Home Properties is developing a subdivision that includes 360 home lots. The 240 lots in the Canyon section are below a ridge and do not have views of the neighboring canyons and hills; the 120 lots in the Hilltop section offer unobstructed views. The expected selling price for each Canyon lot is $43,000 and for each Hilltop lot is $105,000. The developer acquired the land for $2,400,000 and spent another $1,200,000 on street and utilities improvements. Assign the joint land and improvement costs of $3,600,000 to the Canyon section and the Hilltop section using the value basis of allocation. Note: Do not round your intermediate calculations. > Answer is not complete. Sales Value Percent of Sales Value Cost to Allocate Allocated Cost Numerator Denominator Canyon section Hilltop section $ 10,320,000 12,600,000 $ 10,320,000 $ 4,800,000 % of Sales Value 215.00% 12,600,000 4,800,000 (115.00)% Totals $ 22,920,000
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- Home Properties is developing a subdivision that includes 320 home lots. The 150 lots in the Canyon section are below a ridge and do not have views of the neighboring canyons and hills; the 170 lots in the Hilltop section offer unobstructed views. The expected selling price for each Canyon lot is $42,000 and for each Hilltop lot is $105,000. The developer acquired the land for $2,100,000 and spent another $3,000,000 on street and utilities improvements. Assign the joint land and improvement costs of $5,100,000 to the Canyon section and the Hilltop section using the value basis of allocation. (Do not round your intermediate calculations.) Canyon section Hilltop section Totals Sales Value Numerator Percent of Sales Value Denominator % of Sales Value 0 0 0 Cost to Allocate Allocated Cost Quantity of LotsHome Properties is developing a subdivision that includes 470 home lots. The 170 lots in the Canyon section are below a ridge and do not have views of the neighboring canyons and hills; the 300 lots in the Hilltop section offer unobstructed views. The expected selling price for each Canyon lot is $51,000 and for each Hilltop lot is $98,000. The developer acquired the land for $2,400,000 and spent another $2,000,000 on street and utilities improvements. Assign the joint land and improvement costs of $4,400,000 to the Canyon section and the Hilltop section using the value basis of allocation. Note: Do not round your intermediate calculations. Canyon section Hilltop section Totals Sales Value Numerator Percent of Sales Value Denominator % of Sales Value Cost to Allocato Allocated CostAPA is planning to expand its operations and plans to purchase a parcel of land on which to construct a building for their review center, which they will need 5 years hence. The current costs are: land: P2M; building: P3.5M. Since these are not needed immediately, the company plans to defer the purchase of the land and the construction of the building until they are needed. If the value of the land and the cost of the building are expected to appreciate at the rates of 10% and 8% per annum, respectively. What will be the total cost of the investment after 5 years? A. P8,580,275.74 B. P7,244,668.37 C. P8,363,668.27 D. None of these
- A developer owns a vacant site for which he recently paid $1,000,000. He intends to develop a 15,000 sq. ft. building which will cost a total of $110 per sq. ft. to build (hard and soft costs excluding land). What will the value of the property have to be (rounded to the nearest $10,000) once it is completed and leased if the developer's investors require an 8.0% return O $2,740,000 O $2,510,000 O $2,860,000 O $3,190,000Zelda Company owns a plot of land on which buried toxic wastes have been discovered. Since it will require several years and a considerable sum of money before the property is fully detoxified and capable of generating revenues, Zelda wishes to sell the land now. It has located two potential buyers: Buyer A, who is willing to pay $800,000 for the land now, and Buyer B, who is willing to make 20 annual payments of $120,000 each, with the first payment to be made 5 years from today. Assuming that the appropriate rate of interest is 9%, which should Zelda sell the land?Carey Company owns a plot of land on which buried toxic wastes have been discovered. Since it will require several years and a considerable sum of money before the property is fully detoxified and capable of generating revenues, Carey wishes to sell the land now. It has located three potential buyers: Buyer A, who is willing to pay $1,000,000 for the land now, Buyer B, who is willing to make 20 annual payments of $110,000 each starting from today. Buyer C, who is willing to make 10 annual payments of $220,000, but the payments will begin two years from today. Assuming that the appropriate rate of interest is 9%, to whom should Carey sell the land? Why? Please show your calculations to compare the present values of the three options.
