Opting for the lease is a more favorable choice. To illustrate, we examine the calculations for both options. First, we calculate the Net Present Value (NPV) for the Lease Option:
Year n Details CF ($) DF=1/(1.1)^n PV ($)
1 - Lease payment (30,000) 0.9091 (27,273)
2 - Lease payment (30,000) 0.8264 (24,793)
3 - Lease payment (30,000) 0.7513 (22,539)
4 - Lease payment (30,000) 0.6830 (20,490)
The NPV for the lease option equals (95,096).
For the Buy Option, we carry out the following calculations:
Year n Details CF ($) DF=1/(1.1)^n PV
0 Purchase cost (80,000) 1.0000 (80,000)
1 Maintenance costs (10,000) 0.9091 (9,091)
2 Maintenance costs (10,000) 0.8264 (8,264)
3 Maintenance costs (10,000) 0.7513 (7,513)
4 Maintenance costs (10,000) 0.6830 (6,830)
Residual value at end of year 4 20,000 0.6830 13,660
The NPV for the buy option results in (98,038).
To determine the equivalent annual annuity (EAA) for each option:
EAA = (r × NPV) / (1 - (1 + r)^-n)
where r is the discount rate per period and n shows the number of periods.
Calculating:
Lease option EAA = (0.1 × -95,096) / (1 - (1 + 0.1)^-4) = -30,000.
Buy option EAA = (0.1 × 98,038) / (1 - (1 + 0.1)^-4) = -30,928.
Since the lease option manifests a lower EAA of $30,000 compared to the buy option's $30,928, the lease is deemed the superior choice.
During the quarter, employee wages exempt from FUTA or SUTA hinges on 15 weeks of service. Employee 1 received wages computed as 15 weeks × $900 totaling $13,500, with exemptions totaling $6,500 after deducting the $7,000 threshold. Employee 2 accrued wages of 15 weeks × $1,200 amounting to $18,000, thus $11,000 exempt. With total payments of $13,500 and $18,000 across both employees, computations yield a collective taxable wage of $14,000 by deducting exemptions from gross wages. Consequently, SUTA and FUTA taxes at the end of the first and second quarters result in SUTA at 0.057 multiplied by $14,000 equating to $798 and FUTA at 0.008 multiplied by $14,000 amounts to $112.
Answer:The question is incomplete; see the full question below:
Trim Corporation purchased 100 percent of Round Corporation's voting common stock on January 1, 20X2, at a cost of $405,000. At that time, the book values and fair values for Round's assets and liabilities were identical. Round announced the following summarized balance sheet information:
Assets $ 715,000 Accounts Payable $ 102,000
Bonds Payable 208,000
Common Stock 120,000
Retained Earnings 285,000
Total $ 715,000 Total $ 715,000
Round reported net income of $89,000 for 20X2 and paid dividends totaling $30,000.
Prepare the required consolidation entries for December 31, 20X2, in order to compile consolidated financial statements. (If a transaction/event does not require an entry, please select "No journal entry required" in the first account field.)
Explanation:
I have created the requisite journal entries to prepare consolidated accounts.
Refer to the necessary journals in the attached excel document.
The answer is b. The monopolist is currently maximizing profits, resulting in total profits of $250. The analysis for the monopolist indicates that they are producing 50 units with marginal revenue at $4, a price of $8, and marginal costs also at $4 while average total costs stand at $3. Hence, with MR equal to MC and P being greater than ATC, the monopolist is generating a profit at this output level. The total profit is calculated to be (P - ATC) multiplied by quantity, equating to $250.
