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Hi, I have an accounting assignment. It is a total of 8 questions, hope you can help :D Thank you! Foundations of Accounting Assignment 6

Hi, I have an accounting assignment. It is a total of 8 questions, hope you can help :D Thank you!

image text in transcribed Foundations of Accounting Assignment 6 Part A (20 points) Required: answer each of the following questions, which are independent from each other. 1. Big Box Real Estate is considering two sites for its latest development project, a mixed-use retail shopping center. The company's management has put together the following cash flow estimates and other data for each project: Land and construction costs Annual cash inflows Annual cash outflows Estimated useful life (in years) Interest rate Site 1 Cedar Park $5,000,000 680,000 96,000 Site 2 Round Rock $6,500,000 715,000 120,000 20 10% 25 8% The company expects the Cedar Park site to have a $2,000,000 salvage value at the end of its useful life and the Round Rock site to have a $3,000,000 salvage value at the end of its useful life. What is the net present value (NPV) of each site and which site (if any) would be the preferred investment? 2. You recently received a birthday gift of $1,500 and you decide to save it for later use. If you deposit it into an investment account that pays 6% interest, how much will be in the account in 3 years? 3. Assuming that you are 20 years old and want to retire a millionaire when you turn 65, how much must you deposit each year to reach your goal if your investment account averages an 8% return? -- Page 1 of 2 -- Part B (30 points) Required: answer each of the following questions, which are independent from each other. 1. The Montana Company has decided to invest in a project that is expected to produce the following cash flows: 9,000 (year 1), 12,500 (year 2) and 14,000 (year 3). The project would require a $29,000 initial investment. Assuming an interest of 8 percent, what is the net present value (NPV) of the project? What is the present value index of the project? 2. You have recently opened a retirement account and decided to deposit $4,000 a year in the account. If you want to retire in 45 years and the account earns 8 percent interest, how much will he have in your account when you retire? 3. The Sampson Company borrowed $20,000 from a local bank at an interest rate of 8 percent that will be repaid in full at the end of the three-year term. Prepare all of the transactions the company would record in an accounting framework related to the loan. 4. If you are able to earn 4% interest, what amount would you need to invest to have $850 two years from now? -- Page 2 of 2

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