- Nguyen, Inc., is considering the purchase of a new computer system (ICX) for $130,000. The system will require an additional $30,000 for installation. If the new computer is purchased, it will replace an old system that has been fully depreciated. The new system will be depreciated under the MACRS rules applicable to 7-year class assets. If the ICX is purchased, the old system will be sold for $20,000. The ICX system, which has a useful life of 10 years, is expected to increase revenues by $32,000 per year over its useful life. Operating costs are expected to decrease by $2,000 per year over the life of the system. The firm is taxed at a 40 percent marginal rate.a. What net investment is required to acquire the ICX system and replace the old system?b. Compute the annual net cash flows associated with the purchase of the ICX system.Louie's Leisure Products is considering a 4-year project which will require the purchase of $1.2 million in new equipment. The project will use existing land for a warehouse. The market value of the land is $1 million and is expected to remain unchanged in the future. The equipment will be depreciated straight-line to a book value of $0.2 million over the 4-year life of the project. Louie's expects to sell the equipment at the end of the project for 25% of its original cost. Annual sales from this project are estimated at $1.2 million. The operating cost is 25% of the sales revenue. Net working capital equal to 20% of sales will be required to support the project. The firm desires a 10% rate of return on this project. The tax rate is 40%. Should Louie's Leisure Products accept the project?The city of Columbia is considering extending the runways of its municipal airport so that commercial jets can use the facility. The land necessary for the runway extension is currently a farmland that can be purchased for $350,000. Construction costs for the runway extension are projected to be $600,000, and the additional annual maintenance costs for the extension are estimated to be $22,500. If the runways are extended, a small terminal will be constructed at a cost of $250,000. The annual operating and maintenance costs for the terminal are estimated at $75,000. Finally, the projected increase in flights will require the addition of two air traffic controllers at an annual cost of $100,000. Annual bemefits of the runway extension have been estimated as follows: Rental receipts from airlines leasing space at the facility $325,000 $65,000 Airport tax charged to passengers $50,000 $50,000 Convenience benefit for residents of Columbia Additional tourism dollars for Columbia Apply the…
- The city of Columbia is considering extending the runways of its municipal airport so that commercial jets can use the facility. The land necessary for the runway extension is currently a farmland that can be purchased for $350,000. Construction costs for the runway extension are projected to be $600,000, and the additional annual maintenance costs for the extension are estimated to be $22,500. If the runways are extended, a small terminal will be constructed at a cost of $250,000. The annual operating and maintenance costs for the terminal are estimated at $75,000. Finally, the projected increase in flights will require the addition of two air traffic controllers at an annual cost of $100,000. Annual benefits of the runway extension have been estimated as follows (shown): Apply the B–C ratio method with a study period of 20 years and a MARR of 10% per year to determine whether the runways at Columbia Municipal Airport should be extended.The city council is considering a proposal about purchasing a new landfill site. Both the current landfill and new landfill would be usable for the next 10 years. The purchase price is $279,000 and the preparatory work will cost $77,800. It is estimated that the new landfill will cost $51,000 less per year to operate than the current landfill. Assume a hurdle rate of 8%. Ignore tax impacts. Required: Calculate the net present value of the new landfill. Should the city council approve the project on financial grounds? Calculate the internal rate of return for the new landfill. Should the city council approve the project on financial grounds?Rader Railway is determining whether to purchase a new rail setter, which has a base price of $394,000 and would cost another $58,000 to install. The setter will be depreciated according to the MACRS 3-year class of assets, and it would be sold after three years for $196,000. Using the setter requires a $26,000 increase in net working capital. Although it would have no effect on revenues, the setter should save the firm $171,000 per year in before-tax operating costs (excluding depreciation). Rader's marginal tax rate is 40 percent, and its required rate of return is 13 percent. Should the setter be purchased? Do not round intermediate calculations. Round your answer to the nearest cent. Use a minus sign to enter a negative value, if any. The setter **(SHOULD/SHOULD NOT)** be purchased because the net present value, that is (Greater than/Less than/Equal to) is zero. $