Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Financial Accounting Expert

Problem1. Home Furnishings Express is increasing its product offerings to reach a wider range of customers. To do this, they must enlarge the showroom and purchase new equipment. The expansion project comprises increasing the floor inventory by $430 and raising its debt to suppliers by 70 percent of floor inventory. The company will spend $450 for building contractor to enlarge the size of its showroom and $30 for new equipment. As part of expansion plan, the company will be offering credit to its customers and hence expects accounts receivable to rise by $90. The new product will be sold for four years. The showroom and new equipment is being depreciated using the five year MACR Scategory (20, 32, 19, 12, 11 and 6%). The new product must have annual sales of $200, $250, $200, $150, till the project ends in 4 years.

The new product will diminish annual sales of existing products by $10, till the product ends in four years. The cost of goods sold is 50% for both new and old products. Whiles sales will adjust after the first year, the firm thinks that working capital will only affect initial cash flows and the working capital will return to normal levels after project ends.

Over the precedent year, Home Furnishing Express has spent $17 studying the market for the new project. The accountants estimate which store overhead will rise due to the addition of the new back office personnel.

This overhead will equal 10% of raised sales. A sales commission to our sales personnel is 8% of sales. Annual Fixed costs will rise by $7. If we did not sell the new product, we could rent the space to a vendor for $30 per year for the 4 years. In addition, our annual property taxes will rise by $6 due to the expansion. After four years, we plan to sell the company. We estimate which we will receive an extra $100 for the store due to the extra sale's space and equipment. The firm's tax rate is 30%. The cost of capital is 12%.

problem1. What is Initial Cash flow, the year 2 operating cash flows, and the terminal cash flows?

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M94280

Have any Question? 


Related Questions in Financial Accounting

1 describe the formal procedures associated with issuing

1. Describe the formal procedures associated with issuing long-term debt. 2. Describe the nature, type, and valuation of current liabilities. 3. Explain the accounting for different types of loss contingencies. 4. Explai ...

Application calculating variances and analyzing the

Application: Calculating Variances and Analyzing the Results While many organizational costs can be planned for, the actual results may vary from the initial projections. Assessing how these variances impact the bottom l ...

1 wellplace hospital provides you with the following

1. Wellplace Hospital provides you with the following financial statements for 20X2 and 20X1: December 31 20X2 20X1 Cash $ 168 $ 211 Temporary investments 126 34 Receivables-patients, net 1,011 893 Inventory 296 315 Prep ...

Todays workforce is increasingly made up of part-time or

Today's workforce is increasingly made up of part-time or contingent employees. Is organizational culture important if the workforce is comprised of mostly temporaries

Question 1 an advantage of the corporate form of business

Question 1. An advantage of the corporate form of business is _____. it is simple to establish the corporate tax rate is less than the personal tax rate corporations must pay dividends the shareholders are not responsibl ...

Using the data that follows and assuming cost of goods sold

Using the data that follows and assuming cost of goods sold is $273,700, prepare the cost of goods sold section of a merchandising income statement (periodic inventory system). Include the amount of purchases for the mon ...

Assignmentyou will be analyzing three different

Assignment You will be analyzing three different hypothetical cases. Please answer the questions for each case in complete sentences, with proper spelling, grammar and punctuation. Each answer should be at least 3-4 para ...

Mastering inventory1 baco opens its business in 20x2 and

MASTERING INVENTORY 1. BaCo opens its business in 20X2 and purchases merchandise on account for $88,000. In 20X2, BaCo pays $67,000 cash on the $88,000 due, sales are $145,000, and ending inventory is $24,000. BaCo's gro ...

Assignment purchase point media corporation ppmc

Assignment: Purchase Point Media Corporation (PPMC) INTRODUCTION Purchase Point Media Corporation (PPMC) INTRODUCTION This case is based on actual financial projections developed and provided by a publicly traded firm, P ...

Assignmentin a survey 24 it professionals in chicago were

Assignment In a survey, 24 IT professionals in Chicago were asked how much their annual salary was for the year 2012. The results are shown below: $109,000 $ 65,000 $ 65,000 $ 59,000 $ 180,000 $ 101,325 $ 130,000 $95,000 ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro