Concept introduction:
Marketable Securities are the securities which are liquid in nature and can be easily converted into cash.
Capital Assets are the assets that are generally long term asset i.e. having useful life for more than one year and the capital asset are generally not intended for sale in the normal course of business operations. These are generally properties (movable and immovable), tangible or in tangible, etc.
Requirement 1:
We have to determine the amount of annual cash flow of Google.
Concept introduction:
Concept introduction:
Marketable Securities are the securities which are liquid in nature and can be easily converted into cash.
Capital Assets are the assets that are generally long term asset i.e. having useful life for more than one year and the capital asset are generally not intended for sale in the normal course of business operations. These are generally properties (movable and immovable), tangible or in tangible, etc.
Requirement 2:
We have to determine the amount that Google invested in capital asset for year 2017.
Concept introduction:
Concept introduction:
Marketable Securities are the securities which are liquid in nature and can be easily converted into cash.
Capital Assets are the assets that are generally long term asset i.e. having useful life for more than one year and the capital asset are generally not intended for sale in the normal course of business operations. These are generally properties (movable and immovable), tangible or in tangible, etc.
Requirement 3:
We have to determine whether Google invested more in capital asset or Apple invested in capital asset for year 2017.
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Managerial Accounting
- Cash Payback Period, Net Present Value Method, and Analysis Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project are as follows: Plant Expansion Retail Store Expansion Year 1 2 3 4 5 Total Year 1 2 Each project requires an investment of $294,000. A rate of 15% has been selected for the net present value analysis. Present Value of $1 at Compound Interest 6% 10% 12% 15% 20% 0.893 0.870 0.833 0.797 0.756 0.694 3 4 5 $162,000 132,000 114,000 103,000 33,000 $544,000 6 7 8 9 10 Required: 0.909 0.826 $135,000 159,000 109,000 76,000 65,000 $544,000 0.943 0.890 0.840 0.751 0.792 0.683 0.747 0.621 0.705 0.564 0.665 0.627 0.592 0.558 0.712 0.658 0.636 0.572 0.567 0.497 0.507 0.432 0.513 0.452 0.376 0.467 0.404 0.327 0.424 0.361 0.284 0.386 0.322 0.247 1a. Compute the cash payback period for each project. Cash Payback Period 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 Plant Expansion Retail Store Expansion 1b. Compute the net present value.…arrow_forwardAFN EQUATION Refer to Problem 16-1. What additional funds would be needed if the companys year-end 2019 assets had been 4 million? Assume that all other numbers are the same. Why is this AFN different from the one you found in Problem 16-1? Is the companys capital intensity the same or different? Explain.arrow_forwardFirst United Bank Inc. is evaluating three capital investment projects using the net present value method. Relevant data related to the projects are summarized as follows: BranchOfficeExpansion ComputerSystemUpgrade ATMKioskExpansion Amount to be invested $686,053 $516,654 $295,458 Annual net cash flows: Year 1 411,000 288,000 177,000 Year 2 382,000 259,000 122,000 Year 3 349,000 230,000 89,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: 1. Assuming that the desired rate of return is 20%, prepare a net present value analysis for each project. Use the…arrow_forward
- Sunshine Corporation is reviewing an investment proposal. The initial cost of the investment is R52 500. The estimated cash flows and net profit for each year are presented in the schedule below. All cash flows are assumed to take place at the end of the year. Year Net cash flows Net profit1 R20 000 R2 5002 R17 500 R3 5003 R15 000 R4 5004 R12 500 R5 5005 R10 000 R6 500 The cost of capital is 12%.Required:Calculate the following:1. Payback Period 2. Net Present value 3. Accounting rate of returnarrow_forwardUse Table 8 to answer the next two questions. Assume the committed capital is $100, the management fee is 2.00%, and the carried interest is 20.00%. Year 2015 2016 2017 2018 2019 $5.40 What is the carried interest in 2019? Called-down Paid in capital Mgmt Fees $26 $31 $21 O $11.20 $9.12 $9.85 $10 $12 Table 8 Operating NAV before Carried NAV after Results Distributions Interest Distributions Distributions -$14 $6 $11 $41 $46 $5 $10arrow_forwardExample (1): You have the following data: Details 12/31/2020 1/1/2020 60000 80000 40000 150000 15000 50000 10000 20000 Fund Assets Debtors Goods Liabilities Creditors and you have available additional information: 1. Additions to the capital amounted to 100,000 dinars . 2. Withdrawals from the capital amounted to 40,000 dinars. Required: Extracting the result of the activity works on 31/12/2020.arrow_forward
- The capital investment committee of Iguana Inc. is considering two capital investments. The estimated operating income and net cash flows from each investment are as follows: Year Robotic AssemblerOperating Income Robotic AssemblerNet Cash Flow WarehouseOperating Income WarehouseNet Cash Flow 1 $55,000 $171,000 $116,000 $274,000 2 55,000 171,000 88,000 231,000 3 55,000 171,000 44,000 162,000 4 55,000 171,000 19,000 111,000 5 55,000 171,000 8,000 77,000 Total $275,000 $855,000 $275,000 $855,000 Each project requires an investment of $500,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 10% for purposes of the net present value analysis. Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279…arrow_forwardThe capital investment committee of Iguana Inc. is considering two capital investments. The estimated operating income and net cash flows from each investment are as follows: Year Robotic AssemblerOperating Income Robotic AssemblerNet Cash Flow WarehouseOperating Income WarehouseNet Cash Flow 1 $35,000 $65,000 $21,000 $51,000 2 25,000 55,000 21,000 51,000 3 20,000 50,000 21,000 51,000 4 15,000 45,000 21,000 51,000 5 10,000 40,000 21,000 51,000 Total $105,000 $255,000 $105,000 $255,000 Each project requires an investment of $150,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 12% for purposes of the net present value analysis. Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627…arrow_forwardThe capital investment committee of Arches Landscaping Company is considering two capital investments. The estimated operating income and net cash flows from each investment are as follows: Front-End Loader Greenhouse Year OperatingIncome Net CashFlow OperatingIncome Net CashFlow 1 $45,600 $149,000 $96,000 $238,000 2 45,600 149,000 73,000 201,000 3 45,600 149,000 36,000 142,000 4 45,600 149,000 16,000 97,000 5 45,600 149,000 7,000 67,000 Total $228,000 $745,000 $228,000 $745,000 Each project requires an investment of $480,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 15% for purposes of the net present value analysis. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5…arrow_forward
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- Fundamentals Of Financial Management, Concise Edi...FinanceISBN:9781337902571Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning