FOUNDATIONS OF FINANCE-MYFINANCELAB
10th Edition
ISBN: 9780135160619
Author: KEOWN
Publisher: PEARSON
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Chapter 14, Problem 10SP
a)
Summary Introduction
To determine: Net income in 2019.
b)
Summary Introduction
To determine: Net income in 2019 and addition to
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Consider the following cash flows on two mutually exclusive projects for the Bahamas
Recreation Corporation (BRC). Both projects require an annual return of 14 percent.
New Submarine
Deepwater Fishing
Year
Ride
0
-$875,000
1
330,000
2
480,000
3
440,000
-$1,650,000
890,000
730,000
590,000
a-1. Compute the IRR for both projects. (Do not round intermediate calculations and
enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Deepwater Fishing
Submarine Ride
19.16 %
17.50%
a-2. Based on the IRR, which project should you choose?
Deepwater Fishing
Submarine Ride
b-1. Calculate the incremental IRR for the cash flows. (Do not round intermediate
calculations and enter your answer as a percent rounded to 2 decimal places,
e.g., 32.16.)
Incremental IRR
14.96 %
b-2. Based on the incremental IRR, which project should you choose?
Submarine Ride
Deepwater Fishing
What is the possibility that cases are not readily bounded but may have blurry definitions?
How to address Robert Yin statement and how to resolve the ‘not readily bound’ case? Please help explain.
An investment that is worth $44,600 is expected to pay you $212,205 in X years and has an expected return of 18.05 percent per year.
What is X?
Chapter 14 Solutions
FOUNDATIONS OF FINANCE-MYFINANCELAB
Ch. 14 - Prob. 1RQCh. 14 - Discuss the shortcomings of the percent of sales...Ch. 14 - Prob. 3RQCh. 14 - Prob. 4RQCh. 14 - Prob. 1SPCh. 14 - Prob. 2SPCh. 14 - (Financial forecastingdiscretionary financing...Ch. 14 - (Financial forecastingpercent of sales) Next years...Ch. 14 - Prob. 5SPCh. 14 - (Percent of sales forecasting) Which of the...
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- An investment that is worth $27,200 is expected to pay you $62,280 in 5 years and has an expected return of X percent per year. What is X?arrow_forwardDon't used Ai solution and don't used hand raitingarrow_forward3-7. (Working with an income statement and balance sheet) Prepare a balance sheet and income statement for Kronlokken Company from the following scrambled list of items. a. Prepare a common-sized income statement and a common-sized balance sheet. Interpret your findings. Depreciation expense $66,000 Cash 225,000 Long-term debt 334,000 Sales 573,000 Accounts payable 102,000 General and administrative expense 79,000 Buildings and equipment 895,000 Notes payable 75,000 Accounts receivable 153,000 Interest expense 4,750 Accrued expenses 7,900 Common stock 289,000 Cost of goods sold 297,000 Inventory 99,300 Taxes 50,500 Accumulated depreciation 263,000 Prepaid expenses 14,500 Taxes payable 53,000 Retained earnings 262,900 ||arrow_forward
- x3-3. (Preparing an income statement) Prepare an income statement and a common- sized income statement from the following information. MyLab Sales Cost of goods sold General and administrative expenses Depreciation expenses Interest expense Income taxes $525,000 200,000 62,000 8,000 12,000 97,200arrow_forward3-9. (Working with a statement of cash flows) Given the following information, prepare LO3 a statement of cash flows. Increase in accounts receivable Increase in inventories Operating income Interest expense Increase in accounts payable Dividends $25 30 75 25 25 15 20 Increase in net fixed assets 23 Depreciation expense Income taxes 12 17 Beginning cash 20 Increase in common stockarrow_forward3-4. (Preparing a balance sheet) Prepare a balance sheet from the following informa- LO2 tion. What is the net working capital and debt ratio? Cash $50,000 Account receivables 42,700 Accounts payable 23,000 Short-term notes payable 10,500 Inventories 40,000 Gross fixed assets 1,280,000 Other current assets 5,000 Long-term debt 200,000 Common stock 490,000 Other assets 15,000 Accumulated depreciation 312,000 Retained earnings ? MyLabarrow_forward
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