Question 1
7. Only a cash basis partnership is concerned with the problem of ?unrealized receivables?. True or False 17. Rachael and Ray form an equal partnership R&R on January 1, 20X1. Rachael contributes $100,000 in exchange for her one-half interest; Ray contributes land worth $100,000. Rays adjusted basis in the land is $30,000. Which of the following statements is accurate with respect to this exchange? a. Neither Rachael, Ray, nor R&R recognize any gain or loss on the transfer. b. Ray recognizes $70,000 gain on the transfer. c. R&R recognizes $70,000 gain on the transfer. d. b. and c. 18. Wayne owns 60 percent and Larry owns 40 percent of the profits and losses of the WL partnership. On January 1, 20X4, the basis in their respective partnership interests is $60,000 and $10,000. During 20X4, WL reports taxable ordinary income of $50,000 and has the following separately stated items: qualified dividend income of $1,000; taxable interest income of $2,600; charitable contributions of $3,000; and Sec. 179 expense of $20,000. During the year, partnership liabilities decreased by $25,000 and there were no distributions made to either partner. On December 31, 20X4, which of the following correctly states the basis in each partners interest in WL? a. Wayne: $63,360 and Larry: $12,240 b. Wayne: $65,520 and Larry: $12,680 c. Wayne: $90,360 and Larry: $30,240 d. Wayne: $92,160 and Larry: $31,440 20. On April 1, George Hart, Jr. acquired a 25 percent interest in the Wilson, Hart, and Company partnership by gift from his father. The 25 percent partnership interest had been acquired by a $50,000 cash investment by Hart, Sr. 10 years ago. The fair market value of Hart, Sr.?s partnership interest was $60,000 at the time of the gift. Hart, Jr. sold the 25 percent interest for $85,000 on December 17. What type and amount of capital gain should Hart, Jr. report on his tax return? a. Long-term capital gain of $25,000 b. Short-term capital gain of $25,000 c. Long-term capital gain of $35,000 d. Short-term capital gain of $35,000 23. Magda Shaw?s adjusted basis for her partnership interest in Shaw & Zack was $60,000. In complete liquidation of her interest in Shaw & Zack, Shaw received cash of $44,000 plus the following assets: Adjusted Basis to Shaw & Zack Fair Market Value to Shaw & Zack Land?Tract A $24,000 $10,000 Land?Tract B 8,000 8,000 How much is Shaw?s basis for Tract B? a. $16,000 b. $8,000 c. $ 7,111 d. $ 4,000
Question 2
Focus of the Summary Marketing Plan: Choose a marketing plan project from any one of the topics listed below: *Using Aleve now that Vioxx and Bextra have been taken off the market. *Use of genuine Harley parts for repairs as opposed to less expensive after-market parts. *Flying on a full-service airline as opposed to a low-fare discount carrier. *Staying with Cable-based television instead of switching to satellite TV. *Pursuing an online MBA program over an on-site program. The Summary Marketing Plan must incorporate at least 4 resources, 2 from ProQuest. Each paper will contain the following elements: 0.1 Company Overview 0.2 Executive Summary of Marketing Plan 1.0 Description of the Target Market 2.0 Description of Competitors 3.0 Description of Product or Service 4.0 Marketing Budget 5.0 Description of Location 6.0 Pricing Strategy 7.0 Summary and Implementation Plan Writing the Summary Paper The Summary Paper: Must be eight (8) double-spaced-pages in length, exclusive of Appendix, References, Exhibits, etc., and formatted according to APA style as outlined in the approved APA style guide. Must address the topic of the paper with critical thought. Must use APA style as outlined in the approved APA style guide to document all sources. Must include, on the final page, a Reference List that is completed according to APA style as outlined in the approved APA style guide and incorporates at least 4 resources, 2 from ProQuest.,Will you do this?,Thank you!
