Accounting Chapter 25 Homework The Essay Answer Will Not Graded Enter

subject Type Homework Help
subject Pages 10
subject Words 1929
subject Authors Carl S. Warren, James M. Reeve, Jonathan Duchac

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An asterisk (*) will appear to the right, immediately above, or immediately below an incorrect entry.
The essay answer will not be graded.
Enter a zero in cells you would otherwise leave blank.
1.
Proposal A: -year, -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1
Year 2
Year 3
Year 4
Proposal B: -year, -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1
Year 2
Year 3
Year 4
Proposal C: -year, -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1
Year 2
Year 3
Year 4
Proposal D: -year, -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1
Year 2
Year 3
Year 4
Problem 25(10)-6A
Name:
Section:
Payback Period
0%
[Key code here]
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2.
Proposal A:
Proposal B:
Proposal C:
Proposal D:
3.
Cash Payback Period Average Rate Accept for
Proposal Years Months of Return
A
B
C
D
4., 5.
Present Present
Value of Net Cash Value of Net
$1 at 15% Flow =Cash Flow
Year 1
Year 2
Year 3
Year 4
Year 5
Total
Amount to be invested
Net present value
Present value index
Present Present
Value of Net Cash Value of Net
$1 at 15% Flow =Cash Flow
Net Present Value and Present Value Index
=
=
Average Rate of Return
=
=
Year 1
Year 2
Year 3
Year 4
Year 5
Total
Amount to be invested
Net present value
Present value index
6., 7.
Based on net present value calculated in Part 4, the proposals should be ranked as follows:
Rank 1
Rank 2
Based on present value index calculated in Part 5, the proposals should be ranked as follows:
Rank 1
Rank 2
8.
[Key essay answer here]
page-pf4
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1.
Proposal A: 3 -year, 6 -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1 full year 200,000$ 200,000$
Year 2 full year 200,000 400,000
Proposal B: 4 -year, 0 -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1 full year 90,000$ 90,000$
Year 2 full year 90,000 180,000
Proposal C: 2 -year, 0 -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1 full year 55,000$ 55,000$
Year 2 full year 53,000 108,000
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1 full year 180,000$ 180,000$
Payback Period
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Problem 25(10)-6A
Name:
Solution
Section:
page-pf5
2.
Proposal A:
$240,000 5
Proposal B:
$20,000 5
$320,000 2
Proposal C:
Proposal D:
3.
Cash Payback Period Average Rate Accept for
Proposal Years Months of Return
A 3 6 14.1% Reject
B 4 0 2.5% Reject
4., 5.
Present Present
Value of Net Cash Value of Net
$1 at 15% Flow =Cash Flow
Year 1 0.870 55,000$ 47,850$
Year 2 0.756 53,000 40,068
Year 3 0.658 50,000 32,900
Net Present Value and Present Value Index
Average Rate of Return
2.5%
=
Proposal C:
page-pf6
Present Present
Value of Net Cash Value of Net
$1 at 15% Flow
=Cash Flow
Year 1 0.870 180,000$ 156,600$
Year 2 0.756 180,000 136,080
Year 3 0.658 160,000 105,280
6., 7.
Based on net present value calculated in Part 4, the proposals should be ranked as follows:
Rank 1
Based on present value index calculated in Part 5, the proposals should be ranked as follows:
Rank 1
8.
Proposal D
Proposal C
The present value indexes indicate that although Proposal D has the larger net present value, it is not as
attractive as Proposal C in terms of the amount of present value per dollar invested. Proposal D requires the
Proposal D:
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The essay answer will not be graded.
Enter a zero in cells you would otherwise leave blank.
1.
Proposal A: -year, -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1
Year 2
Year 3
Year 4
Proposal B: -year, -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1
Year 2
Year 3
Year 4
Proposal C: -year, -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1
Year 2
Year 3
Year 4
Proposal D: -year, -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1
Year 2
Year 3
Year 4
Problem 25(10)-6B
Name:
Section:
Payback Period
0%
[Key code here]
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Instructions
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2.
Proposal A:
Proposal B:
Proposal C:
Proposal D:
3.
Cash Payback Period Average Rate Accept for
Proposal Years Months of Return
A
B
C
D
4., 5.
Present Present
Value of Net Cash Value of Net
$1 at 12% Flow =Cash Flow
Year 1
Year 2
Year 3
Year 4
Year 5
Total
Amount to be invested
Net present value
Present value index
Present Present
Value of Net Cash Value of Net
$1 at 12% Flow =Cash Flow
Net Present Value and Present Value Index
=
=
Average Rate of Return
=
=
Year 1
Year 2
Year 3
Year 4
Year 5
Total
Amount to be invested
Net present value
Present value index
6., 7.
Based on net present value calculated in Part 4, the proposals should be ranked as follows:
