Unit VI Lab Assignment Questions 6 & 7 uses the same table

Unit VI Lab Assignment

6) HirooleCorporation is making a $103,050investment in equipment with a5-year life. The company uses the straight-line method of depreciation and has a tax rate of20percent. The company's required rate of return is11percent. Click here to view factor tables

B

TABLE B9.1

Present value of $1 due in periods

6% 7% 8% 9% 10% 11%

1 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009

2 0.8900 0.8734 0.8573 0.8417 0.8264 0.8116

3 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312

4 0.7921 0.7629 0.7350 0.7084 0.6830 0.6587

5 0.7473 0.7130 0.6806 0.6499 0.6209 0.5935

6 0.7050 0.6663 0.6302 0.5963 0.5645 0.5346

7 0.6651 0.6227 0.5835 0.5470 0.5132 0.4817

8 0.6274 0.5820 0.5403 0.5019 0.4665 0.4339

9 0.5919 0.5439 0.5002 0.4604 0.4241 0.3909

10 0.5584 0.5083 0.4632 0.4224 0.3855 0.3522

11 0.5268 0.4751 0.4289 0.3875 0.3505 0.3173

12 0.4970 0.4440 0.3971 0.3555 0.3186 0.2858

13 0.4688 0.4150 0.3677 0.3262 0.2897 0.2575

14 0.4423 0.3878 0.3405 0.2992 0.2633 0.2320

15 0.4173 0.3624 0.3152 0.2745 0.2394 0.2090

16 0.3936 0.3387 0.2919 0.2519 0.2176 0.1883

17 0.3714 0.3166 0.2703 0.2311 0.1978 0.1696

18 0.3503 0.2959 0.2502 0.2120 0.1799 0.1528

19 0.3305 0.2765 0.2317 0.1945 0.1635 0.1377

20 0.3118 0.2584 0.2145 0.1784 0.1486 0.1240

12%

0.8929

0.7972

0.7118

0.6355

0.5674

0.5066

0.4523

0.4039

0.3606

0.3220

0.2875

0.2567

0.2292

0.2046

0.1827

0.1631

0.1456

0.1300

0.1161

0.1037

13%

0.8850

0.7831

0.6931

0.6133

0.5428

0.4803

0.4251

0.3762

0.3329

0.2946

0.2607

0.2307

0.2042

0.1807

0.1599

0.1415

0.1252

0.1108

0.0981

0.0868

14%

0.8772

0.7695

0.6750

0.5921

0.5194

0.4556

0.3996

0.3506

0.3075

0.2697

0.2366

0.2076

0.1821

0.1597

0.1401

0.1229

0.1078

0.0946

0.0829

0.0728

15%

0.8696

0.7561

0.6575

0.5718

0.4972

0.4323

0.3759

0.3269

0.2843

0.2472

0.2149

0.1869

0.1625

0.1413

0.1229

0.1069

0.0929

0.0808

0.0703

0.0611

16%

0.8621

0.7432

0.6407

0.5523

0.4761

0.4104

0.3538

0.3050

0.2630

0.2267

0.1954

0.1685

0.1452

0.1252

0.1079

0.0930

0.0802

0.0691

0.0596

0.0514

20%

0.8333

0.6944

0.5787

0.4823

0.4019

0.3349

0.2791

0.2326

0.1938

0.1615

0.1346

0.1122

0.0935

0.0779

0.0649

0.0541

0.0451

0.0376

0.0313

0.0261

30%

0.7692

0.5917

0.4552

0.3501

0.2693

0.2072

0.1594

0.1226

0.0943

0.0725

0.0558

0.0429

0.0330

0.0254

0.0195

0.0150

0.0116

0.0089

0.0068

0.0053

Table B9.2 Present value of an annuity of $1 per period

6% 7% 8% 9% 10% 11% 12%

1 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929

2 1.8334 1.8080 1.7833 1.7591 1.7355 1.7125 1.6901

3 2.6730 2.6243 2.5771 2.5313 2.4869 2.4437 2.4018

4 3.4651 3.3872 3.3121 3.2397 3.1699 3.1024 3.0373

5 4.2124 4.1002 3.9927 3.8897 3.7908 3.6959 3.6048

6 4.9173 4.7665 4.6229 4.4859 4.3553 4.2305 4.1114

7 5.5824 5.3893 5.2064 5.0330 4.8684 4.7122 4.5638

8 6.2098 5.9713 5.7466 5.5348 5.3349 5.1461 4.9676

9 6.8017 6.5152 6.2469 5.9952 5.7590 5.5370 5.3282

10 7.3601 7.0236 6.7101 6.4177 6.1446 5.8892 5.6502

11 7.8869 7.4987 7.1390 6.8052 6.4951 6.2065 5.9377

12 8.3838 7.9427 7.5361 7.1607 6.8137 6.4924 6.1944

13 8.8527 8.3577 7.9038 7.4869 7.1034 6.7499 6.4235

14 9.2950 8.7455 8.2442 7.7862 7.3667 6.9819 6.6282

15 9.7122 9.1079 8.5595 8.0607 7.6061 7.1909 6.8109

16 10.1059 9.4466 8.8514 8.3126 7.8237 7.3792 6.9740

17 10.4773 9.7632 9.1216 8.5436 8.0216 7.5488 7.1196

18 10.8276 10.0591 9.3719 8.7556 8.2014 7.7016 7.2497

19 11.1581 10.3356 9.6036 8.9501 8.3649 7.8393 7.3658

20 11.4699 10.5940 9.8181 9.1285 8.5136 7.9633 7.4694

13%

0.8850

1.6681

2.3612

2.9745

3.5172

3.9975

4.4226

4.7988

5.1317

5.4262

5.6869

5.9176

6.1218

6.3025

6.4624

6.6039

6.7291

6.8399

6.9380

7.0248

14%

0.8772

1.6467

2.3216

2.9137

3.4331

3.8887

4.2883

4.6389

4.9464

5.2161

5.4527

5.6603

5.8424

6.0021

6.1422

6.2651

6.3729

6.4674

6.5504

6.6231

15%

0.8696

1.6257

2.2832

2.8550

3.3522

3.7845

4.1604

4.4873

4.7716

5.0188

5.2337

5.4206

5.5831

5.7245

5.8474

5.9542

6.0472

6.1280

6.1982

6.2593

16%

0.8621

1.6052

2.2459

2.7982

3.2743

3.6847

4.0386

4.3436

4.6065

4.8332

5.0286

5.1971

5.3423

5.4675

5.5755

5.6685

5.7487

5.8178

5.8775

5.9288

20%

0.8333

1.5278

2.1065

2.5887

2.9906

3.3255

3.6046

3.8372

4.0310

4.1925

4.3271

4.4392

4.5327

4.6106

4.6755

4.7296

4.7746

4.8122

4.8435

4.8696

30%

0.7692

1.3609

1.8161

2.1662

2.4356

2.6427

2.8021

2.9247

3.0190

3.0915

3.1473

3.1903

3.2233

3.2487

3.2682

3.2832

3.2948

3.3037

3.3105

3.3158

What is the present value of the tax savings related to depreciation of the equipment?(Round present value factor calculations to 4 decimal places, e.g. 1.2151 and final answer to 0 decimal place, e.g. 125. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

The present value

$enter present value in dollars rounded to 0 decimal place

7) VaughnHardy recently rejected a $19,600,000, five-year contract with the Vancouver Seals hockey team. The contract offer called for an immediate signing bonus of $7,350,000and annual payments of $2,450,000. To sweeten the deal, the president of player personnel for the Seals has now offered a $21,470,000, five-year contract. This contract calls for annual increases and a balloon payment at the end of five years.

Year 1		$2,450,000
Year 2		2,530,000
Year 3		2,610,000
Year 4		2,690,000
Year 5		2,860,000
Year 5 balloon payment		8,330,000
Total		$21,470,000

Click here to view factor tables Question 6 & 7 uses the same table Suppose you are Hardy's agent and you wish to evaluate the two contracts using a required rate of return of15percent. In present value terms, how much better is the second contract?(Round present value factor calculations to 4 decimal places, e.g. 1.2151 and final answers to 0 decimal places, e.g. 125. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Present value of old contract		enter a dollar amount
Present value of new contract		enter a dollar amount

In present value terms, the second contract isselect an option better not better than the old one.

8) DynatechIndustrial has estimated that production for the next five quarters will be:

Production Information
1st quarter, 2020		36,000units
2nd quarter, 2020		32,800units
3rd quarter, 2020		39,200units
4th quarter, 2020		30,400units
1st quarter, 2021		37,600units

Finished units of production require6pounds of raw material per unit. The raw material cost is $7per pound. There is $226,800of raw material on hand at the beginning of the first quarter, 2020.Dynatechdesires to have15percent of next quarter's material requirements on hand at the end of each quarter. Prepare quarterly direct materials purchases budgets forDynatechIndustrial for 2020.

9) TheSipacoreAntique Mall budgeted credit sales in the first quarter of 2021 to be as follows:

January		$147,200
February		156,400
March		167,200

Credit sales in December 2020 are expected to be $184,000. The company expects to collect60percent of a month's sales in the month of sale and40percent in the following month. Estimate cash receipts for each month of the first quarter of 2021.

Collection of credit sales	January		February		March
Collection of December sales	$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
Collection of January sales	enter a dollar amount		enter a dollar amount		enter a dollar amount
Collection of February sales	enter a dollar amount		enter a dollar amount		enter a dollar amount
Collection of March sales	enter a dollar amount		enter a dollar amount		enter a dollar amount
	$enter a total dollar amount		$enter a total dollar amount		$enter a total dollar amount

10) TheDynatechAntique Mall expects to make purchases in the first quarter of 2021 as follows:

January		$76,000
February		96,000
March		68,000

Purchases in December 2020 are expected to be $73,600. The company expects that50percent of a month's purchases will be paid in the month of purchase and50percent will be paid in the following month. Estimate cash disbursements related to purchases for each month of the first quarter of 2021.

Cash disbursements for purchases	January		February		March
Payment of December purchases	$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
Payment of January purchases	enter a dollar amount		enter a dollar amount		enter a dollar amount
Payment of February purchases	enter a dollar amount		enter a dollar amount		enter a dollar amount
Payment of March purchases	enter a dollar amount		enter a dollar amount		enter a dollar amount
	$enter a total dollar amount		$enter a total dollar amount		$enter a total dollar amount