Maintenance money for an athletic complex has been sought. Mr. Kendall, the Athletic Director, would like to solicit a donation to cover all future expected maintenance costs for the building. These maintenance costs areexpected to be $1.2 million each year for the first five years, $1.5 million each year for years 6 through 10, and $1.7 million each year after that. (The building has an indefinite service life.)If the money is placed in an account that will pay 5% interest compounded annually, how large should the gift be?Click the icon to view the interest factors for discrete compounding when i = 5% per year.The gift should be $ million. (Round to two decimal places.)- XMore InfoSingle PaymentN12345678910CompoundAmountFactor(F/P, i, N)1.05001.10251.15761.21551.27631.34011.40711.47751.55131.6289PresentWorthFactor(P/F, i, N)0.95240.90700.86380.82270.78350.74620.71070.67680.64460.6139CompoundAmountFactor(F/A, i, N)1.00002.05003.15254.31015.52566.80198.14209.549111.026812.5779Equal Payment SeriesSinking PresentFundWorthFactorFactor(A/F, i, N)(P/A, i, N)1.00000.95240.48781.85940.31722.72320.23203.54600.18104.32950.14705.07570.12285.78840.10476.46320.09077.10780.07957.7217CapitalRecoveryFactor(A/P, i, N)1.05000.53780.36720.28200.23100.19700.17280.15470.14070.1295

Present value refers to the current valuation for a future sum. Investors determine the present…