Question 3
7. Two projects being considered are mutually exclusive and have the following cash flows: If the required rate of return on these projects is 10 percent, which would be chosen and why? (Points : 1) Project B because of higher NPV. Project B because of higher IRR. Project A because of higher NPV. Project A because of higher IRR. Neither, because both have IRRs less than the cost of capital. 8. The Oneonta Chemical Company is evaluating two mutually exclusive pollution control systems. Since the company's revenue stream will not be affected by the choice of control systems, the projects are being evaluated by finding the PV of each set of costs. The firm's required rate of return is 13 percent, and it adds or subtracts 3 percentage points to adjust for project risk differences. System A is judged to be a high-risk project (it might end up costing much more to operate than is expected). The appropriate risk-adjusted discount rate that should be used to evaluate System A is (Points : 1) 10%; this might seem illogical at first, but it correctly adjusts for risk where outflows, rather than inflows, are being discounted. 13%; the firm's cost of capital should not be adjusted when evaluating outflow only projects. 16%; since A is more risky, its cash flows should be discounted at a higher rate, because this correctly penalizes the project for its high risk. Somewhere between 10% and 16%, with the answer depending on the riskiness of the relevant inflows. Indeterminate, or, more accurately, irrelevant, because for such projects we would simply select the process that meets the requirements with the lowest required investment. 9. An insurance firm agrees to pay you $3,310 at the end of 20 years if you pay premiums of $100 per year at the end of each year of the 20 years. Find the internal rate of return to the nearest whole percentage point. (Points : 1) 9% 7% 5% 3% 11% 10. Whitney Crane Inc. has the following independent investment opportunities for the coming year: The IRRs for Project A and C, respectively, are: (Points : 1) 16% and 14% 18% and 10% 18% and 20% 18% and 13% 16% and 13%,Here it it. Thanks,I sent you a file but I guess it didn't go thru, so I copy and paste.. ***Cash Flow Required: Question 7: Year Project A Project B 0 -$50,000 -$50,000 1 $15,625 $0 2 $15,625 $0 3 $15,625 $0 4 $15,625 $0 5 $15,625 $99,500 Question 10: Project Cost Annual Cash Inflow Life (Years) IRR A $10,000 $11,800 1 B $5,000 $3,075 2 15% C $12,000 $5,696 3 D $3,000 $1,009 4 13%
Question 4
ABC Inc., a specialized equipment manufacturer, uses a job order costing system. The overhead is allocated to jobs on the basis of direct labor hours. The overhead rate is now $2,000 per direct labor hour. The design engineer thinks that this is illogical. The design engineer has stated the following: Our accounting system doesn?t make any sense to me. It tells me that every labor hour carries an additional burden of $2,000. This means that direct labor makes up only 5% of our total product cost, yet it drives all our costs. In addition, these rates give my design engineers incentives to ?design out? direct labor by using machine technology. Yet, over the past years as we have had less and less direct labor, the overhead rate keeps going up and up. I won?t be surprised if next year the rate is $2,500 per direct labor hour. I?m also concerned because small errors in our estimates of the direct labor content can have a large impact on our estimated costs. Just a 30-minute error in our estimate of assembly time is worth $1,000. Small mistakes in our direct labor time estimates really swing our bids around. I think this puts us at a disadvantage when we are going after business. Instructions: Answer the following questions using complete sentences, proper grammar, spelling and punctuation. On your submitted document, include each question. 1. What is the engineer?s concern about the overhead rate going ?up and up?? 2. What did the engineer mean about the large overhead rate being a disadvantage when placing bids and seeking new business? 3. What do you think is a possible solution?
Question 5
9.8 TERMINAL VALUE ANALYSIS. TERMINAL VALUE REFERS TO THE VALUATION ATTACHED TO THE END OF THE PLANNING PERIOD AND THAT CAPTURES THE VALUE OF ALL SUBSEQUENT CASH FLOWS. ESTIMATE THE VALUE TODAY FOR EACH OF THE FOLLOWING SETS OF FUTURE CASH FLOW FORECASTS : A. CLAYMORE MINING COMPANY ANTICIPATES THAT IT WILL EARN FIRM FREE CASH FLOWS (FCFs) OF $4 MILLION PER YEAR FOR EACH OF THE NEXT FIVE YEARS. MOREOVER, BEGINING IN YEAR 6, THE FIRM WILL EARN FCF OF $5 MILLION PER YEAR FOR THE INDEFINITE FUTURE. IF CLAYMORE S COST OF CAPITAL IS 10%, WHAT IS THE VALUE OF THE FIRM'S FUTURE CASH FLOWS ? B. SHAMELESS COMMERCE INC. HAS NO OUTSTANDING DEBT AND IS BEING EVALUATED AS A POSSIBLE ACQUISITION. SHAMELESS'S FCFs FOR THE NEXT FIVE YEARS ARE PROJECTED TO BE $1 MILLION PER YEAR, AND, BEGINNING IN YEAR 6, THE CASH FLOWS ARE EXPECTED TO BEGIN GROWING AT THE ANTICIPATED RATE OF INFLATION WHICH IS CURRENTLY 3% PER ANNUM. IF THE COST OF CAPITAL FOR SHAMELESS IS 10%, WHAT IS YOUR ESTIMATE OF THE PRESENT VALUE OF THE FCFs? C. DUSTIN ELECTRIC INC. IS ABOUT TO BE ACQUIRED BY THE FIRM'S MANAGEMENT FROM THE FIRM S FOUNDER FOR $15 MILLION IN CASH. THE PURCHASE PRICE WILL BE FINANCED WITH $10 MILLION IN NOTES THAT ARE TO BE REPAID IN $2 MILLION INCREMENTS OVER THE NEXT FIVE YEARS. AT THE END OF THIS FIVE -YEAR PERIOD, THE FIRM WILL HAVE NO REMAINING DEBT. THE FCFS ARE EXPECTED TO BE $3 MILLION A YEAR FOR THE NEXT FIVE YEARS. BEGINING IN YEAR 6, THE FCFS ARE EXPECTED TO GROW AT A RATE FO 2% PER YEAR INTO THE INDEFINITE FUTURE. IF THE UNLEVERED COST OF EQUITY FOR DUSTIN IS APPROXIMATELY 15% AND THE FIRM 'S BORROWING RATE ON THE BUYOUT DEBT IS 10% (BEFORE TAXES AT A RATE OF 30%), WHAT IS YOUR ESTIMATE OF THE VALUE OF THE FIRM ?
