xxxxxxxxx | 0.8621 | xxxxxx |
x | xxxxxxxxx | 0.7432 | xxxx |
x | xxxxxxxxx | 0.6407 | $993 |
3 | xxxxxxx | 0.6407 | $8,329 |
NPV | $1,408 | ||
c) |
x
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxCity of Bedford | ||
xxxxxx xx xxxxx | 600 | |
xxxxxxxx xxxx | $450 | per acre |
xxxx Preparation | xxxxxxxx | |
Useful xxxx | 20 | |
Annual Operating Costs Savings | $40,000 | |
Required xxxxxx | 8% | |
Year | Cash xxxx | |
0 | ($445,000) | |
x | $40,000 | |
2 | $40,000 | |
x | xxxxxxx | |
x | $40,000 | |
5 | $40,000 | |
x | $40,000 | |
7 | xxxxxxx | |
x | $40,000 | |
9 | xxxxxxx | |
10 | xxxxxxx | |
xx | $40,000 | |
xx | xxxxxxx | |
13 | xxxxxxx | |
xx | $40,000 | |
xx | xxxxxxx | |
16 | $40,000 | |
xx | $40,000 | |
xx | xxxxxxx | |
xx | xxxxxxx | |
20 | $40,000 | |
NPV | ($52,274.10) |
4
xxxxxxxxxxxxxxSTL Entertainment | ||
xxxx xx xxxx | xxxxxxxx | |
Service xxxx | 10 | xxxxxxx |
Disposal Value | $100,000 | |
xxxxxxxx xxx xxxx | 300 | passenger |
Fixed Operating xxxxxx xxxxxxxxx xxxxxxxxxxxx | xxxxxxxx | per xxxxxx |
xxxxxxxx Operating xxxx per Trip | xxxxxx | |
Ticket xxxxx | $5 | per ticket |
xxxxxxxxx Sales xx Passengers | xxxxxxx | xxx |
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