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Balloons By Sunset (BBS) is considering the purchase of two new hot air balloons so that it can expand its desert sunset tours. Various information about the proposed investment follows: (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided.) Initial investment (for two hot air balloons) Useful life Salvage value Annual net income generated BBS's cost of capital $ 434,000 9 years $ 47,000 38,626 10% Assume straight line depreciation method is used. Required: Help BBS evaluate this project by calculating each of the following: 1. Accounting rate of return. (Round your answer to 2 decimal places.) 2. Payback period. (Round your answer to 2 decimal places.) 3. Net present value (NPV). (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar.) 4. Recalculate the NPV assuming BBS's cost of capital is 13 percent. (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar.) X Answer is not complete. 1. 8.90 % 2. 5.32 years Accounting rate of return Payback period Net present value Net present value assuming 13% cost of capital 3. 4. Tulip Inc. uses standard costing, and its manufacturing standards are as follows: 11.0 pounds of materials at $9.4 per pound, and 21 hours of labor at $8.2 per hour. Budgeted production last period was 6,800 units, and actual production and sales was 3,900 units. Last period, Tulip purchased and used 54,800 pounds of materials for $267,000, and used 105,000 labor hours, costing $163,000. What is the journal entry to record direct labor costs to the Cost of Goods Sold account? Multiple Choice $671,580 Cost of Goods Sold Wages Payable $671,580 $ 163,000 Cost of Goods Sold Wages Payable $ 163,000 $671,580 $189,420 Cost of Goods Sold Direct Labor Efficiency Variance Direct Labor Rate Variance Wages Payable $698,000 $ 163,000 $671,580 $189,420 Cost of Goods Sold Direct Labor Rate Variance Direct Labor Efficiency Variance Wages Payable $698,000 $163,000 Olive Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $250,400. The equipment will have an initial cost of $1,300,600 and have an 8-year life. There is no salvage value for the equipment. If the hurdle rate is 10%, what is the internal rate of return? Ignore income taxes. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor from the PV tables. Round your final answer to the nearest dollar amount.) Multiple Choice Between 6% and 8% Between 8% and 10% Greater than 10% less than zero Randall Corp. is trying to decide whether to lease or purchase a piece of equipment needed for the next five years. The equipment would cost $170,000 to purchase, and maintenance costs would be $80,000 per year. After five years, Randall estimates it could sell the equipment for $100,000. If Randall leases the equipment, it would pay $100,000 each year, which would include all maintenance costs. If the hurdle rate for Randall is 12%, Randall should: (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor from the PV tables. Do not round intermediate calculations. Round your final answer to the nearest hundred.) Multiple Choice lease the equipment, as net present value of cost is about $41,000 less. lease the equipment, as net present value of cost is about $100,000 less. buy the equipment, as net present value of cost is about $100,000 less. buy the equipment, as net present value of cost is about $41,000 less. Ironwood, Inc., which has a hurdle rate of 12%, is considering three different independent investment opportunities. Each project has a seven-year life. The annual cash flows and initial investment for each of the projects are as follows: (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1. (Use appropriate factor from the PV tables. Do not round intermediate calculations. Round your final answer to the nearest hundred.) Annual cash flows Initial investment Project A Project B Project C $131, 470 $ 120,520 $109,560 320,000 300,000 230,000 In what order should Ironwood prioritize investment in the projects? Multiple Choice ACB O CBA C, A,B A,B,C O How much will you have in a savings account in ten years, if you deposit $1,500 in the account at the end of each year and the account earns 7% interest, compounded annually? (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor from the PV tables. Round your final answer to the nearest dollar amount.) Multiple Choice $20,725 $16,050 $15,000 $25,452
