Yancey Company has limited funds available for investment and must ration the funds among four competing projects (A+)

Yancey Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows:

Project Investment Net Present List of the Internal Rate of

Required Value Project (Years) Return

A $890,000 $133,570 5 16%

B $765,000 $341,100 10 20%

C $740,000 $169,840 5 19%

D $940,000 $129,410 3 18%

The net present values above have been computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, which to accept second, and so forth. The company’s investment funds are limited.

Required:

1. Compute the project profitability index for each project.

2. In order of preference, rank the four projects in terms of net present value, project profitability index and internal rate of return.

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Renfree Mines, Inc., owns the mining rights to a large tract of land in a mountainous area (A+)

Renfree Mines, Inc., owns the mining rights to a large tract of land in a mountainous area. The tract contains a mineral deposit that the company believes might be commercially attractive to mine and sell. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with opening and operating a mine in the area:

Cost of equipment required $910,000

Annual net cash receipts $345,000

Working capital required $245,000

Cost of road repairs in four years $70,000

Salvage value of equipment in thirteen years $110,000

Receipts from sales of ore, less out-of-pocket costs for salaries, utilities, insurance, and so forth.

The mineral deposit would be exhausted after thirteen years of mining. At that point, the working capital would be released for reinvestment elsewhere. The company’s required rate of return is 19%.

Required:

a. Determine the net present value of the proposed mining project.

b. Should the project be accepted?

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The Children’s Place Retail Stores, Inc and Subsidiaries (PLCE) (A+)

The Children’s Place Retail Stores, Inc and Subsidiaries (PLCE)

Retail Family Clothing

1) Modified Income statement (projection of five years)

2) Modified Balance Sheet (projection of five years)

3) Modified Cash flow statement (projection of five years)

4) Calculation of WACC

5) Discounted cash flows

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In early August 2007, Paul White, vice-president of finance of Savannah Petroleum Company (A+)

In early August 2007, Paul White, vice-president of finance of Savannah Petroleum Company, was reviewing a proposal that the company\’s parent, Edgewater Oil Company, participate in a joint venture with Gulf Coast Towing Company to make the American flag tanker Monterey a jumbo tanker. Edgewater held an option that gave it until September 18, 1977, to decide if it would join Gulf Coast in the venture.

Savannah Petroleum Company is a distributor of home heating and industrial fuel oil. It serves a number of heating oil retailers, industrial firms, and public utilities in southeastern Georgia. The company operates a fuel pier, tank farm, and truck-loading facility in Savannah, Georgia. All petroleum products are received by tanker and distributed to customers by barge or truck. Although most petroleum products are imported ……………………omitted……………………………..

In preparing his analysis, Mr. White realized that he should include adjustments for inflation, but he was uncertain as to how to reflect them in the relevant cost, revenue, and interest rate factors. He believed, however, that operating costs would increase by at least 5% per year, and that the charter rate would escalate during the life of the tanker to cover increased costs but would probably be fixed for three-year intervals by each lease agreement.

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Ripken Company’s ending inventory includes the following items (A+)

Ripken Company’s ending inventory includes the following items.

Per Unit

Product Units Cost Market

Helmets 41 $63 $59

Bats 34 81 113

Shoes 55 100 104

Uniforms 59 45 45

Required:

Compute the lower of cost or market for ending inventory applied separately to each product.

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3. Harold Co. reported the following current-year purchases and sales data for its only product (A+)

Harold Co. reported the following current-year purchases and sales data for its only product.

Date Activities Units Acquired at Cost Units Sold at Retail

Jan. 1 Beginning inventory 100 units @ $10=$1,000

Jan. 10 Sales 90 units@$40

Mar. 14 Purchase 250 units@ $15=3,750

Mar. 15 Sales 140 units @$40

July 30 Purchase 400 units @ $20= 8,000

Oct. 5 Sales 300 units @$40

Oct. 26 Purchase 600 units @ $25=15,000

Totals 1,350 units$27,750 530 units

Harold uses a perpetual inventory system.

Required:

1. Determine the costs assigned to ending inventory and to cost of goods sold using FIFO.

2. Determine the costs assigned to ending inventory and to cost of goods sold using LIFO.

3. Compute the gross margin for FIFO and LIFO method.

4. Assume that ending inventory is made up of 100 units from the March 14 purchase, 120 units from the July 30 purchase, and all 600 units from the October 26 purchase. Using the specific identification method, calculate the following.

(a) Cost of goods sold

(b) Gross profit

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Chess Company uses LIFO for inventory costing and reports the following financial data (A+)

Chess Company uses LIFO for inventory costing and reports the following financial data. It also recomputed inventory and cost of goods sold using FIFO for comparison purposes.

2011 2010

LIFO inventory $150 $100

LIFO cost of goods sold 730 670

FIFO inventory 220 125

FIFO cost of goods sold 685 —

Current assets (using LIFO) 210 180

Current liabilities 190 170

1. Compute its current ratio, inventory turnover, and days\’ sales in inventory for 2011 using (a) LIFO numbers and (b) FIFO numbers.

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2. Harold Co. reported the following current-year purchases and sales data for its only product (A+)

Harold Co. reported the following current-year purchases and sales data for its only product.

Date Activities Units Acquired at Cost Units sold at Retail

Jan. 1 Beginning Inventory 100 units @$10 = $1,000

Jan. 10 Sales 90 units @ $40

Mar. 14 Purchase 250 units @$15 = 3,750

Mar. 15 Sales 140 units @$40

July. 30 Purchase 400 units @$20 = $8,000

Oct. 5 Sales 300 units @ $40

Oct. 26 Purchase 600 units @$25 = $15,000

Totals 1,350 units $27,750 530 units

Harold uses a perpetual inventory system.

Requirements:

1) Determine the costs assigned to ending inventory and to cost of goods sold using FIFO.

2) Determine the costs assigned to ending inventory and to cost of goods sold using LIFO.

3) Compute the gross margin for FIFO and LIFO method.

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2. Park Company reported the following March purchases and sales data for its only product (A+)

Park Company reported the following March purchases and sales data for its only product.

Date Activities Units Acquired at Cost Units sold at Retail

Mar. 1 Beginning Inventory 150 units @$7.00 = $1,050

Mar. 10 Sales 90units @ $15

Mar. 20 Purchase 220 units @$6.00 = 1,320

Mar. 25 Sales 145 units @$15

Mar. 30 Purchase 90 units @$5.00 = 450

Totals 460 units $2,820 235 units

Park uses a perpetual inventory system. For specific identification, ending inventory consists of 225 units, where 90 are from the March 30 purchase, 80 are from the March 20 purchase, and 55 are from beginning inventory.

Required:

1. Determine the cost assigned to ending inventory and to cost of goods sold using specific identification.

2. Determine the cost assigned to ending inventory and to cost of goods sold using weighted average.(Due to rounding, the sum of Cost of Goods Sold and Ending inventory may not equal the Cost of Good available for sales.

3. Determine the cost assigned to ending inventory and to cost of goods sold using FIFO.

4. Determine the cost assigned to ending inventory and to cost of goods sold using LIFO.

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2. Duke Associates, antique dealers, purchased the contents of an estate for $37,500 (A+)

Duke Associates, antique dealers, purchased the contents of an estate for $37,500. Terms of the purchase were FOB shipping point, and the cost of transporting the goods to Duke Associates’ warehouse was $1,200. Duke Associates insured the shipment at a cost of $150. Prior to putting the goods up for sale, they cleaned and refurbished them at a cost of $490.

Required:

1 Determine the cost of the inventory acquired from the estate.

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