Kivi Service Stations is considering expanding its operations to include the greater Dubuque area. Rather than build new service stations in the Dubuque area, management plans to acquire existing service stations andconvert them into Kivi Outlets.Kivi is evaluating two similar acquisition opportunities. Information relating to each of these service stations is presented below:Estimated normal rate of return on netassetsJoe'sGarage20%$950,000Gas N'GoFair value of net identifiable assetsActual average net income for past fiveyearsb. Compute an estimated fair value for any goodwill associated with Kivi purchasing Gas N' Go. Base your computation upon an assumption that Kivi's management expects excess earnings to continue for four years.$220,00020%$980,000$275,000

Goodwill -"Goodwill" is an intangible asset that results from a company's consistent, long-term…

Answered: Kivi Service Stations is considering…

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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Cost recovery. Richardses' Tree Farm, Inc. purchased a new aerial tree trimmer for $93,000. It is classified in the property class category of a single-purpose agricultural and horticultural structure. Then the company sold the tree trimmer after four years of service. If a seven-year life and MACRS, was used for the depreciation schedule, what is the after-tax cash flow from the sale of the trimmer (use a 35% tax rate) if a. the sales price was $30,000? b. the sales price was $29,053.20? c. the sales price was $21,000? (Round to the nearest cent.) MACRS Fixed Annual Expense Percentages by Recovery Class Year 3-Year 5-Year 7-Year 10-Year 1 33.33% 20.00% 14.29% 10.00% 2 44.45% 32.00% 24.49% 18.00% 3 14.81% 19.20% 17.49% 14.40% 4 7.41% 11.52% 12.49% 11.52% 5 11.52% 8.93% 9.22% 6 5.76% 8.93% 7.37% 7…
7. Required information [The following information applies to the questions displayed below.]Falcon Crest Aces (FCA), Inc., is considering the purchase of a small plane to use in its wing-walking demonstrations and aerial tour business. Various information about the proposed investment follows: Initial investment $170,000 Useful life 10 years Salvage value $20,000 Annual net income generated $4,000 FCA's cost of capital 8% Assume straight line depreciation method is used. Help FCA evaluate this project by calculating each of the following: Net present value (NPV). (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar.) Net Present Value = ? (Tables are attached here as images)
please answer in text form and in proper format answer with must explanation , calculation for each part and steps clearly
Subject: accounting
Net present value method The following data are accumulated by Geddes Company in evaluating the purchase of $150,000 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $40,000 $77,500 Year 2 30,000 67,500 Year 3 16,500 54,000 Year 4 2,000 39,500 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet Assuming that the desired rate of return is 15%, determine the net present value for the proposal. If required, round to the nearest dollar. Net present value $ Would management be likely to look with favor on the proposal? , the net present value indicates that the return on the proposal is than the minimum desired rate of return of 15%.
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Net present value method The following data are accumulated by Geddes Company in evaluating the purchase of $130,000 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $46,000 $78,500 Year 2 29,000 61,500 Year 3 11,000 43,500 Year 4 5,000 37,500 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Assuming that the desired rate of return is 10%, determine the net present value for the proposal. If required, round to the nearest dollar. Net present value $ Would management be likely to look with favor on the proposal? Yes , the net present value indicates that the return on the proposal is greater than the minimum desired rate of return of 10%.

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