Answered: Maintenance money for an athletic…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The accounting for contributions may depend on how they will be used.Green Hills County received the following two contributions during a year:• A developer (in exchange for exemptions to zoning restrictions) donated several acres of land that the county intended to convert to a park. The land had cost the developer $1.7 million. At the time of the contribution, its fair market value was $3.2 million. • A local resident donated several acres of land to the county with the understanding that the county would sell the land and use the proceeds to fund construction of a county health center. The land had cost the resident $2.5 million. The county sold the land intended for the health center for $3 million 30 days after the end of its fiscal year. 1. Prepare journal entries to record the contributions. Be sure to specify the appropriate fund in which they would likely be made.2. Comment on and justify any differences in the way you accounted for the two contributions.3. Comment on how…
The City of Chessie received two contributions during its current fiscal year: A developer contributed 10 acres of land as part of an agreement with the city to allow more houses to be built per acre than current zoning laws permit. The city will use the land to build a park. The developer purchased the land for $1.5 million. The fair value of the land at the time of the contribution was $1.9 million. · A local resident contributed 30 acres of land to the city. The city agreed that it would sell the land and use the proceeds to add a new wing to the city’s senior center. The resident paid $500,000 for the land. When it was contributed, it had a fair value of $1.5 million. The city sold the land to several developers a month after its fiscal year-end for $1.7 million. a. Prepare journal entries to record each of these contributions in the city’s general fund. b. Comment on and justify any differences in the way you recognized each of these transactions. c. Would your answer on the…
This year Southfork began work on a senior center to hold activities for its growing senior citizen population. It is to be financed by a $5,000,000 bond issue, a $500,000 grant, and a $500,000 General Fund transfer. The following transactions occurred during the current year: The General Fund transferred $500,000 to the Senior Center Capital Projects Fund. A plot of land was purchased for $400,000 in cash. (This cost had not been encumbered.) Preliminary planning and engineering costs of $95,000 were vouchered. (This cost had not been encumbered.) A contract was signed with Sunset Construction Company for the major part of the project on a bid of $4,950,000. The $5,000,000 bonds were issued at par. Temporary investments were purchased at a cost of $3,500,000. A payable was recorded for a $49,500 billing from the Water and Sewer enterprise fund for the cost of extending water pipes to the new building. (This cost had not been encumbered.) An invoice in the amount of $1,500,000 was…
On March 31, 2020, Capital Investment Advisers paid $4,530,000 for land with two buildings on it. The plan was to demolish Building 1 and build a new store (Building 3) in its place. Building 2 was to be used as a company office and was appraised at a value of $1,307,320. A lighted parking lot near Building 2 had improvements (Land Improvements 1) valued at $560,280. Without considering the buildings or improvements, the tract of land was estimated to have a value of $2,801,400. Capital incurred the following additional costs: Cost to demolish Building 1 $ 691,160 Cost of additional landscaping 270,020 Cost to construct new building (Building 3) 2,472,000 Cost of new land improvements near Building 2 (Land Improvements 2) 253,800 Required:1. Allocate the costs incurred by Capital to the appropriate columns and total each column. 2. Prepare a single journal entry dated March 31, 2020, to record all the incurred costs, assuming they were paid in…
Neighboring parishes in Louisiana have agreed to pool road tax resources already designated for bridge refurbishment. At a recent meeting, the engineers estimated that a total of $500,000 will be deposited at the end of next year into an account for the repair of old and safety-questionable bridges throughout the area. Further, they estimate that the deposits will increase by $100,000 per year for only 9 years thereafter, then cease. Determine the equivalent (a) present worth and (b) annual series amounts, if public funds earn at a rate of 5% per year. Draw also the cash flow diagram
Scofield City received a donation from the estate of the late Lisa O’Reilly to be used to support the city’s public library. The gift consisted of $200,000 cash and a portfolio of securities with a market value of $350,000. The securities have a book value of $250,000. The donor stipulated that the principal of the gift, including investment gains (realized and unrealized) but excluding investment losses, must be kept intact. The income must be used to care for and maintain the book collection at the newly renamed O’Reilly Public Library. All appropriate costs, including investment losses, may be charged against the revenues yearly to determine the amount available for the specified purposes. During the year, the city engaged in the following transactions on behalf of the library. Prepare the appropriate entries in the city’s permanent fund. a) Accepted the donation. b) Received dividends and interest of $18,000. c) Purchased securities for $200,000. d) Sold securities that were part…
V3. A school district considers two alternative plans for an athletic stadium. An engineer makes the following cost estimates for each: Concrete Bleachers. First cost, $350,000. Life is 90 years. Annual maintenance cost $2,500. Wooden Bleachers on Earth Fill. First cost, $200,000. Life is 90 years. Painting cost $12,000 every 10 years. New seats costs $40,000 every 15 years and new bleachers cost $100,000 every 30 years (don’t include replacing the bleachers in year 90). Compare equivalent uniform annual costs for a 90-year period using i = 7% compounded annually. (Which one would you choose?)
Caring Shop is a gift shop located in The Natural History Museum. Caring shop has annual sales revenue of $850,000. Additionally, the Natural History museum has investment income of $550,000 from its endowment, and an annual operating budget of $3 million. Both the income from the gift shop and the endowment income are used to support the exempt purpose of the museum. The balance of funding required for annual operations is provided through admission fees. Dan Nolan, a new board member, does not understand why the museum is subject to tax at all, particularly because all of the entity's profits are used in carrying out the mission of the museum. Assume instead that the endowment income is reinvested in the endowment fund, rather than being used to support annual operations. Calculate the amount of unrelated business income.
In response to a petition signed by the property owners of Riverdale Subdivision, the city of Pewaukee will oversee the installation of sidewalks, curbs, and gutters in the subdivision, to be accounted for in the city’s capital projects fund. Pewaukee reports on a calendar-year basis. Construction is estimated to cost $900,000 and will be financed by a $100,000 county grant, a $50,000 transfer from the city’s general fund, and special assessments of $750,000 to be levied against subdivision property owners. One-third of the levy is to be due on February 1 of each year, starting with 2018. The first $250,000 installment will be received by the capital projects fund directly. The remaining installments will be collected by the debt service fund and will be used to service the related bond debt. The project is to begin on January 15, 2018, and is to take 18 months to complete. It is estimated that 70% of the work will be completed during 2018.To cover construction costs, a 6%, $500,000…

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