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ACC206 week 5 (assignment +exercise +2 dsicussons)




Question;List a few of the issues and considerations;businesses should have when it comes to the selection of long-term investments;and how those issues impact the various financial statements.;Review the rights and responsibilities of;Certified Management Accountants;;What are some of the ethical responsibilities and;obligations that management accountants have within an organization? Provide;some examples. Are these responsibilities different than the obligations for;financial accountants?;Exercise;ACC206 Week Five Problems;Please;complete the following 5 exercises below in either Excel or a word document;(but must be single document). You must show your work where appropriate;(leaving the calculations within Excel cells is acceptable). Save the document;and submit it in the appropriate week using the Assignment Submission button.;1.;Basic present value calculations;Calculate;the present value of the following cash flows, rounding to the nearest dollar;a. A;single cash inflow of $12,000 in five years, discounted at a 12% rate of return.;b. An;annual receipt of $16,000 over the next 12 years, discounted at a 14% rate of;return.;c. A;single receipt of $15,000 at the end of Year 1 followed by a single receipt of;$10,000 at the end of Year 3. The company has a 10% rate of return.;d. An;annual receipt of $8,000 for three years followed by a single receipt of;$10,000 at the end of Year 4. The company has a 16% rate of return.;2.;Cash flow calculations and net present value;On;January 2, 20X1, Bruce Greene invested $10,000 in the stock market and;purchased 500 shares of Heartland Development, Inc. Heartland paid cash;dividends of $2.60 per share in 20X1 and 20X2, the dividend was raised to $3.10;per share in 20X3. On December 31, 20X3, Greene sold his holdings and generated;proceeds of $13,000. Greene uses the net-present- value method and desires a;16% return on investments.;a.;Prepare a chronological list of the investment's cash flows. Note: Greene is;entitled to the 20X3 dividend.;b.;Compute the investment's net present value, rounding calculations to the;nearest dollar.;c.;Given the results of part (b), should Greene have acquired the Heartland stock?;Briefly explain.;3.;Straightforward net present value and internal rate of return;The;City of Bedford is studying a 600-acre site on Route 356 for a new landfill.;The startup cost has been calculated as follows;Purchase;cost: $450 per acre;Site;preparation: $175,000;The;site can be used for 20 years before it reaches capacity. Bedford, which shares;a facility in Bath Township with other municipalities, estimates that the new;location will save $40,000 in annual operating costs.;a.;Should the landfill be acquired if Bedford desires an 8% return on its;investment? Use the net-present-value method to determine your answer.;4.;Straightforward net-present-value and payback computations;STL;Entertainment is considering the acquisition of a sight-seeing boat for summer;tours along the Mississippi River. The following information is available;Cost;of boat $500,000;Service;life 10 summer seasons;Disposal;value at the end of 10 seasons $100,000;Capacity;per trip 300 passengers;Fixed;operating costs per season (including straight-line depreciation) $160,000;Variable;operating costs per trip $1,000;Ticket;price $5 per passenger;All;operating costs, except depreciation, require cash outlays. On the basis of;similar operations in other parts of the country, management anticipates that;each trip will be sold out and that 120,000 passengers will be carried each;season. Ignore income taxes.;Instructions;By;using the net-present-value method, determine whether STL Entertainment should;acquire the boat. Assume a 14% desired return on all investments- round;calculations to the nearest dollar.;5.;Equipment replacement decision;Columbia;Enterprises is studying the replacement of some equipment that originally cost;$74,000. The equipment is expected to provide six more years of service if;$8,700 of major repairs are performed in two years. Annual cash operating costs;total $27,200. Columbia can sell the equipment now for $36,000, the estimated;residual value in six years is $5,000.;New;equipment is available that will reduce annual cash operating costs to $21,000.;The equipment costs $103,000, has a service life of six years, and has an;estimated residual value of $13,000. Company sales will total $430,000 per year;with either the existing or the new equipment. Columbia has a minimum desired;return of 12% and depreciates all equipment by the straight-line method.Final PaperFocus of the Final PaperYou?ve;just been hired onto ABC Company as the corporate controller. ABC;Company is a manufacturing firm that specializes in making cedar roofing;and siding shingles. The company currently has annual sales of around;$1.2 million, a 25% increase from the previous year. The company has an;aggressive growth target of reaching $3 million annual