Looking for answers. I have attached images below. Thanks! Barry Cabs is a sole proprietorship that owns and operates one taxi cab. The company purchased its cab 5 years ago for $40,000. When itpurchased the cab it expected it to be useful for 8 years with a residual value of $5,000. Barry thinks he could sell the cab today for $14,000.Barry is considering replacing the old cab with a new, all-electric taxi. The all electric car would cost $60,000 and would have an expected usefullife of 8 years. Over its 8 year life, the cab would reduce annual operating costs (mostly gas and maintenance) by $8,000 per year for the first 6years, and $10,000 per year thereafter. After 8 years, it is expected the taxi would have a $2,000 residual value. Barry's cost of borrowing is 15%and assume no tax implications.Required:1 What is the payback period for replacing the exiting cab with the new electric taxi? (2 marks)2 What is the net present value of replacing the existing cab with the new electric one? (4 marks)3 What is the internal rate of return for replacing the existing cab with the new electric one? (2 marks)4 What is the profitability index for replacing the existing cab with the new electric one? (2 marks) Bloom Corp. produces one product that sells at $20 per unit and sells best on Valentine's Day and Mother'sDay. As a result peak sales occur in February and May of each year. Budgeted sales in units for the first sixmonths of the coming year are:MonthJanuaryUnits12,000FebruaryMarch|АprilMay32,00018,00034,00030,000June15,00025% of all sales are cash sales and the rest are on account. Past experience shows that the company collects25% of a month's credit sales in the month of sale. Another 65% of credit sales is collected in the monthfollowing sale, and the remaining 10% of credit sales is collected in the second month following sale. Baddebts are negligible and can be ignored.To ensure that sales volumes can be met, the company requires that ending inventory for a particular monthreflect 15% of next month's sales. Assume June 30 closing inventory will be 1,500 units.Required:a)Prepare a sales budget in dollars and a schedule of cash collections from sales, by month and in total, for the secondquarter (10 marks).b)If the company prepares a budgeted balance sheet as of June 30, compute the accounts receivable as of that date (5marks).c)Prepare a production budget by month and in total for the first quarter (5 marks).

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Barry Cabs is a sole proprietorship that owns and operates one taxi cab. The company purchased its cab 5 years ago for $40,000. When it purchased the cab it expected it to be useful for 8 years with a residual value of $5,000. Barry thinks he could sell the cab today for $14,000. Barry is considering replacing the old cab with a new, all-electric taxi. The all electric car would cost $60,000 and would have an expected useful life of 8 years. Over its 8 year life, the cab would reduce annual operating costs (mostly gas and maintenance) by $8,000 per year for the first 6 years, and $10,000 per year thereafter. After 8 years, it is expected the taxi would have a $2,000 residual value. Barry's cost of borrowing is 15% and assume no tax implications.

Barry Cabs is a sole proprietorship that owns and operates one taxi cab. The company purchased its cab 5 years ago for $40,000. When it purchased the cab it expected it to be useful for 8 years with a residual value of $5,000. Barry thinks he could sell the cab today for $14,000. Barry is considering replacing the old cab with a new, all-electric taxi. The all electric car would cost $60,000 and would have an expected useful life of 8 years. Over its 8 year life, the cab would reduce annual operating costs (mostly gas and maintenance) by $8,000 per year for the first 6 years, and $10,000 per year thereafter. After 8 years, it is expected the taxi would have a $2,000 residual value. Barry's cost of borrowing is 15% and assume no tax implications.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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