What amount of development cost should Headway Company capitalize in 2024? a. 2,200,000 b. 5,700,000 c. 6,000,000 d. 7,500,000
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2024:
Project A. Expected total revenues P7,000,000, starting in early 2023. Expected total costs,will
be P5,000,000. Costs incurred to date, all in 2014, are P2,200,000.
Project B. Expected total revenues P6,000,000. Costs incurred to date are P3,500,000.
Expected total costs are P4,500,000. The commencement of commercial sales is uncertain due
to problems in raising funds to cover the final development costs.
Project C. Expected total revenues, P3,500,000 with P1,000,000 of revenue already earned in
2024. Total development costs incurred, all in 2024, were P3,800,000.
Research projects. Total costs spend in 2024 were P I,500,000.
What amount of development cost should Headway Company capitalize in 2024?
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- Projected income statement for a project for years 1 and 2: Revenues $4,000 and $5,000; COGS $2,500 and $3,000; Depreciation $500 and $400; EBIT $1,000 and $1,600. Initial capital investment is $3,000. Working capital is 6% of the expected revenue; investment in working capital is made at the beginning of each year. The firm pays 14% on its profit. Estimate liquidation value Group of answer choices $2,000 $2,100 $2,600 $3,000Assume that a company is considering a $2,500,000 capital investment in a project that would earn net income for each of the next five years as follows: Sales Variable expenses Contribution margin Fixed expenses: Out-of-pocket operating costs Depreciation Net operating income The project's internal rate of return is closest to: Garrison 17e Rechecks 2021-11-25 Multiple Choice Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. O O 22%. 20%. 18%. $ 300,000 400,000 16%. $ 1,900. 800 1, 100 700 $ 400.Initial project set-up costs are estimated to be SEK15m (year 0-2023). Further estimated operating costs and projected revenues are as follows: Operating costs - Years 1-5 (2024-2028) All figures are in millions of SEK. Further costs are presented in the table below. No inflationary adjustments have been made Year Operational costs Maintenance costs Tech update costs Y1 6 Year Revenue (merchant fees) 4 3 Y2 6 Y1 8 4 3 Important points to note (after year 1): • Operational costs are estimated to increase by 3.5% per year • Maintenance costs are estimated to increase by 2.8% per year • Tech update costs are estimated to increase by 2% per year Revenue - revenue projections have been estimated as are follows: Y2 20 Y3 6 4 3 The discount rate used by BioMet is 4.5% per annum. Task Y3 22 in Y4 6 4 3 Y4 25 the Y5 6 4 3 Y5 30 table. 1. Prepare a cashflow forecast and use investment appraisal techniques to calculate Net Present Value (NPV), Return on Capital (ROC) and Payback Period (PB) for…
- Romanos Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $5,000,000 for the year. Laura Berenstein, staff analyst at Romanos, is preparing an analysis of the three projects under consideration by Chester Romanos, the company's owner. Data Table A B C D 1 Project A Project B Project C 2 Projected cash outflow 3 Net initial investment $3,000,000 $2,100,000 $3,000,000 4 Projected cash inflows 5 Year 1 $1,200,000 $1,200,000 $1,700,000 6 Year 2 1,200,000 600,000 1,700,000 7 Year 3 1,200,000 500,000 200,000 8 Year 4 1,200,000 100,000 9 Required rate of return 10% 10% 10% 1. Because the company's cash is limited, Romanos thinks the payback method should be used to choose between the capital budgeting projects. a. What are the…2) solve following questions a) Determine the fixed capital investment of the acetic acid producing facility, which was established in 2020 with a capacity of 15 million kg/year. b) 2 million kg of product is produced annually in a chemical process. The annual product cost of this process is 4 million TL. If the annual production cost is 3 million TL, determine the general expenses for 1 kg of product.Halls Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $5,000,000 for the year. Laura Bentley, staff analyst at Halls, is preparing an analysis of the three projects under consideration by Caden Halls, the company's owner. Data Table A B C D 1 Project A Project B Project C 2 Projected cash outflow 3 Net initial investment $3,000,000 $2,100,000 $3,000,000 4 Projected cash inflows 5 Year 1 $1,200,000 $1,200,000 $1,700,000 6 Year 2 1,200,000 600,000 1,700,000 7 Year 3 1,200,000 500,000 200,000 8 Year 4 1,200,000 100,000 9 Required rate of return 6% 6% 6 1.. Calculate the payback period for each of the three projects. Ignore income taxes. Using the payback method, which projects should Halls choose?. Ignore income taxes. (Round your answers to…
- McGloire Construction is analyzing its capital expenditure proposals for thepurchase of equipment in the coming year. The capital budget is limited to $5,000,000 for theyear. Lori Alleyne, staff analyst at McGloire’s, is preparing an analysis of the three projectsunder consideration by Joyanne McGloire, the company’s owner. A B C D 1 Project A Project B Project C 2 Projected cash outflow 3 Net initial investment $3 000 000 $1 500 000 $4 000 000 4 5 Projected cash inflows 6 Year 1 $1 000 000 $400 000 $2 000 000 7 Year 2 1 000 000 900 000 2 000 000 8 Year 3 1 000 000 800 000 200 000 9 Year 4 1 000 000 100 000 10 11 Required rate of return 10% 10% 10% 1. Because the company’s cash is limited, McGloire thinks the payback methodshould be used to choose between the capital budgeting projects.a. List two benefits and two limitations of using the payback method to choosebetween projects? b. Calculate the payback…a project estimated initial cost is $113,000. The project is expected to generate the following cashflows for the first 4 years End of Years Net cashflows $20,000 $33,000 -$27,500 $41,500 If the company is MARR is 12%, using NPW/NFW analysis is the project profitable in the first 4 years?A project proposal submitted to you for evaluation follow: Investment, including depreciable assets of P495,000 with economic life of six years) - Php 865,000 Annual sales revenue - PhP 750,00 Variable cost of sales - 43.5% Annual cash operating costs - 295,000 Income tax rate - 25% Required: a. Annual cash return, payback period and internal rate of return. b. If the corporate cost of capital is 8%, should the project be implemented ?
- Required information A project has a first cost of $670,000, a salvage value of 27% of the first cost after 3 years, and annual (GI-OE) of $275,000. Assume the company has a Te of 37%. Determine the approximate after-tax rate of return (ROR). The after-tax rate of return (ROR) is determined to beAssume that a company is considering a $2,400,000 capital investment in a project that would earn net income for each of the next five years as follows: Sales Variable expenses Contribution margin $ 1,900,000 800,000 1,100,000 12:46 Fixed expenses: Out-of-pocket operating costs. $ 300,000 Depreciation 400,000 700,000 Net operating income $ 400,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. If the company's discount rate is 21%, then the project's net present value is closest toA company has two projects that are under evaluation. The project investment costs, annual projected cash flows, and required rates of return are shown below: Project 1 Project 2 Rate of Return: 0.065 0.065 Project Cost: -$1,397,654 -$1,619,835 Year 1 $245,367 $267,345 Year 2 $302,542 $343,563 Year 3 $316,543 $367,834 Year 4 $367,843 $432,098 Year 5 $450,425 $589,435 Compute the NPV for each project using Microsoft Excel NPV's function. Be sure to show your work. Which project should be pursued? Why?