Accounting word problems

2

>Instructions

Instructions: Complete the following exercises in Microsoft Excel (preferred) using cell formulas. If the assignment is completed in Microsoft Word, provide explanations (

1

00 words) to each of the answers along with any relevant calculations to receive credit. Your part in completing the assignment is to demonstrate an understanding and application of the concepts and problem-solving. Review the grading rubric below to adhere to assignment/grading criteria.

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Your assignment will be evaluated according to the following Assignment Requirements:

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12

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12

12

60

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Section Total30

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Section Total10

Guidelines	Assignment Grading Criteria	Points
Content (	60	Response demonstrates a clear understanding of the key elements of assignment questions					12
Response thoroughly covers the question elements in a substantive manner
Answers demonstrate critical thinking and analysis
Answers are complete and accurate
Answers provide adequate information on the given topic
		Section Total
Organization & Calculations (30%)	Explanations flow in a logical sequence
Answers are correct and address major points of exercise		8
Answers and/or formulas are present and have a logical flow
Student explanations address major points
Assignment Format, Writing Style, & Grammar (	10	Sentences are well constructed, complete, clear, and concise
The tone is appropriate to the content and assignment
Grammar, spelling, and punctuation are correct
Assignment is submitted in Microsoft Excel/Word format
Total Score	100

Week 5 – Signature Assignment
Chapters 7 & 8
Instructions: Complete the following exercises in Microsoft Excel (preferred). If the
assignment is completed in Microsoft Word, provide explanations (100 words) to each
of the answers along with any relevant calculations to receive credit. Your part in
completing the assignment is to demonstrate an understanding and application of the
concepts and problem-solving. Review the grading rubric below to adhere to
assignment/grading criteria.
A project has an initial cost of $45,000. The incremental inflows associated with the
project are $20,000 in year 1, $15,000 in year 2, $10,000 in year 3 and $8,000 in year 4.
All cash inflows are at the end of the year. The appropriate discount rate for this project
is 8.0%. (HINT: Possibly use Excel Worksheet)
1. What is the project’s payback period?
a.
5.00 Years
b.
3.00 Years
c.
8.00 Years
d.
7.00 Years
2. What is the project’s discounted payback period?
a.
2.87 Years
b.
3.97 Years
c.
10.25 Years
d.
6.75 Years
3. What is the project’s net present value?
a.
$197.16
b.
$278.96
c.
$345.21
d.
$225.35
4. What is the project’s internal rate of return? Calculate to two decimal places.
a.
3.52%
b.
8.23%
c.
5.35%
d.
2.75%
5. What is the project’s modified internal rate of return? Calculate to two decimal
places.
a.
3.52%
b.
7.60%
c.
5.35%
d.
8.12%
A project has an initial cost of $45,000. The incremental inflows associated with the
project are $20,000 in year 1, $15,000 in year 2, $10,000 in year 3 and $8,000 in year 4.
All cash inflows are at the end of the year. The appropriate discount rate for this project
is 8.0%. The component costs of capital and their weights are given below:
6. What is the project’s weighted-average cost of capital?
kd = 10%
kp = 5%
ke = 8%
T = 40%
a.
6.8%
b.
2.4%
c.
4.3%
d.
8.5%
wd = 45%
wp = 10%
we = 45%