2) The council members of a small town have decided that the earth levee that protects the townflooding should be rebuilt and strengthened. The town engineer estimates that the cost of thework at the end of the first year will be $85,000. He estimates that in subsequent years theannual repair costs will decline by $10,000 making the second-year cost $75,000; the thirdyear $65,000, and so forth. The council members want to know what the equivalent presentcost is for the first 5 years of repair work if annual effective interest is 4%.

The first step is to figure out the future value of each of the five years of expenses. We can use…

Answered: The council members of a small town…

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 city is installing a new swimming pool in the east end recreation centre. One design being considered is a reinforced concrete pool that will cost $5000000 to install. Thereafter, the inner surface of the pool will need to be refinished and painted every 10 years at a cost of $450000 per refinishing. Assuming that the pool will have essentially an infinite life, what is the present worth of the costs associated with the pool design? The city uses a MARR of 6%. Review the following table and calculate the present worth of the project for a +5% change in refinishing costs. Round your answer to the nearest dollar. Parameter Construction Costs Refinishing Costs MARR [%] -10% -5% Base Case +5% +10% $5000000 $450000 6 Present Worth of -10% -5% 0% +5% Costs +10% Changes to Construction Costs Changes to refinishing Costs Changes to MARR ????? ?
A city starts a solid waste landfill that it expects to fill to capacity gradually over a 12-year period. At the end of the first year, it is 7 percent filled. At the end of the second year, it is 17 percent filled. Currently, the cost of closure and postclosure is estimated at $1 million. None of this amount will be paid until the landfill has reached its capacity. Which of the following is true for the Year 2 government-wide financial statements? a. Expense will be $100,000 and liability will be $170,000. b. Both expense and liability will be $100,000. c. Expense will be $90,000 and liability will be $180,000. d. Both expense and liability will be zero.
On January 1, 2020, the City of Hastings creates a solid waste landfill that it expects to reach capacity gradually over the next 20 years. If the landfill were to be closed at the current time, closure costs would be approximately $1.65 million plus an additional $900,000 for postclosure work. Of these totals, the city must pay $63,900 on December 31 of each year for preliminary closure work. At the end of 2020, the landfill reaches 4 percent of capacity. At the end of 2021, the landfill reaches 18 percent of capacity. At the end of 2021, a reassessment is made. Experts determine total closure costs will be $1.85 million rather than $1.65 million. a. Assume the city views the landfill as an enterprise fund. What journal entries should the city make in 2020 and 2021 in preparing government-wide financial statements? b. Assume the city views the landfill as being within the general fund. What journal entries should the city make in 2020 and 2021 in preparing government-wide financial…
6 The City of Wade has a fiscal year ending June 30. Examine the following transactions for Wade: (A.) On 6/5/21, Wade opens a new landfill. The engineers estimate that at the end of 12 years the landfill will be full. Estimated costs to close the landfill are currently $4,800,000. (B.) On 6/18/21, Wade receives a donation of a vintage railroad steam engine. The engine will be put on display at the local town park. A fee will be charged to actually climb up into the engine. The engine has been valued at $650,000. (C.) On 6/30/21, Wade estimates that the landfill is 2% filled. Determine and prepare the general fund journal entries for the City of Wade for each lettered item for the purposes of preparing the fund financial statements.
The government has imposed a fine on JJ’s Place. The fine calls for annual payments of $60,000 one year from now, $70,000 two years from now, $75,000 three years from now, and $50,000 four years from now. The government plans to invest the funds until the final payment is collected and then donate the entire amount, including the investment earnings, to help the local community shelter. The government will earn 7.5 percent on the funds held. How much will the community shelter receive four years from today? Group of answer choices $328,572 $236,875 $277,491 $286,057 $281,748
A city government adds streetlights within its boundaries at a total cost of $336,000. These lights should burn for at least 12 years but can last significantly longer if maintained properly. The city develops a system to monitor these lights with the goal that 97 percent will be working at any one time. During the year, the city spends $50,200 to clean and repair the lights so that they are working according to the specified conditions. The city also spends another $87,600 to construct lights for several new streets. a. Prepare the entries assuming infrastructure assets are capitalized with depreciation recorded on government-wide financial statements. b. Prepare the entries assuming infrastructure assets are capitalized with government using the modified approach on government- wide financial statements. Complete this question by entering your answers in the tabs below. Required A Required B Prepare the entries assuming infrastructure assets are capitalized with depreciation recorded…
The board of directors of the Cortez Beach Yacht Club (CBYC) is developing plans to acquire more equipment for lessons and rentals and to expand club facilities. The board plans to purchase about $50,000 of new equipment each year and wants to begin a fund to purchase a $600,000 piece of property for club expansion. The club manager is concerned about the club’s capability to purchase equipment and expand its facilities. One club member has agreed to help prepare the following financial statements and help the manager ascertain whether the plans are realistic. Additional information follows the financial statements. CORTEZ BEACH YACHT CLUB Statement of Income (Cash Basis) For the Year Ended October 31 Year 9 Year 8 Cash revenues Annual membership fees $ 710,000 $ 600,000 Lesson and class fees 468,000 360,000 Miscellaneous 4,000 3,000 Total cash received $ 1,182,000 $ 963,000 Cash costs Manager’s salary and…
What is the bond, bond valuation, and interest rates of CVS in 2020?
Can some one please help me to answer the following question. PLEASE AND THANK YOU!!!!
Arlington Town uses an Internal Service Fund to account for its motor poolactivities. You have the following information:Automobiles: The Motor Pool uses two 6-passenger vans, each costing $90,000and each estimated to have a 5-year life when they were acquired in 2020.Driver salaries: The Motor Pool has a driver-administrator, who earns $90,000a year, and a driver, who earns $70,000.The town uses a rate of 33 percent (to cover benefits, including pensions)for planning purposes.Insurance: In 2020, the town purchased a 3-year automobile accident policyat a cost of $12,000.Fuel and maintenance costs: Based on experience, the driver-administratorestimates that total fuel and maintenance costs for the year will be $16,000.Billing units: To simplify its record keeping, the Motor Pool charges a fixed priceper trip. Arlington’s budget office estimates it will provide 1,600 trips to thetown’s departments in 2021.Arlington Town had the following transactions and events during January 2021:1.…
Voters of Valdez School District, a public school district, approved construction of a new high school at a cost not to exceed $20 million. The district will finance the construction by issuing $20 million of 6 percent term bonds payable in 20 years. Because the site had already been prepared, the school district began construction immediately but the bonds would not be issued for nearly a year. Shortly before the fiscal year-end, the school district borrowed $5 million from a local bank due in one year with interest at 6.2 percent. The note will be repaid from bond proceeds. The school district secured a financing agreement with the bank to convert the debt to a 10-year debt if the school district is unable to sell the bonds by the due date. At year-end, how should the $5 million note be displayed in the government-wide financial statements? A.) Notes payable-long term $5 million; B.) Notes payable-short term $5 million; C.) Nothing D.) None of above
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…

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