Rate of Return And NPV – Homework – Accounting & Finance
The key terms in these Finance Chapters include Rate of Return, NPV, Costs, Accounts Receivables, Bad Debts, Allowance for Doubtful Accounts, Cowboy Ice Cream. Homework – Accounting & Finance
A company has two different investment opportunities, both requiring an initial payment of $150,000. The company’s desired rate of return is 10%.
Project A | Project B | |
Year 1 | $100,000 | $40,000 |
Year 2 | $100,000 | $170,000 |
What is the NPV of Project B?
26,859.5
A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $24,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $675. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?
Bad Debts Expense | 24,750 | |
Allowance for Doubtful Accounts | 24,750 |
Bad Debts Expense | 24,075 | |
Allowance for Doubtful Accounts | 24,075 |
Bad Debts Expense | 25,425 | |
Allowance for Doubtful Accounts | 25,425 |
Correct
Accounts Receivable | 24,750 | |
Bad Debts Expense | 675 | |
Sales | 25,425 |
Accounts Receivable | 25,425 | |
Allowance for Doubtful Accounts | 25,425 |
Explanation
Desired balance in allowance account: | $ | 24,750 | credit |
Current balance: | 675 | debit | |
Required: adjustment to allowance | $ | 25,425 | credit |
A company has two different investment opportunities, both requiring an initial payment of $150,000. The company’s desired rate of return is 10%.
Project A | Project B | |
Year 1 | $100,000 | $40,000 |
Year 2 | $100,000 | $170,000 |
Which project would you recommend based on NPV?
A
B
A company has two different investment opportunities, both requiring an initial payment of $150,000. The company’s desired rate of return is 10%.
Project A | Project B | |
Year 1 | $100,000 | $40,000 |
Year 2 | $100,000 | $170,000 |
What is the NPV of Project B?
26,859.5
Rubio, Inc. is considering eliminating one of its segments. The segment incurs the following fixed costs. If the segment is eliminated, the building it uses will be sold.
Advertising expense | $140,000 |
Supervisory salaries | 300,000 |
Allocation of company-wide facility costs | 130,000 |
Original cost of building | 220,000 |
Book value of building | 100,000 |
Market value of building | 160,000 |
Maintenance costs on equipment | 112,000 |
Real estate taxes on building | 12,000 |
Identify the relevant costs associated with the segment. (Select all that apply)
Advertising expense
Book value of building
Maintenance costs on equipment
Supervisory Salaries
Allocation of company-wide facility costs
Original cost of building
Real estate taxes on building
Market value of building
What was Cowboy Ice Cream’s sales volume variance, and was it favorable or unfavorable?
500; favorable
$32,000; favorable
$33,750; unfavorable
$1,750; unfavorable
$33,750; favorable
$32,000; unfavorable
$4,000; favorable
500; unfavorable
$2,250; favorable
$2,250; unfavorable
$1,750; favorable
$4,000; unfavorable
A company has two different investment opportunities, both requiring an initial payment of $150,000. The company’s desired rate of return is 10%.
Project A | Project B | |
Year 1 | $100,000 | $40,000 |
Year 2 | $100,000 | $170,000 |
What is the NPV of Project B?
26,859.5
A company has two different investment opportunities, both requiring an initial payment of $150,000. The company’s desired rate of return is 10%.
Project A | Project B | |
Year 1 | $100,000 | $40,000 |
Year 2 | $100,000 | $170,000 |
Which project would you recommend based on NPV?
A
B