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2 Chapter 9 Evaluating Decentralized Operations Obj. 3 EX 9-3 Service department charges and activity bases For each of the following service departments, identify an
2 Chapter 9 Evaluating Decentralized Operations Obj. 3 EX 9-3 Service department charges and activity bases For each of the following service departments, identify an activity base that could be used for charging the expense to the profit center: A Legal B. Duplication services C Electronic data processing D. Central purchasing E Telecommunications F Accounts receivable EX 9.4 Activity bases for service department Ohi ntial ting, 400 A EX 10-1 Differential analysis for a lease or sell decision Obj. 1 Granite Construction Company is considering selling excess machinery with a book value of $175,000 (original cost of $315,000 less accumulated depreciation of $140,000) for $180,000, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $200,000 for four years, after which it is expected to have no residual value. During the period of the lease, Granite Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $34,400. A. Prepare a differential analysis, dated November 7 to determine whether Granite should lease (Alternative 1) or sell (Alternative 2) the machinery. On the basis of the data presented, would it be advisable to lease or sell the ma- B. chinery? Explain. E HOW life. Project 1 could be sold at the end of eight years for a price of $8,000. (A) Determine t Project 1 requires an original per year for 10 years. Project 2 has a calculated net HOW net present value of Project 1 over an eight-year life, with residual value, assuming a minimo rate of return of 12%. (B) Which project provides the greatest net present value? Kercises Obj. EX 11-1 Average rate of return cer, 16% The following data are accumulated by Lone Peak Inc. in evaluating two competing capital investment proposals: 3D Printer Truck Amount of investment $40,000 $50,000 Useful life 7 years 10 years Estimated residual value $3,000 $6,000 Estimated total income over the useful life $24,080 $36,400 Determine the expected average rate of return for each proposal. SHOW ME HOW
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