Calculate the net present value based on the original estimates.

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Answer 1

Question

Chapter 24, Problem 4AP

(a)

To determine

Calculate the net present value based on the original estimates.

(b)

To determine

Calculate the net present value based on the revised estimates.

(c)

To determine

Discuss based on the worth of additional benefits, which project to be accepted.

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Zanzibar Limited entered into a lease agreement on July 1 2016 to lease somehighly customized hydraulic equipment to Kaizen Limited. The fair value of theequipment as at that date was $ 700,000. The terms of the lease agreement were: Note: the lease is cancellable but only with Zanzibar’s permission At the end of the lease term, the equipment is to be returned to Zanzibar Limited.On July 1, 2016, Zanzibar incurred $12,000 in legal fees for setting up the lease. Theannual rental payment includes $10, 000 to reimburse the lessor for maintenancefees incurred on behalf of the lessee. Requirements:a) Discuss the nature of the lease using the appropriate criteria. Justify youranswer using calculations where applicable b) Prepare the lease schedule for the Kaizen Limited c) Prepare Kaizen’s journal entries for 2016 & 2017 d) If the lease agreement could be cancelled at any time without penalty.Wouldyour answer in parts a & b change? If yes, explain how and why.

Answer 2

Question

Chapter 24, Problem 4AP

(a)

To determine

Calculate the net present value based on the original estimates.

(b)

To determine

Calculate the net present value based on the revised estimates.

(c)

To determine

Discuss based on the worth of additional benefits, which project to be accepted.

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Answer 3

Question

Chapter 24, Problem 4AP

(a)

To determine

Calculate the net present value based on the original estimates.

(b)

To determine

Calculate the net present value based on the revised estimates.

(c)

To determine

Discuss based on the worth of additional benefits, which project to be accepted.

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Answer 4

Question

Chapter 24, Problem 4AP

(a)

To determine

Calculate the net present value based on the original estimates.

(b)

To determine

Calculate the net present value based on the revised estimates.

(c)

To determine

Discuss based on the worth of additional benefits, which project to be accepted.

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Answer 5

Chapter 24, Problem 4AP

(a)

To determine

Calculate the net present value based on the original estimates.

(b)

To determine

Calculate the net present value based on the revised estimates.

(c)

To determine

Discuss based on the worth of additional benefits, which project to be accepted.

Answer 6

Chapter 24, Problem 4AP

(a)

To determine

Calculate the net present value based on the original estimates.

Answer 7

Chapter 24, Problem 4AP

(a)

To determine

Calculate the net present value based on the original estimates.

Answer 8

(b)

To determine

Calculate the net present value based on the revised estimates.

Answer 9

(b)

To determine

Calculate the net present value based on the revised estimates.

Answer 10

(c)

To determine

Discuss based on the worth of additional benefits, which project to be accepted.

Answer 11

(c)

To determine

Discuss based on the worth of additional benefits, which project to be accepted.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 24 - Prob. 1Q Ch. 24 - Prob. 2Q Ch. 24 - Prob. 3Q Ch. 24 - Prob. 4Q Ch. 24 - Prob. 5Q Ch. 24 - Prob. 6Q Ch. 24 - Prob. 7Q Ch. 24 - Prob. 8Q Ch. 24 - Prob. 9Q Ch. 24 - Prob. 10Q

Calculate the net present value based on the original estimates.

Calculate the net present value based on the original estimates.

Calculate the net present value based on the revised estimates.

Discuss based on the worth of additional benefits, which project to be accepted.

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Chapter 24 Solutions