Research & Development. Edwards Corporation purchases a building for $2,000,000 which is to be used to create prototype for a new type hydrogen bomb. Once the prototype is completed, the building will have to be burned down because of high radiation levels. During the period of bomb construction, the salaries of Edwards Corporation's scientists are billable to the Philippine government on a cost-plus-profit basis. The total billed this period was $100,000. How much is the R& D expense for the period?
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- Sandstorm Corporation decides to develop a new line of paints. The project begins in 2023 in the U.S. Sandstorm incurs the following expenses in 2023 in connection with the project: Salaries $90,000 Materials 27,000 Depreciation on equipment 13,500 The benefits from the project will be realized starting in July 2024. If an amount is zero, enter "0". Sandstorm Corporation capitalizes and amortizes its research and experimental expenditures. What are its related deductions in 2023 and 2024?2023: $fill in the blank 12024: $fill in the blank 2InterCell Company wants to participate in the upcoming World's Fair in Korea. To participate, the firm needs to spend $1.5 million in year 0 to develop a showcase. The showcase will produce a cash flow of $3.75 million at the end of year 1. Then at the end of year 2, $2.31 million must be expended to restore the land on which the showcase was presented to its original condition. Therefore, the project's expected net cash flows are as follows (in thousands of dollars): N Cash flow0 -$1,SOO1 $3,7502 -$2,310(a) Plot the present worth of this investment as a function of i.(b) Compute the i*s for this investment. Is this a pure investment?( c) Would you accept this investment at MARR= 14 % ?InterCell Company wants to participate in the upcoming World's Fair in Korea. To participate, the firm needs to spend $1.5 million in year 0 to develop a showcase. The showcase will produce a cash flow of $3.75 million at the end of year 1. Then at the end of year 2, $2.31 million must be expended to restore the land on which the showcase was presented to its original condition. Therefore, the project's expected net cash flows are as follows (in thousands of dollars): (a) Plot the present worth of this investment as a function of i.(b) Compute the i*s for this investment. Is this a pure investment?( c) Would you accept this investment at MARR= 14 % ?
- ACME Corporation distributes agricultural equipment. The board of directors is considering a proposal to establish a facility to manufacture an electronically controlled "intelligent" crop sprayer invented by a professor at a local university. This crop-sprayer project would require an investment of $10 million in assets and would produce an annual after-tax net benefit of $1.8 million over a service life of eight years. All costs and benefits are included in these figures. When the project terminates, the net proceeds from the sale of the assets would be $1 million (as shown). Compute the rate of return of this project.Build Limited plans to start a project (Project Beta) for the forthcoming yearthat will be sold to an international corporation. Build Limited is yet to pay for the research costs to date, which total Rs. 150,000. The following additional costs have been estimated by the managing director to complete project Beta. MaterialsTwo materials are needed for project Beta – Material A and Material B. Material A has already been purchased at a cost of Rs. 60,000. It is toxic; and if not used in project Beta, it must be disposed of at a cost of Rs. 5,000. Material B – there are 50 kgs available in inventory which has been purchased at Rs. 400 per kg. project Beta will require a total of 150 kgs of this material. The current purchase price if Rs. 450 per kg and this material is regularly used in other projects currently undertaken by Build Limited. LabourProject Beta will require skilled labour which is hard to recruit in the present situation. Workers will have to be transferred from another…Liv Enterprise is considering a national launch of 2 corn chip products under project A and B. The National launch will require the following:Additional manufacturing equipment; Project A: K900, 000.00 and Project B: K1, 000,000.00 Upgrading Existing Facilities; Project A: K100, 000.00 and Project B: K400,000.00 Both of the above would be paid for at the outset and would be depreciated in the accounts over a five year period using straight line with a residual value of for both for Project A and B of zero.Projected revenues and costs over a period of five years are given in table below:Project AYear Revenue Costs1 K1,200,000.00 K1,340,000.002 K2,000,000.00 K1,670,000.003 K2,000,000.00 K1,520,000.004 K2,250,000.00 K1,685,000.005 K2,250,000.00 K1,685,000.00 Project B Year Revenue Costs1 K1,300,000.00 K1,460,000.002 K2,100,000.00 K1,520,000.003 K2,200,000.00 K1,400,000.004…
