rate of return on their investment of capital in the proposed new bank‚ are they likely to proceed with their charter application given the above estimates? 2. Do problem 1 under the following assumptions: a tax rate of 30% and straight line depreciation of physical assets. 3. Hampton Savings Bank is considering the establishment of a new branch office at the corner of Queen Street and Victoria Boulevard. The savings association’s economics department projects annual operating revenues of $1
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expected to provide services to the company for a number of years. Except for land‚ plant assets decline in value over their useful lives. Plant assets are usually subject to depreciation. Depreciation methods are not covered in detail in this paper. The book value of plant assets is the cost of the asset less accumulated depreciation. This amount is not an indication of the market value of the asset‚ which may be much higher than the book value in most cases. The difference between the market and book
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Learning Team contains: Team Problems Prepare solutions to the following problems from the text: 1) Chapter 11: P11-10 (Comprehensive Depreciation Computations) Sheryl Crow Corporation‚ a manufacturer of steel products‚ began operations on October 1‚ 2006. The accounting department of Crow has started the fixed-asset and depreciation schedule presented on page 563. You have been asked to assist in completing this schedule. In addition to ascertaining that the data already on
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Chapter 20 Accounting Changes and Error Corrections True / False Questions 1. Most‚ but not all‚ changes in accounting principle are reported using the retrospective approach. True False 2. Prior years’ financial statements are restated when the prospective approach is used. True False 3. The after-tax cumulative effect on income is no longer required for changes in accounting principles. True False 4. Most changes in accounting principle require
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PYROLYSIS PLANT PROPOSED FINANCIAL ASPECTS ( 2 ton conversion per day--3 batches of 8 hours each‚ Assumption : 26 working days per month ) A. FIXED CAPITAL (i) Land and Building Deposit for 2250sqft 550‚000.00 Total 550‚000.00 (ii) Machinery & Equipment SI.No. Description Qty. Rate (Rs.) Value (Rs.) 1 2 tons conv. Machine 1 6‚820‚000.00 6‚820‚000.00 2 Office Furniture 10‚000.00 Taxes‚ licensing expenses‚ trasnportation
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Dealing with Operating Leases in Valuation Aswath Damodaran Stern School of Business 44 West Fourth Street New York‚ NY 10012 adamodar@stern.nyu.edu Abstract Most firm valuation models start with the after-tax operating income as a measure of the operating income on a firm and reduce it by the reinvestment rate to arrive at the free cash flow to the firm. Implicitly‚ we assume that the operating expenses do not include any financing expenses (such as interest expense on debt). While this assumption
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ACTG381 Sample Midterm Midterm 1 Name:_____________________________________________ Part 1: Multiple Choice (25 questions @ 3 pts ea. Suggested time 50 minutes) Use a scantron to fill in the letter corresponding to the “best” answer. 1. Which of the following properly describes a deferral? a. Cash is received after revenue is earned. b. Cash is received before revenue is earned. c. Cash is paid after expense is incurred. d. Cash is paid in the
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accountant would then record a debit to the rent expense account and a credit to the prepaid rent account in the amount of $1000‚ each month for the next three months. (Nobels‚ et al. 139) Another example of a prepaid transaction is recording the depreciation of plant assets. A plant asset is any asset the business has that may depreciate in value
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inventory 11‚700 Trucks 32‚000 Accum. depreciation-Trucks - Equipment 45‚000 Accum. depreciation-Equipment 12‚200 Accounts payable 5‚000 Estimated warranty liability 1‚400 Unearned services revenue - Interest payable - Long-term notes payable 15‚000 D. Buggs‚ Capital 59‚700 D. Buggs‚ Withdrawals 10‚000 Extermination services revenue 60‚000 Interest revenue 872 Sales (of merchandise) 71‚026 Cost of goods sold 46‚300 Depreciation expense-Trucks - Depreciation expense-Equipment - Wages expense
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class. The machinery is expected to have a salvage value of $25‚000 after 4 years of use. The new line would generate incremental sales of 1‚250 units per year for four years at an incremental cost of $100 per unit in the first year‚ excluding depreciation. Each unit can be sold for $200 in the first year. The sales price and cost are expected to increase by 3% per year due to inflation. Further‚ to handle the new line‚ the firm’s net operating working capital would have to increase by an amount
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