3. A company functioning from a rented building, decides to buy a new building for its head office. The cost of new building including furniture and fixture is RO 3 million which will be financed with a loan of RO 2 million. The monthly loan installment would be RO 100,000. New building will be depreciated @ 5% annually. Prior to this transaction: The original rental payment was RO 140,000/-(Fixed). Sales = 10 million, Fixed costs = 7 million, Variable costs = 2 million Calculate the profit and loss and also break-even point before and after the transaction.

3. A company functioning from a rented building, decides to buy a new building for its head office. The cost of new building including furniture and fixture is RO 3 million which will be financed with a loan of RO 2 million. The monthly loan installment would be RO 100,000. New building will be depreciated @ 5% annually. Prior to this transaction: The original rental payment was RO 140,000/-(Fixed). Sales = 10 million, Fixed costs = 7 million, Variable costs = 2 million Calculate the profit and loss and also break-even point before and after the transaction.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The overall cost of the machine is P1,200,370. Molemi Group has P900,000 in the bank. The useful life of the machine is estimated to be 10 years and the policy is depreciated using diminishing balance at 10%. Let's say Molemi Group chooses to construct an office and shop with the money they have, which would cost the same as the machine above, and borrows the remainder from the bank at 7% interest over two years. The money is invested at 5% per year six months before construction starts. How would it be shown in the first year's financial statements?
A company purchase a piece of manufacturing equipment for an additional income. The expected income is $4,500 per semester. Its useful ife is 9 years. Expenses are estimated to be $500 semiannually if the purchase price is $44,000 and there is a salvage value of $4,500, what is the prospective rate of return (RR) of this investment? The MARR is 10% compounded semiannually Oa IRR-602% semiannual Oh IRR-3% semiannual ORR-12% semiannual Od IRR-6.23% semiannual
5- A hotel has 300 rooms and an annual fixed cost of R$ 2,800,000.00 and variable operating costs of R$ 120.00 per occupied room, that is, per day-room. The hotel operates 365 days a year and is subject to a 15% income tax. Required: What is the minimum price that must be charged per night for the hotel to give an annual return of 12% on the investment made by the partners in its construction. The amount invested was R$ 10,000,000.00. Assume an occupancy rate of 30%. * a) R$ 241.46b) R$ 205.24c) R$ 284.43d) R$ 241.77
Junker Rental Car has a contract with a garage for major repair service for $450 per car, every 6 months. Management estimates that for $350,000, the company could have its own facility, financed at 8% interest for 20 years, and a salvage value of $20,000. They will do their own car repairs at a cost of $200 per car, every 6 months. Ignoring taxes and other economic factors, what is the minimum number of cars needed to make the change feasible?
Q4. Al Dhahabi Mills Ltd. purchases a machinery which costs RO 20,000. The useful life of the machine is 10 years and the annual rate of depreciation is 8% per annum, depreciation being calculated on WDV method. After 10 years, the existing machine has to be replaced by a new one which will cost 250% more than the book value of the existing machine at that time. a) If company sells existing machine at scrap value, What is the extra amount the company will require at the end of 10th year to replace the existing machine by a new one? b) Do you agree with company's decision to sell the existing machine after 10 years and buy new one. Give reasons to your answer
Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase the washer for $7,200 and sell its old washer for $2,500. The new washer will last for 6 years and save $1,700 a year in expenses. The opportunity cost of capital is 15%, and the firm’s tax rate is 21%. a. If the firm uses straight-line depreciation over a 6-year life, what are the cash flows of the project in years 0 to 6? The new washer will have zero salvage value after 6 years, and the old washer is fully depreciated. (Negative amounts should be indicated by a minus sign.) b. What is project NPV? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. What is NPV if the firm investment is entitled to immediate 100% bonus depreciation? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
15. A company purchases a piece of equipment for $15,000. After nine years, the salvage value is $900. The annual insurance cost is 5% of the purchase price, the electricity cost is $600/yr, and the maintenance and replacement parts cost is $120/yr. The effective annual interest rate is 10%. Neglecting taxes, what is most nearly the present worth of the equipment if it is expected to save the company $4500 per year? (A) $2300 (B) $2800 (C) $3200 (D) $3500
You are analyzing a property that popped up on CREXI. Real estate taxes and management services cost 42,362 and 31,563, respectfully. Other expenses are 15,369. If your company’s required return is 10%, what must the average annual rent be over the next five years for you to purchase the property at $400,000 and obtain that 10%? Expenses grow at 2.5% per year. A. 189,500 B. 198,400 C. 201,300 D. 192,700 E. 209,500
A warehouse is bought at the capitalization ratio of 8.5% for $1,000,000. The buyer used a 65% LTV loan with 6% interest amortized over 15 years, with monthly payments. What is the expected before-tax cash flow for the first year of operations? $19,179 $5,485 Impossible to answer the question from the information provided. $65,821 $85,000
Please solve all questions

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