- Nguyen, Inc., is considering the purchase of a new computer system (ICX) for $130,000. The system will require an additional $30,000 for installation. If the new computer is purchased, it will replace an old system that has been fully depreciated. The new system will be depreciated under the MACRS rules applicable to 7-year class assets. If the ICX is purchased, the old system will be sold for $20,000. The ICX system, which has a useful life of 10 years, is expected to increase revenues by $32,000 per year over its useful life. Operating costs are expected to decrease by $2,000 per year over the life of the system. The firm is taxed at a 40 percent marginal rate.a. What net investment is required to acquire the ICX system and replace the old system?b. Compute the annual net cash flows associated with the purchase of the ICX system.Golden Flights, Inc. is considering buying some specialized machinery which would enable the company to obtain a six-year government contract for the design and engineering of a futuristic plane. The machinery costs $900,000 and must be destroyed for security reasons at the end of the six-year contract period. The estimated annual operating results of the project are as follows: Revenues from sales under the contract = $850,000Expenses (including annual depreciation of $150,000) = $650,000 All revenue from the contract and all expenses (except depreciation) will be received or paid in cash in the same period as recognized for accounting purposes. Compute the net present value of the investment in this machinery, discounted at an annual rate of 12%.The management of Byrge Corporation is investigating buying a small used aircraft to use in making airborne inspections of its above-ground pipelines. The aircraft would have a useful life of 5 years. The company uses a discount rate of 10% in its capital budgeting. The net present value of the investment, excluding the intangible benefits, is -$ 395,750. (Ignore income taxes.) Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. How large would the annual intangible benefit have to be to make the investment in the aircraft financially attractive? (Round your intermediate calculations and final answer to the nearest whole dollar amount.)
- The management of Byrge Corporation is investigating buying a small used aircraft to use in making airborne Inspections of Its above-ground pipelines. The aircraft would have a useful life of 4 years. The company uses a discount rate of 15% in its capital budgeting. The net present value of the Investment, excluding the Intangible benefits, Is -$316,520. (Ignore Income taxes.) Click here to view Exhibit 128-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. How large would the annual Intangible benefit have to be to make the Investment in the aircraft financially attractive? (Round your intermediate calculations and final answer to the nearest whole dollar amount.) Multiple Choice O O $110,865 $47,478 $316,520 $79,130Mudurnu Yem plans to produce high-quality chicken feed. Existing storage that is currently leased to a nearby company is planning to be used in the new project. The storage's rental price for the following year is $130,000, and the rent is predicted to increase at a rate of 4% percent every year afterward. In addition to utilizing the storage, the new project requires $1.38 million investment in plant and equipment. For tax purposes, this may be depreciated straight-line over a ten-year period. Mudurnu Yem, on the other hand, plans to finish the project after eight years and resell the plant and equipment for $460,000 in year eight. Lastly, the project necessitates an immediate investment of $380,000 in working capital. Following that, in each of years 1 through 7, working capital is expected to equal 10% percent of revenues. Sales of high-quality chicken feed are predicted to be $4.80 million in the first year, and sales are expected to grow at a pace of 5% percent each year after…The management of Byrge Corporation is investigating buying a small used aircraft to use in making airborne inspections of its above-ground pipelines. The aircraft would have a useful life of 6 years. The company uses a discount rate of 18% in its capital budgeting. The net present value of the investment, excluding the intangible benefits, is -$474,600. (Ignore income taxes.) Click here to view Exhibit 12B-1 and Exhibit 128-2, to determine the appropriate discount factor(s) using the tables provided. How large would the annual intangible benefit have to be to make the investment in the aircraft financially attractive? Multiple Choice O O O $474,600 $135,678 $79,100 $85,428