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1. Ames Co. is planning an investment project of a five-year con- tract to provide component parts for a large manufacturer. The project has the following requirements and annual cash flows. The project requires an initial investment of $10,000 for the special equipment. The project also requires $5,000 of working capital. The working capital will be released at the end of the pro- ject's life. This project will bring in $8,000 of annual cash flow. The discount rate is 10% The project has the following requirements and annual cash flows. . The project requires an initial investment of $37,908 for the special equipment. This project will bring in $10,000 of annual cash flow for the next 5 years. Decker Co. has a cost of capital of 9% its plants in Japan. Relevant data relating to the equipment fol low: Purchase cost of the equipment: $500,000 Sales value at the end of life of 10 years: $100,000 Annual incremental cash flow. 590,000 Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment's useful life. What is the internal rate of return on the project, and is that indicative of an acceptable project for the company? What is the net present value of the proposal? 3. What is the payback period for a project that requires an initial investment of $100,000 and provides the following cash in flows? 5. Ames Co. is planning an investment project of a 20-year contract to build a supertanker. The company has estimated that the net present value (NPV) of all cash flows except salvage value is $1,400,000). If a discount rate of 8% is used, what would the salvage value cash flow need to be in 20 years to make this investment attractive? (round to nearest dollar) 2. Decker Co. is planning an investment project of a five-year con tract to provide component parts for a large manufacturer. 4. A piece of labor-saving equipment has just come onto the mar- ket that Mitsui Electronics could use to reduce costs in one of 6. Jordan Company produces and sells basketballs. To guard against out of stock situations, the company requires that 20% of the next month's sales be on hand at the end of each month. Budgeted sales of basketballs over the next three months are: October November December Budgeted sales in units 80,000 120,000 100,000 8. Dilla Company's sales are collected 30% in the month of the sale, 40% in the month following sale, and 30% in the second month following sale. The following are budgeted sales data: 10. Letestu Company has a beginning cash balance on January 1, 2011 of $10,000. Cash collected in January is $100,000 and sales revenue in January is $108,000. Expected disbursements for January for inventory purchases are $45,000 and for selling and administrative expenses are $62,000. Additionally, a divi- dend payment of $5,000 will be made in January. Letestu maintains a minimum cash balance of $5,000. How much cash will Letestu need to borrow in January in order to meet the minimum balance requirement? What are budgeted cash collections in March? Budgeted production for November would be: end of document 7. The La Pann Company has obtained the following sales forecast data: 9. Cooke Company incurs $4 per unit of variable selling and admin- istrative expense and $50,000 per month in fixed selling and administrative expense. Of the fixed expense, $12,000 relates to depreciation each month. Selling and administrative ex- pense is paid in the month incurred. During February 2011, Cooke produced 50,000 units and sold 48,000 units. What amount would Cooke include for selling and administrative ex- pense on its February income statement? The regular pattern of collection of credit sales is 30% in the month of sale and 70% in the month following the month of sale. There are no bad debts. The budgeted accounts receivable balance on September 30" is: 1. Ames Co. is planning an investment project of a five-year con- tract to provide component parts for a large manufacturer. The project has the following requirements and annual cash flows. The project requires an initial investment of $10,000 for the special equipment. The project also requires $5,000 of working capital. The working capital will be released at the end of the pro- ject's life. This project will bring in $8,000 of annual cash flow. The discount rate is 10% The project has the following requirements and annual cash flows. . The project requires an initial investment of $37,908 for the special equipment. This project will bring in $10,000 of annual cash flow for the next 5 years. Decker Co. has a cost of capital of 9% its plants in Japan. Relevant data relating to the equipment fol low: Purchase cost of the equipment: $500,000 Sales value at the end of life of 10 years: $100,000 Annual incremental cash flow. 590,000 Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment's useful life. What is the internal rate of return on the project, and is that indicative of an acceptable project for the company? What is the net present value of the proposal? 3. What is the payback period for a project that requires an initial investment of $100,000 and provides the following cash in flows? 5. Ames Co. is planning an investment project of a 20-year contract to build a supertanker. The company has estimated that the net present value (NPV) of all cash flows except salvage value is $1,400,000). If a discount rate of 8% is used, what would the salvage value cash flow need to be in 20 years to make this investment attractive? (round to nearest dollar) 2. Decker Co. is planning an investment project of a five-year con tract to provide component parts for a large manufacturer. 4. A piece of labor-saving equipment has just come onto the mar- ket that Mitsui Electronics could use to reduce costs in one of 6. Jordan Company produces and sells basketballs. To guard against out of stock situations, the company requires that 20% of the next month's sales be on hand at the end of each month. Budgeted sales of basketballs over the next three months are: October November December Budgeted sales in units 80,000 120,000 100,000 8. Dilla Company's sales are collected 30% in the month of the sale, 40% in the month following sale, and 30% in the second month following sale. The following are budgeted sales data: 10. Letestu Company has a beginning cash balance on January 1, 2011 of $10,000. Cash collected in January is $100,000 and sales revenue in January is $108,000. Expected disbursements for January for inventory purchases are $45,000 and for selling and administrative expenses are $62,000. Additionally, a divi- dend payment of $5,000 will be made in January. Letestu maintains a minimum cash balance of $5,000. How much cash will Letestu need to borrow in January in order to meet the minimum balance requirement? What are budgeted cash collections in March? Budgeted production for November would be: end of document 7. The La Pann Company has obtained the following sales forecast data: 9. Cooke Company incurs $4 per unit of variable selling and admin- istrative expense and $50,000 per month in fixed selling and administrative expense. Of the fixed expense, $12,000 relates to depreciation each month. Selling and administrative ex- pense is paid in the month incurred. During February 2011, Cooke produced 50,000 units and sold 48,000 units. What amount would Cooke include for selling and administrative ex- pense on its February income statement? The regular pattern of collection of credit sales is 30% in the month of sale and 70% in the month following the month of sale. There are no bad debts. The budgeted accounts receivable balance on September 30" is