Your father wants to restore a '68 Chevelle. However, he is unsure if it is worth thework.He can pull a 350-small block engine from the junk yard at S400 and will onlyneed $200 in parts to get it running.A remanufactured transmission is $1,250 from a local parts store.He will do the interior (dash and seats) himself with $300 in materials.He plans $950 in tires, brakes, and suspension parts.The paint job will cost $650.He figures he can resell it at $40,000.The car is currently posted on an auto trader site for $25,000.1. What is the ROI (write as a percentage)?2. Is it a good idea (Yes or No, based on ROI)?

An investment in a job or an activity involves many types of expenses, from purchasing the material…

Your father wants to restore a '68 Chevelle. However, he is unsure if it is worth the work. He can pull a 350-small block engine from the junk yard at 400 and will only need $200 in parts to get it running. A remanufactured transmission is $1,250 from a local parts store. He will do the interior (dash and seats) himself with S300 in materials. He plans $950 in tires, brakes, and suspension parts. The paint job will cost $650. He figures he can resell it at $40,000. The car is currently posted on an auto trader site for $25,000. 1. What is the ROI (write as a percentage)? 2. Is it a good idea (Yes or No, based on ROI)?

Your father wants to restore a '68 Chevelle. However, he is unsure if it is worth the work. He can pull a 350-small block engine from the junk yard at 400 and will only need $200 in parts to get it running. A remanufactured transmission is $1,250 from a local parts store. He will do the interior (dash and seats) himself with S300 in materials. He plans $950 in tires, brakes, and suspension parts. The paint job will cost $650. He figures he can resell it at $40,000. The car is currently posted on an auto trader site for $25,000. 1. What is the ROI (write as a percentage)? 2. Is it a good idea (Yes or No, based on ROI)?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Ruth just graduated from college. Since she is starting her own business, it's time to upgrade from her clunker to a reliable vehicle. Ruth has the option to purchase a new car for her business at a cost of $21,528 (life of 7 years with no salvage value), estimating that it would help her bring in additional annual net operating cash flows of $10,400 over the life of the car. Determine the simple payback period and the IRR for this investment. Ruth expects her business income to be subject to a 30% tax rate. (Round simple payback perlod to 3 decimal places, eg. 15.256 and IRR to 2 decimal places, eg. 15.25%. Round Intermediate calculations to 2 decimal places, eg. 15.25) Simple payback period IRR years. %
just A.
Bill has just returned from a duck hunting trip. He brought home eight ducks. Bill's friend, John, disapproves of duck hunting, and to discourage Bill from further hunting, John presented him with the following cost estimate per duck: Camper and equipment: Cost, $11,000; usable for eight seasons; 14 hunting trips per season Travel expense (pickup truck): 100 miles at $0.40 per mile (gas, oil, and tires-$0.28 per mile; depreciation and insurance-$0.12 per mile) Shotgun shells (two boxes per hunting trip) Boat: Cost, $2,400, usable for eight seasons; 14 hunting trips per season Hunting license: Cost, $70 for the season; 14 hunting trips per season Money lost playing poker: Loss, $30 (Bill plays poker every weekend whether he goes hunting or stays at home) Bottle of whiskey: Cost, $10 per hunting trip (used to ward off the cold) Total cost Cost per duck ($244+ 8 ducks) $ 98 Complete this question by entering your answers in the tabs below. 40 40 21 5 30 10 $ 244 $ 30 Required: 1. Assuming…
Bill just returned from a duck hunting trip with eight ducks. Bill's friend, John, disapproves of duck hunting, and to discourage Bill from further hunting, John presented him with the following cost estimate per duck: Camper and equipment: Cost, $10,000; usable for eight seasons; 14 hunting trips per season Travel expense (pickup truck): $ 89 100 miles at $0.38 per mile (gas, oil, and tires-$0.20 per mile; depreciation and insurance-$0.18 per mile) 38 Shotgun shells (two boxes per hunting trip) 35 Boat: Cost, $2,160, usable for eight seasons; 14 hunting trips per season 19 Hunting license: 5 24 15 $ 225 $ 28 Cost, $70 for the season; 14 hunting trips per season Money lost playing poker: Loss, $24 (Bill plays poker every weekend whether he goes hunting or stays at home) Bottle of whiskey: Cost, $15 per hunting trip (used to ward off the cold) Total cost Cost per duck ($225 +8 ducks) Required: 1. Assuming the duck hunting trip Bill just completed is typical, what costs are relevant to a…
Scarlett is considering the purchase of a new Wolf gas range by Sub-Zero Group, Inc. to increase the quality of the food served in her restaurant. It will also enhance the cooking experience for her and her chefs, as they won't have to fuss with the finicky electric burners they currently use. However, the new range is expensive. It will cost $9,920 to buy and properly install. On the upside, it should last for at least 7 years, at which time Scarlett may consider trading it in for another new range. While her operating costs will not decrease as a result of this purchase, Scarlett will be able to generate additional gross margin of at least $1,510 in the first year. After that, she expects the additional gross margin to grow by 10% each year for the next 4 years, at which point it will become stable for the remainder of the 7- year life. She believes the new range will be worth $1,010 at the end of this 7-year period. Her current range can be salvaged today for $250. Click here to…
Seth Fitch owns a small retail ice cream parlor. He is considering expanding the business and has identified two attractive alternatives. One involves purchasing a machine that would enable Mr. Fitch to offer frozen yogurt to customers. The machine would cost $7,530 and has an expected useful life of three years with no salvage value. Additional annual cash revenues and cash operating expenses associated with selling yogurt are expected to be $6,070 and $850, respectively.Alternatively, Mr. Fitch could purchase for $9,960 the equipment necessary to serve cappuccino. That equipment has an expected useful life of four years and no salvage value. Additional annual cash revenues and cash operating expenses associated with selling cappuccino are expected to be $8,440 and $2,350, respectively.Income before taxes earned by the ice cream parlor is taxed at an effective rate of 20 percent.Required Determine the payback period and unadjusted rate of return (use average investment) for each…
Willie is a boat dealer. He pays 28250 for a boat and uses a 30% markup on cost. At what price should willie resell the boat?
A careful buyer is deciding whether to buy artificial Christmas trees or continue cutting down trees. The artificial tree costs him $34 and he can use it for 8 years after which it is thrown away as garbage. The other alternative is to continue cutting trees at a cost of $8 today, $9 next year, $10 the next year and so on during those same 8 years. If he buys the artificial tree, what is the return on investment?
You just bought a new luxury sports car for $125,000. Before you had time to get insurance, the car was wrecked. Weird Wally offers to take it off your hands for $10,000. You can then purchase a similar model for $128,000. A body-shop (with an excellent reputation) offers to rebuild the wrecked car for $90,000 and loan you a similar model while the vehicle is being rebuilt. Once rebuilt, the body-shop claims, it will "run like a new car and nobody will be able to tell the difference." What is the preferred course of action, from a financial point of view?
Seth Fitch owns a small retail ice cream parlor. He is considering expanding the business and has identified two attractive alternatives. One involves purchasing a machine that would enable Mr. Fitch to offer frozen yogurt to customers. The machine would cost $7,980 and has an expected useful life of three years with no salvage value. Additional annual cash revenues and cash operating expenses associated with selling yogurt are expected to be $6,010 and $840, respectively. Alternatively, Mr. Fitch could purchase for $9,960 the equipment necessary to serve cappuccino. That equipment has an expected useful life of four years and no salvage value. Additional annual cash revenues and cash operating expenses associated with selling cappuccino are expected to be $8,380 and $2,400, respectively. Income before taxes earned by the ice cream parlor is taxed at an effective rate of 20 percent. Required a. Determine the payback period and unadjusted rate of return (use average investment) for each…
Bill has just returned from a duck hunting trip. He brought home eight ducks. Bill's friend, John, disapproves of duck hunting, and to discourage Bill from further hunting, John presented him with the following cost estimate per duck: Camper and equipment: Cost, $11,000; usable for eight seasons; 14 hunting trips per season Travel expense (pickup truck): 100 miles at $0.38 per mile (gas, oil, and tires-$8.26 per mile; depreciation and insurance-50.12 per mile) Shotgun shells (two boxes per hunting trip) Boat: Cost, $2,080, usable for eight seasons; 14 hunting trips per season Hunting License: Cost, $40 for the season; 14 hunting trips per season Money lost playing poker: Loss, $36 (Bill plays poker every weekend whether he goes hunting or stays at home) Bottle of whiskey: Cost, $15 per hunting trip (used to ward off the cold) Total cost Cost per duck ($244 + 8 ducks) Complete this question by entering your answers in the tabs below. Camper and equipment Travel expense Shotgun shells…
William and Miller Brown run a real estate brokerage firm. They have just moved into a new building and want to add some outdoor digital signage to advertise the firm's services. The sign they are considering has two display areas that can display two different images at the same time and costs $104,800. It is expected to have a useful life of 4 years. In an effort to recoup the cost of the sign, William and Miller will rent one display panel to other tenants in the building for $39,646 a year. Electricity to power the sign is expected to be $870 per year. (a) Calculate the annual net operating income generated by the new sign. Annual net operating income 2$ eTextbook and Media