sales within the;next 3 years. The CEO has been trying to find additional products that;can leverage the current ABC employee skillset as well as the;manufacturing facilities. As the controller of ABC Company, the;CEO has come to you with a new opportunity that he?s been working on.;The CEO would like to use the some of the shingle scrap materials to;build cedar dollhouses. While this new product line would add additional;raw materials and be more time-intensive to manufacture than the cedar;shingles, this new product line will be able to leverage ABC?s existing;manufacturing facilities as well as the current staff. Although this;product line will require added expenses, it will provide additional;revenue and gross profit to help reach the growth targets. The CEO is;relying on you to help decide how this project can be afforded Provide;details about the estimated product costs, what is needed to break even;on the project, and what level of return this product is expected to;provide.In order to help out the CEO, you need to prepare a six-;to eight-page report that will contain the following information;(including exhibits, but excluding your references and title page).;Refer to the accompanying Excel spreadsheet (available through your;online course) for some specific cost and profit information to complete;the calculations.Final Paper SpreadsheetI. An overall risk profile of the company based on current economic and industry issues that it may be facing.II. Current company cash flowa. You need to complete a cash flow statement for the company using the direct method.b. Once you?ve completed the cash flow statement, answer the following questions:i. What does this statement of cash flow tell you about the sources and uses of the company funds?ii. Is there anything ABC Company can do to improve the cash flow?iii. Can this project be financed with current cash flow from the company? Why or why not?iv.;If the company needs additional financing beyond what ABC Company can;provide internally (either now or sometime throughout the life of the;project), how would you suggest the company obtain the additional;financing, equity or corporate debt, and why?III.;Product cost: ABC Company believes that it has an additional 5,000;machine hours available in the current facility before it would need to;expand. ABC Company uses machine hours to allocate the fixed factory;overhead, and units sold to allocate the fixed sales expenses. Bases on;current research, ABC Company expects that it will take twice as long to;produce the expansion product as it currently takes to produce its;existing product.a. What is the product cost for the expansion product under absorption and variable costing?b.;By adding this new expansion product, it helps to absorb the fixed;factory and sales expenses. How much cheaper does this expansion make;the existing product?c. Assuming ABC Company wants a 40% gross;margin for the new product, what selling price should it set for the;expansion product? d. Assuming the same sales mix of these two products, what are the contribution margins and break-even points by product?IV.;Potential investments to accelerate profit: ABC company has the option;to purchase additional equipment that will cost about $42,000, and this;new equipment will produce the following savings in factory overhead;costs over the next five years:Year 1, $15,000Year 2, $13,000Year 3, $10,000Year 4, $10,000Year 5, $6,000ABC;Company uses the net-present-value method to analyze investments and;desires a minimum rate of return of 12% on the equipment.a. What is the net present value of the proposed investment (ignore income taxes and depreciation)?b.;Assuming a 5-year straight-line depreciation, how will this impact the;factory?s fixed costs for each of the 5 years (and the implied product;costs)? What about cash flow?c. Considering the cash flow impact of;the equipment as well as the time-value of money, would you recommend;that ABC Company purchases the equipment? Why or why not? V. Conclusion:a. What are the major risk factors that you see in this project?b. As the controller and a management accountant, what is your responsibility to this project?c. What do you recommend the CEO do?Writing the Final Paper1.;Must be six to eight double-spaced pages in length, and formatted;according to APA style as outlined in the Ashford Writing Center.2. Must include a title page with the following:a. Title of paperb. Student?s namec. Course name and numberd. Instructor?s namee. Date submitted3. Must begin with an introductory paragraph that has a succinct thesis statement.4. Must address the topic of the paper with critical thought.5. Must end with a conclusion that reaffirms your thesis.6. Must document at least three, but no more than five sources in APA style, as outlined in the Ashford Writing Center.7. Must include a separate reference page, formatted according to APA style as outlined in the Ashford Writing Center.


Paper#38455 | Written in 18-Jul-2015

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