A community wants to create a park on some vacant property on the outskirts of the town (zoned commercial). They estimate the benefit to the community to be worth $1,500,000. Contractors have estimated a net cost to build the park and to rezone the property to be $2,300,00. Should they build the park? A. 0.65 and Yes B. 0.65 and No C. 1.53 and Yes D. 1.53 and No

A community wants to create a park on some vacant property on the outskirts of the town (zoned commercial). They estimate the benefit to the community to be worth $1,500,000. Contractors have estimated a net cost to build the park and to rezone the property to be $2,300,00. Should they build the park? A. 0.65 and Yes B. 0.65 and No C. 1.53 and Yes D. 1.53 and No

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 5TP: You own a construction company and have recently received a contract with the local school district...

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Question: A community wants to create a park on some vacant property on the outskirts of the town (zoned commercial). They estimate the benefit to the community to be worth $1,500,000. Contractors have estimated a net cost to build the park and to rezone the property to be $2,300,00. Should they build the park? A. 0.65 and Yes B. 0.65 and No C. 1.53 and Yes D. 1.53 and No
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What is the NPV of project B? Which project should comfy home choose?
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You own a construction company and have recently received a contract with the local school district to refurbish one of its elementary schools. You are given an up-front payment from the school district in the amount of $5 million. The contract terms extend from years 2018 to 2020. When would you recognize revenue for this payment? What method of accounting would you use for this construction project and why? What would be the benefits and challenges with your method selection? Give an example of your distribution selection and associated costs of the project (you may estimate based on other industry competitors). What might be some benefits and challenges associated with the other method of construction revenue recognition?
A city that operates automobile parking facilities is evaluating a proposal toerect and operate a structure for parking in its downtown area. Three designs for a facility to be built on available sites have been identified as follows, where all dollar figures are in thousands: At the end of the estimated service life, the selected facility would be torn down and the land would be sold. It is estimated that the proceeds from the resale of the land will be equal to the cost of clearing the site. If the city's interest rate is known to be 10%, which design alternative would be selected on the basis of the benefit-cost criterion?
As part of a community initiative, funding is being sought from potential contributors to sustain a public park's maintenance costs. You are considering donating to cover all future expected maintenance expenses for the park. The projected maintenance costs are $48,000 per year for the first five years, $60,000 per year from years 6 to 10, and $72,000 annually thereafter, assuming the park has an indefinite service life. If the funds are placed in an account with a 15% annual interest rate, what should be the size of your donation?
A builder has located a piece of property that she would like to buy and eventually build on. The land is currently zoned for four homes per acre, but she is planning to request new zoning. What she builds depends on approval of zoning requests and your analysis of this problem to advise her. With her input and your help, the decision process has been reduced to the following costs, alternatives, and probabilities: Cost of land: $3 million. Probability of rezoning: 0.40. If the land is rezoned, there will be additional costs for new roads, lighting, and so on, of $1 million. If the land is rezoned, the contractor must decide whether to build a shopping center or 1,400 apartments that the tentative plan shows would be possible. If she builds a shopping center, there is a 50 percent chance that she can sell the shopping center to a large department store chain for $5 million over her construction cost, which excludes the land; and there is a 50 percent chance that she can sell it to…