solution
hifsa shaukat
mira121_final.docx|
|
Alternative 1 - 2 Stories |
Alternative 2 - 5 Stories |
Alternative 3 - 10 Stories |
||||||
|
Year |
CASH FLOWS |
P.V Factor |
PV of Cash Flows |
CASH FLOWS |
P.V Factor |
PV of Cash Flows |
CASH FLOWS |
P.V Factor |
PV of Cash Flows |
|
0 |
$ (500,000.00) |
1.000 |
$ (500,000.00) |
$ (900,000.00) |
1.000 |
$ (900,000.00) |
$ (2,200,000.00) |
1.000 |
$ (2,200,000.00) |
|
1 |
$ 70,000.00 |
0.926 |
$ 64,814.81 |
$ 105,000.00 |
0.926 |
$ 97,222.22 |
$ 256,000.00 |
0.926 |
$ 237,037.04 |
|
2 |
$ 70,000.00 |
0.857 |
$ 60,013.72 |
$ 105,000.00 |
0.857 |
$ 90,020.58 |
$ 256,000.00 |
0.857 |
$ 219,478.74 |
|
3 |
$ 70,000.00 |
0.794 |
$ 55,568.26 |
$ 105,000.00 |
0.794 |
$ 83,352.39 |
$ 256,000.00 |
0.794 |
$ 203,221.05 |
|
4 |
$ 70,000.00 |
0.735 |
$ 51,452.09 |
$ 105,000.00 |
0.735 |
$ 77,178.13 |
$ 256,000.00 |
0.735 |
$ 188,167.64 |
|
5 |
$ 70,000.00 |
0.681 |
$ 47,640.82 |
$ 105,000.00 |
0.681 |
$ 71,461.24 |
$ 256,000.00 |
0.681 |
$ 174,229.30 |
|
6 |
$ 70,000.00 |
0.630 |
$ 44,111.87 |
$ 105,000.00 |
0.630 |
$ 66,167.81 |
$ 256,000.00 |
0.630 |
$ 161,323.42 |
|
7 |
$ 70,000.00 |
0.583 |
$ 40,844.33 |
$ 105,000.00 |
0.583 |
$ 61,266.49 |
$ 256,000.00 |
0.583 |
$ 149,373.54 |
|
8 |
$ 70,000.00 |
0.540 |
$ 37,818.82 |
$ 105,000.00 |
0.540 |
$ 56,728.23 |
$ 256,000.00 |
0.540 |
$ 138,308.83 |
|
9 |
$ 70,000.00 |
0.500 |
$ 35,017.43 |
$ 105,000.00 |
0.500 |
$ 52,526.14 |
$ 256,000.00 |
0.500 |
$ 128,063.74 |
|
10 |
$ 70,000.00 |
0.463 |
$ 32,423.54 |
$ 105,000.00 |
0.463 |
$ 48,635.32 |
$ 256,000.00 |
0.463 |
$ 118,577.53 |
|
11 |
$ 70,000.00 |
0.429 |
$ 30,021.80 |
$ 105,000.00 |
0.429 |
$ 45,032.70 |
$ 256,000.00 |
0.429 |
$ 109,794.01 |
|
12 |
$ 70,000.00 |
0.397 |
$ 27,797.96 |
$ 105,000.00 |
0.397 |
$ 41,696.94 |
$ 256,000.00 |
0.397 |
$ 101,661.12 |
|
13 |
$ 70,000.00 |
0.368 |
$ 25,738.85 |
$ 105,000.00 |
0.368 |
$ 38,608.28 |
$ 256,000.00 |
0.368 |
$ 94,130.67 |
|
14 |
$ 70,000.00 |
0.340 |
$ 23,832.27 |
$ 105,000.00 |
0.340 |
$ 35,748.41 |
$ 256,000.00 |
0.340 |
$ 87,158.03 |
|
15 |
$ 70,000.00 |
0.315 |
$ 22,066.92 |
$ 105,000.00 |
0.315 |
$ 33,100.38 |
$ 256,000.00 |
0.315 |
$ 80,701.88 |
|
16 |
$ 70,000.00 |
0.292 |
$ 20,432.33 |
$ 105,000.00 |
0.292 |
$ 30,648.50 |
$ 256,000.00 |
0.292 |
$ 74,723.96 |
|
17 |
$ 70,000.00 |
0.270 |
$ 18,918.83 |
$ 105,000.00 |
0.270 |
$ 28,378.24 |
$ 256,000.00 |
0.270 |
$ 69,188.85 |
|
18 |
$ 70,000.00 |
0.250 |
$ 17,517.43 |
$ 105,000.00 |
0.250 |
$ 26,276.15 |
$ 256,000.00 |
0.250 |
$ 64,063.75 |
|
19 |
$ 70,000.00 |
0.232 |
$ 16,219.84 |
$ 105,000.00 |
0.232 |
$ 24,329.77 |
$ 256,000.00 |
0.232 |
$ 59,318.29 |
|
20 |
$ 270,000.00 |
0.215 |
$ 57,928.02 |
$ 405,000.00 |
0.215 |
$ 86,892.02 |
$ 656,000.00 |
0.215 |
$ 140,743.62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NPV OF BENEFIT |
$ 730,179.96 |
|
|
$ 1,095,269.94 |
|
|
$ 2,599,265.02 |
||
|
|
|
|
|
|
|
|
|
|
|
|
BENEFIT-COST RATIO (NPV/COST) |
1.46 |
|
|
1.22 |
|
|
1.18 |
So the alternative 1 should be accepted because its Benefit-cost Ratio is greater than other alternatives.
