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

Chapter 1 1 which of the following goals of the firm are

Chapter 1 1) Which of the following goals of the firm are synonymous (equivalent) to the maximization of shareholder wealth? A) profit maximization B) maximization of the total market value of the firm's common stock C) ...

Assignmentpart 11 monthly sales were 200000 it was

Assignment Part 1 1) Monthly sales were $200,000. It was estimated that 4% of the units sold would have to be replaced under warranty. On the date of sale the company should record a debit to: A) Sales for $8,000 B) Warr ...

What are some different ways you could communicate a

What are some different ways you could communicate a concept for a new user interface for an automotive audio system? What are the strengths and weaknesses of each approach?

Intermediate accounting assignmentpart 11 the receipt of

Intermediate Accounting Assignment Part 1 1) The receipt of interest on loans would be reported on a statement of cash flows under the: A) Financing B) operating activities C) investing activities D) Interest received on ...

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 ...

Which survey method mail telephone or personal interview

Which survey method (mail, telephone, or personal interview) would you use for the following situations? Explain your choice. Situation 1 Administration of a questionnaire by a local auto dealership that wishes to find o ...

Part 1 please respond the following question no less then

PART 1 PLEASE RESPOND THE FOLLOWING QUESTION NO LESS THEN 350 WORDS (ORIGINAL WORK, NO PLAGIARISM, 1 Reference Part 1 of our week discussion questions require us to discuss Profitability. Please watch this Youtube lectur ...

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 ...

Rob leslie induced people to invest their savings in a

Rob Leslie induced people to invest their savings in a business venture that he represented to be risky. Because the planned venture never became operational, Leslie never applied the investors' funds in the way he promi ...

There are many challenges and opportunities facing managers

There are many challenges and opportunities facing managers in the long-term care system of the future. Describe what skills managers will need to meet those challenges and opportunities, and specifically what skills you ...

  • 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