MODULE 7 - Calculators

MODULE 7 - Calculators - Cash in and cash out Capital...

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Unformatted text preview: Cash in and cash out Capital budgeting deals with cash inflows and cash outflows as part of the process. Select a () from the drop-down box if the term represents an incremental operating cash outflow (accountants say, a credit to cash) to the company. Select a plus (+) if an incremental opera cash inflow to the company (accountants say, a debit to cash), and a zero (0) if it is not an incremental operating cash flow. Restrict your analysis to cash flows for capital-budgeting purposes. Statement match Purchase $78,000 depreciable property- Corporate headquarters charges a project $8,000 overhead. No corporate outlays were required. Corporate headquarters charges a project $8,000 overhead. + Additional outlays were required. The company reports depreciation expense of $13,000 in its financial statements prepared by the national accounting firm Hoggins and Rasmussen. The company reports depreciation expense of $13,000 on its income-tax return. Income taxes of $7,200 are associated with a project.- Interest expense of $976 is incurred on bonds issued to finance depreciable property. The company receives $42,000 from disposal of depreciable + property. The company has a $4,200 1231 gain from disposal of depreciable property. The company has a $4,200 1231 loss from disposal of depreciable property. The company disposes of $20,000 inventory at the end of the + project's economic life. The company trades in equipment for new property and receives + a trade-in credit of $10,000. The company recieves a $4,000 investment tax credit on an + investment in depreciable property. each item is from the perspective of the company as a whole. A credit to any item other than cash is a debit (increase) to cash. A debit to any item other than cash is a credit (decrease) to cash. a minus ating Calculating ITC-- Friedhoffer example problem A company makes a $1,000 investment in allowable property and the ITC is 8 percent. What is th net cash invested in allowable property? A. $920 correct B. $80 C. $880 D. $890 E. $980 a company makes a $1,000.00 investment in allowable property and the ITC is 8% what is the net cash invested in allowable property? 920.00 he Management of Friedhoffer Associates is evaluating a proposal to expand market penetra northwest part of the United States. Doing so requires a $214,204 investment in depreciab property. Sales taxes, shipping charges, and set-up are $15,769. These outlays qualify for percent investment tax credit. How much is the net capital invested in depreciable proper correct answer 211575 Management of Friedhoffer Associates is evaluating a proposal to expand market penetration in...
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This note was uploaded on 05/10/2010 for the course FINA 3770 taught by Professor Chandy during the Fall '08 term at North Texas.

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MODULE 7 - Calculators - Cash in and cash out Capital...

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