SOLUTION # 2
|
1) |
A $5,000 invoice for concrete charged to a job (transaction completed)? |
||
|
|
|
|
|
|
|
ACCOUNT |
CHANGE IN AMOUNT ($) |
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
Account Payable - Trade |
5,000.00 |
Increase |
|
|
Current Period Net - Income |
5,000.00 |
Decrease |
|
|
|
|
|
|
|
INCOME STATEMENT |
|
|
|
|
CONCRETE - Materials |
5,000.00 |
Increase |
|
|
Profit |
5,000.00 |
Decrease |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2) |
A $1,352 bill for office rent (transaction pending) |
||
|
|
|
|
|
|
|
ACCOUNT |
CHANGE IN AMOUNT ($) |
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
Account Payable - Trade |
1,352.00 |
Increase |
|
|
Current Period Net - Income |
1,352.00 |
Decrease |
|
|
INCOME STATEMENT |
|
|
|
|
Office Rent |
1,352.00 |
Increase |
|
|
Profit |
1,352.00 |
Decrease |
|
|
|
|
|
|
|
|
|
|
|
3) |
A $375 invoice for repairs to a backhoe (transaction completed) |
||
|
|
|
|
|
|
|
ACCOUNT |
CHANGE IN AMOUNT ($) |
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
Accruals - Repairs & Maintenance |
375.00 |
Increase |
|
|
Accruals - Repairs & Maintenance |
375.00 |
Decrease |
|
|
Cash |
375.00 |
Decrease |
|
|
INCOME STATEMENT |
|
|
|
|
Repair & Maintenance Expense |
1,352.00 |
Increase |
|
|
|
|
|
SOLUTION # 3
|
|
|
|
|
|
|
|
ACCOUNT |
CHANGE IN AMOUNT ($) |
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
|
Account Payable - Trade |
249,996.00 |
Increase |
|
|
|
Account Payable - Retention |
118,268.00 |
Increase |
|
|
|
Current Period Net - Income |
368,264.00 |
Decrease |
|
|
|
|
|
|
|
|
|
INCOME STATEMENT |
|
|
|
|
|
Sub Contract |
368,264.00 |
Increase |
|
|
|
Profit |
368,264.00 |
Decrease |
|
|
|
|
|
|
|
SOLUTION # 4
|
Determine over- or under-billing for a company with the following information (use percent |
|||
|
Complete accounting method). How would the over- or under-billing affect the company’s |
|||
|
Income statement and balance sheet (show the changes using T tables)? (10 points) |
|||
|
Job ID: |
318 |
|
|
|
Job Name: |
Marker Street Warehouse |
|
|
|
Current Contract Amount: |
$256,852 |
|
|
|
Total Estimated Cots at Completion: |
$225,236 |
|
|
|
Actual Cost to Date: |
$202,138 |
|
|
|
Total Billed: |
$252,253 |
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCOUNT |
CHANGE IN AMOUNT ($) |
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
|
|
|
|
|
Contract Amount |
256,852.00 |
Increase |
|
|
Cost Of Contract |
225,236.00 |
Increase |
|
|
|
|
|
|
|
INCOME STATEMENT |
|
|
|
|
Job Cost (90% Work Completion) |
202,138.00 |
Increase |
|
|
Profit (Over Billed Amount) |
23,098.00 |
Decrease |
|
|
|
|
|
|
