Daimler Chrysler completed its first year of production of the Jeep Liberty in 2001. This production was in a new plant that cost $1.
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Daimler Chrysler completed its first year of production of the Jeep Liberty in 2001. This production was in a new plant that cost $1.2 billion Daimler Chrysler was assisted in financing this new plant by the federal government, state government, the City of Toledo, and Lucas County. The county pledged $2 million by 2002 to help the City of Toledo acquire and improve the site for the new plant. How would the county account for its $2 million expenditure?
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- Allied Food Products is considering expanding into the fruit juice business with a new fresh lemon juiceproduct. Assume that you were recently hired as assistant to the director of capital budgeting, and youmust evaluate the new project.The lemon juice would be produced in an unused building adjacent to Allied’s Fort Myers plant; Alliedowns the building, which is fully depreciated. The required equipment would cost $450,000, plus anadditional $38,000 for shipping and installation. In addition, inventories would rise by $40,000, whileaccounts payable would increase by $10,000. All of these costs would be incurred at t = 0. By a specialruling, the machinery could be depreciated under the MACRS system as 4-year property. The applicabledepreciation rates are 40%, 30%, 20%, and 10%.The project is expected to operate for 4 years, at which time it will be terminated. The cash inflows areassumed to begin 1 year after the project is undertaken (t = 1), and to continue out to t = 4. At the endof…The City of Santangelo received a $500,000 federal grant to acquire several buses to be used in its public transit system. The city paid $400,000 to acquire several buses. At year-end, $100,000 of the grant had not yet been used. During the year total depreciation on the buses was $40,000. Revenues for the public system were $600,000; operating expenses (other than depreciation) were $470,000. REQUIRED: Assuming the Public Transit Enterprise Fund began the year with unrestricted net assets of $420,000, prepare the following for the Public Transit Enterprise Fund. a)Statement of revenues, expenses, and changes in net position. b)Net position section of the statement of net position.In 2016, the city of Abu Dhabi collected $24 million in fines from motorists because of traffic violations caught by red-light cameras. The cost of operating the system was $14.5 million. The net profit, that is, profit after operating costs, is split equally (that is, 50% each) between the city and the operator of the camera system. What will be the rate of return over a 3-year period to the contractor that paid for, installed, and operates the system, if its initial cost was $10 million and the profit for each of the 3 years is the same as it was in 2016? Should the company invest in this project at MARR of 15% per year?
- Assume that, as a part of its economic development program, your governmental agency has committed to provide access to a new regional industrial park. This project must fund the construction of an on/off-interchange from an adjacent highway, a 2-mile length of 4-lane divided roadway, and a bridge that will cross a 500-foot wide river. The entire project is estimated to require 2 years to complete following planning & design.The roadway to be constructed is projected to cost $125,000 per lane mile. It will need to begin construction 12 months prior to the project’s estimated completion date. Your government controls the permitting process for the roadway and has already issued the necessary permits. The total roadway project will be paid for at its completionWooden Box, Corp. bought land on the outskirts of Portland, Oregon for its factory in 1912 for $10,000. The company built the factory for $100,000 and the building was fully depreciated, torn down and replaced for $350,000 about fifteen years ago, and is now right in the heart of a rehabilitation zone in the city (the city grew around it). Recently an investor approached Wooden Box, Corp. and offered to buy the factory and land for $4,000,000 because it could be turned into loft apartments. The investor presented a bone fide written offer with earnest money, but the board of the Wooden Box, Corp. refused the offer. Assuming the building was being depreciated straight-line over 30 years with a $50,000 salvage value, accumulated depreciation would now be about $150,000. What is the definition of fair market value, and how does it apply to this situation? How should the building and land be shown on the balance sheet? What principle are you following in your recommendation? Do you think…A Municipality needs a new fleet of busses. They have a choice between a diesel fuel powered fleet and a natural gas powered fleet. The Diesel fuel fleet has an initial cost of $50,000,000. The annual maintenance is $1,000,000 per year, each and every year of the 10 years life expectancy of the fleet. In addition, there will be a carbon emissions tax that starts at $250,000 in year 2, and increases by $250,000 each and every year after that. At the end of the ten years the busses can be sold for $5,000,000. The Natural Gas fleet can be purchased for $60,000,000. The annual maintenance is $800,000 per year. There is no carbon tax on the fleet. However, there is a 65% chance of a $5,000,000 one time "Special Maintenance cost at year 7. Because of certain toxic parts on the bus engines, the municipality will have to pay $5,000,000 and the end of the bus life to dispose of them. Use the present value approach to determine which fleet is more cost effective. The cost of money is 6% For the…
- Citco Company is considering investing up to $512,000 in a sustainability-enhancing project. Its managers have narrowed their choices to three potential projects. • Project A would redesign the production process to recycle raw materials waste back into the production cycle, saving on direct materials costs and reducing the amount of waste sent to the landfill. Project B would remodel an office building, utilizing solar panels and natural materials to create a more energy-efficient and healthy work environment. Project C would build a new training facility in an underserved community, providing jobs and economic security for the local community. Required: 1. Assuming the cost of capital is 12%, complete the table below by computing the payback period, NPV, profitability index, and internal rate of return. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) 2. Based strictly on the economic analysis, in which project should they invest?…The City of Waltham wants to obtain the value of its 99 year old City Hall property. Your firm has been engaged to provide an estimate of value. You will use the Cost Approach to determine value. You will be required to estimate reproduction or replacement cost new (specify which is appropriate and why) and proceed through the steps of the Cost Approach to complete the task. Cost Estimates (000 omitted): Cost of new construction: $153,000; Since the last renovation 30 years ago, physical deterioration: $22,000; functional obsolescence: $6,000; external obsolescence: $2,000; four (4) comparable land values have been identified for the valuation estimate: $49,000; $35,000; $40,000; $52,000. Show your answer and the steps of your analysis below:Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land 12 years ago for $3,776,276 in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent these facilities from a competitor instead. If the land were sold today, the company would net $3,278,390. An engineer was hired to study the land at a cost of $748,629, and her conclusion was that the land can support the new manufacturing facility. The company wants to build its new manufacturing plant on this land; the plant will cost $5,555,713 million to build, and the site requires $1,384,583 worth of grading before it is suitable for construction. What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project?