Question: please answer asap Suppose we are deciding whether or not to open a store in a new shopping mall. The required investment in improvements is
please answer asap
Suppose we are deciding whether or not to open a store in a new shopping mall.
The required investment in improvements is $ 500,000.
The store would have a five-year life then everything reverts to the mall owners against the value of $ 50,000.
The required investment would be 100 % depreciated over five years (Straight-line method).
The straight-line method is used for calculating the annual depreciation.
The tax rate is 25 %. ARR target 13.5 %.
The table ahead shows the projected revenues and expenses. Complete the table then answer the following questions:
| $ | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| Revenue | 300,000 | 360,000 | 340,000 | 300,000 | 280,000 |
| Expenses | 200,000 | 150,000 | 100,000 | 100,000 | 100,000 |
| EBDT | |||||
| Depreciation | |||||
| EBT | |||||
| Tax @ 25 % | |||||
| NI |
| The taxes amount for the first year is | Answer 1Choose...$64,500True$360,00014.33%$60,000$100,00012.90%17.92%0Accepted$105,000$500,000$80,625False$110,000$240,000 |
| Net Income for the fifth year is | Answer 2Choose...$64,500True$360,00014.33%$60,000$100,00012.90%17.92%0Accepted$105,000$500,000$80,625False$110,000$240,000 |
| Using the ARR method, the project is accepted or rejected? | Answer 3Choose...$64,500True$360,00014.33%$60,000$100,00012.90%17.92%0Accepted$105,000$500,000$80,625False$110,000$240,000 |
| The ARR method considers the time value of money (True, False) | Answer 4Choose...$64,500True$360,00014.33%$60,000$100,00012.90%17.92%0Accepted$105,000$500,000$80,625False$110,000$240,000 |
| The Accounting Rate of Return (ARR) is | Answer 5Choose...$64,500True$360,00014.33%$60,000$100,00012.90%17.92%0Accepted$105,000$500,000$80,625False$110,000$240,000 |
| The annual depreciation amount is | Answer 6Choose...$64,500True$360,00014.33%$60,000$100,00012.90%17.92%0Accepted$105,000$500,000$80,625False$110,000$240,000 |
| EBT for the second year is | Answer 7Choose...$64,500True$360,00014.33%$60,000$100,00012.90%17.92%0Accepted$105,000$500,000$80,625False$110,000$240,000 |
| EBDT for the third year is | Answer 8Choose...$64,500True$360,00014.33%$60,000$100,00012.90%17.92%0Accepted$105,000$500,000$80,625False$110,000$240,000 |
| The ARR method uses the cashflows (True, False) | Answer 9Choose...$64,500True$360,00014.33%$60,000$100,00012.90%17.92%0Accepted$105,000$500,000$80,625False$110,000$240,000 |
| The highest net income is | Answer 10Choose...$64,500True$360,00014.33%$60,000$100,00012.90%17.92%0Accepted$105,000$500,000$80,625False$110,000$240,000 |
| One of the ARR problems is: the cutoff period is subjective (True, False) | Answer 11Choose...$64,500True$360,00014.33%$60,000$100,00012.90%17.92%0Accepted$105,000$500,000$80,625False$110,000$240,000 |
| The average incremental accounting income | Answer 12Choose...$64,500True$360,00014.33%$60,000$100,00012.90%17.92%0Accepted$105,000$500,000$80,625False$110,000$240,000 |
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