Homework Problems

# Extraordinary gain 80000 1099000 cogs 4800000 3776000

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Extraordinary gain 80000 1,099,000  COGS -4800000 3,776,000  Selling expenses -2000000 Admin expense -900000 Interest Exp -211000 Net Income 132000 1,352,050  3,027,800  125,000  4,504,850  1,075,953

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2,365,000  3,440,953  1,063,897  4,504,850  658,000  208,000  1,610,000  2,476,000  175,000  500,000
675,000  1,801,000  2,476,000

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E6-2 30,000 @ 8% for 8 years A) 30,000 x .08 x 8 = \$19,200 30,000 + 19,200 = 49,200 B) n-8, i-8%, PV-30,000 FV = 55,527.91 C) n-16, i-4%, PV-30,000 FV = 56,189.44 E6-4 A) n-20, 8%, pmt-5,000 FV = 247,114.61 B) n-30, i-10%, PMT-2,500 PV = 25,924.01 C) n-15, i-10%, PMT-2,000 FV = 69,899.46 D) n-6, i-9%, PMT-3,000 PV = 14,668.95 E6-11 A) 15,582 x 10 = 155,820 - 100,000 = 55,820 B) n-10, PV-100,000, FV-155,820 i-9% Use the bank's payment plan because the interest is only 8% instead of 9%. P6-4 500,000 x 46% = 230,000 36,000 x 25% = 9,000 500,000 - 230,000 = 270,000 36,000-9,000 = 27,000 27,000 x 10.60360 = 286,297.20 Chose the payments not the lump sum. P6-6 Years 1-5 6-10 11-30 31-40 Lease (30,000) (30,000) (30,000) (30,000) cost (9,000) (12,000) (12,000) (12,000) profit 60,000  110,000  80,000  (39,000) 18,000  68,000  38,000
CF0 - 0 CF1 - (39,000) Frequency - 5 CF2 - 18,000 Frequency - 5 CF3 - 68,000 Frequency - 20 CF4 - 38,000 Frequency - 10 NPV - 66,935.64 This is the least she should accept for purchase of the company. P6-10 Cost of owning 0 1 2 3 4 5 Loan payments -400,000 -350,000 -350,000 -350,000 -350,000 -350,000 Insurance -27,000 -27,000 -27,000 -27,000 -27,000 -27,000 Property taxes -40,000 -40,000 -40,000 -40,000 -40,000 Other -16,000 -16,000 -16,000 -16,000 -16,000 Residual value Net cash flow -427,000 -433000 -433000 -433000 -433000 -433000 PV 2,151,393.35 Leasing Lease payment -270,000 -270,000 -270,000 -270,000 -270,000 -270,000 Lost interest -10,000 -10,000 -10,000 -10,000 -10,000 Net cash flow -270,000 -280,000 -280,000 -280,000 -280,000 -280,000 PV 2,091,803.40 Since the PV is less for leasing that is the option to recommend. P6-1 A B C D E i=  9% 11% 8% 12% 11% n= 3 10 10 8 9 pmt= 0 300,000x9% = 27,000 4,000 5,000 120,000 FV= 240,000 300x1,000 = 300,000- - - PV= ### ### 26,840.33 24,838.20 ### A 185,324.04-100,000 = 85,324.04 B 24,838.20 + 20,000 = 44,838.20

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6 7 8 9 10 11 12 -27,000 -27,000 -27,000 -27,000 -27,000 -27,000 -40,000 -40,000 -40,000 -40,000 -40,000 -40,000 -40,000 -16,000 -16,000 -16,000 -16,000 -16,000 -16,000 -16,000 500,000 -83000 -83000 -83000 -83000 -83000 -83000 444000 -270,000 -270,000 -270,000 -270,000 -270,000 -10,000 -10,000 -10,000 -10,000 -10,000 -10,000 -280,000 -280,000 -280,000 -280,000 -280,000 -10,000

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E7-2 1 Cash should be reported as \$925,000.  The CD is an investment possibly short  The cash advance and the depoist is listed as receivables. 2 Cash should be reported as 500,000 - 17,000 + 1,350 + 300 for a total of 484,65 The bond would be reported as an investment. 3 Cash should be reported as 590,000 + 9,800 for a total of 599,800.  The postda check would be listed as a receivable, postage is supplies, and restricted cash w be listed as a note. 4 Cash should be reported as 42,000 + 48,000 for a total of 90,000.  The NSF has into the receivables. 5 Cash should be reported as 700,000 + 900 for a total of 700,900.  Cash restricte a non-current asset, treasury bills are listed in current assets, but not cash,  Cas advance is listed as a liability and the deposit to the government is a receivable. E7-4 Merchandise purchase 320,000  Less: Ending inventory (70,000) Merchandise sold 250,000  Sales (250,000 x 1.04) 350,000  Less: Collections (198,000) Ledger Balance 152,000  Balance on books 117,000  Difference in ledger and book total 35,000  E7-5 A 1) 6/3 A/R - Arquette Com 2,000           Sales 2,000 6/12 Cash 1,960 Sales discounts (2000 x 2%) 40           A/R - Arquette Com. 2,000 2) 6/3 A/R - Arquette Com 1,960           Sales (2000 x 2%) 1,960
6/12 Cash 1,960           A/R - Arquette Com. 1,960 B 6/3 A/R - Arquette Com 1,960           Sales (2000 x 2%) 1,960 6/12 Cash 2,000           A/R - Arquette Com. 1,960

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