Rank 1
Rank 2
Based on present value index calculated in Part 5, the proposals should be ranked as follows:
Rank 1
Rank 2
8.
[Key essay answer here]
page-pfa
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Enter a zero in cells you would otherwise leave blank.
1.
Proposal A: 4 -year, 0 -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1 full year 120,000$ 120,000$
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1 full year 100,000$ 100,000$
Proposal C: 3 -year, 6 -month cash payback period
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1 full year 100,000$ 100,000$
Year 2 full year 90,000 190,000
Net Cash Cumulative
Year and Months Flow Net Cash Flows
Year 1 full year 200,000$ 200,000$
Year 2 full year 180,000 380,000
Payback Period
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Problem 25(10)-6B
Name:
Solution
Section:
page-pfb
2.
Proposal A:
$60,000 5
$450,000 2
Proposal B:
Proposal D:
$220,000 5
$540,000 2
3.
Cash Payback Period Average Rate Accept for
Proposal Years Months of Return
A 4 0 5.3% Reject
B 2 4 18.0% Accept
4., 5.
Present Present
Value of Net Cash Value of Net
$1 at 12% Flow =Cash Flow
Year 1 0.893 100,000$ 89,300$
Year 2 0.797 80,000 63,760
Year 3 0.712 60,000 42,720
Net Present Value and Present Value Index
5.3%
=
Average Rate of Return
=
16.3%
Proposal B:
page-pfc
Present Present
Value of Net Cash Value of Net
$1 at 12% Flow
=Cash Flow
Year 1 0.893 200,000$ 178,600$
Year 2 0.797 180,000 143,460
Year 3 0.712 160,000 113,920
Year 4 0.636 120,000 76,320
6., 7.
Based on net present value calculated in Part 4, the proposals should be ranked as follows:
Rank 1
Based on present value index calculated in Part 5, the proposals should be ranked as follows:
Rank 1
8.
Proposal D
Proposal B
The present value indexes indicate that although Proposal D has the larger net present value, it is not as
Proposal D:
An asterisk (*) will appear to the right of an incorrect entry. The essay answer will not be graded.
Fill out the table completely, even after the payback period is reached for each product line.
a.
Initial investment:
Net Cash Cumulative Net Net Cash Cumulative Net
Flow Cash Flows Flow Cash Flows
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
The Liquid Soap product line achieves payback in
The Body Lotion product line achieves payback in
The product line is recommended, based on its shorter cash payback period.
b.
[Key essay answer here]
Liquid Soap
Body Lotion
[Key code here]
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Instructions
0%
Exercise 25(10)-6
Name:
Section:
page-pfe
An asterisk (*) will appear to the right of an incorrect entry. The essay answer will not be graded.
Fill out the table completely, even after the payback period is reached for each product line.
a.
Initial investment: 540,000$
Net Cash Cumulative Net Net Cash Cumulative Net
Flow Cash Flows Flow Cash Flows
Year 1 170,000$ 170,000$ 90,000$ 90,000$
Year 2 150,000 320,000 90,000 180,000
Year 3 120,000 440,000 90,000 270,000
The Liquid Soap product line achieves payback in
b.
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The cash payback periods are different between the two product lines because Liquid Soap earns
cash faster than does Body Lotion. Even though both products earn the same total net cash flow
over the eight-year planning horizon, Liquid Soap returns cash faster in the earlier years. The
Liquid Soap
Body Lotion
Year 4
Exercise 25(10)-6
Name:
Solution
Section:
ON
An asterisk (*) will appear to the right of an incorrect entry.
Present Present
Value of Net Cash Value of Net
$1 at 15%
Flow =Cash Flow
Year 1
Year 2
Year 3
Year 4
Year 4 (residual value)
Total
Amount to be invested
Net present value
Present Present
Value of Net Cash Value of Net
$1 at 15%
Flow =Cash Flow
Year 1
Year 2
Year 3
Year 4
Total
Amount to be invested
Net present value
The Processing Mill is as an investment.
The Electric Shovel is as an investment.
The is preferred if only one investment is possible.
0%
[Key code here]
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Exercise 25(10)-21
Name:
Section:
Score:
Key Code:
Instructions
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Processing Mill
Electric Shovel
page-pf10
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Present Present
Value of Net Cash Value of Net
$1 at 15% Flow =Cash Flow
Year 1 0.870 310,000$ 269,700$
Year 2 0.756 260,000 196,560
Year 3 0.658 260,000 171,080
Present Present
Value of Net Cash Value of Net
$1 at 15% Flow =Cash Flow
Year 1 0.870 330,000$ 287,100$
Year 2 0.756 325,000 245,700
The Processing Mill is as an investment.
Exercise 25(10)-21
Name:
Solution
Section:
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Score:
Instructions
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ON
Processing Mill
Electric Shovel
acceptable

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