Construction Accounting and Financial Management 2nd. Edition by Steven Peterson | 9780135017111 | 135017114 | Holooly

Financial Management

Construction Accounting and Financial Management

186 SOLVED PROBLEMS

Question: 17.18

Your company is looking at purchasing a front-end loader at a cost of $120,000. The loader can be billed out at $95.00 per hour. It costs $30.00 per hour to operate the front-end loader and $25.00 per hour for the operator. The useful life of the equipment is five years. Using 1,200 billable hours ...

Verified Answer:

The hourly profit on the loader equals the billing...

Question: 17.19

Your company is looking at purchasing a front-end loader at a cost of $120,000. The loader can be billed out at $95.00 per hour. It costs $30.00 per hour to operate the front-end loader and $25.00 per hour for the operator. The useful life of the equipment is five years. The salvage value of the ...

Verified Answer:

The hourly profit on the loader equals the billing...

Question: 17.15

Your company is looking at purchasing a new hydraulic excavator. The excavator has a purchase price of $120,000, a useful life of five years, and a salvage value of $12,000 at the end of the fifth year. The excavator can be billed out at $95.00 per hour. It costs $30.00 per hour to operate the ...

Verified Answer:

For the purchase of the excavator to be financiall...

Question: c.1

Determine the inflation factor and initial estimated cost based on the exponential regression for the data in Table C-1. How good is the correlation between the actual cost and the costs based on the regression line? What is the projected cost for the next year? ...

Verified Answer:

First, we take the natural log of the cost so that...

Question: 15.7

What is the present value of five $500 cash flows that occur at the end of each year for the next five years at a periodic interest rate of 6% compounded annually? The first cash flow occurs a year from now, the second cash flow occurs two years from now, . . . , and the fifth cash flow occurs five ...

Verified Answer:

For this problem, the annual cash flow is $500, th...

Question: 18.6

Your S corporation needs a new truck for its operations and is looking at three alternatives. The first alternative is to lease the truck for sixty months. The monthly lease payment is $525 per month with the first payment due in April. At the end of the lease the truck will be returned to the ...

Verified Answer:

The costs for each month can be easily determined;...

Question: 18.5

Your company is looking at leasing office space for the next three years and has identified two options. The first option is to lease space for $13,200 per year. The second option is to lease space for $10,800 per year; however, the second option will require you to spend $10,000 during the first ...

Verified Answer:

Determine the before-tax net present cost for the ...

Question: 18.4

On November 30 of last year your company invested $1,000,000 in an office-building complex and has the opportunity to sell its interest in the complex for $1,220,000 in November. If the complex is sold in November, your company will have held the asset for a year or less, and it will be taxed as ...

Verified Answer:

For this problem all cash flows that occur during ...

Question: 18.3

A company has purchased a small pickup truck for $20,000. Compare writing the truck off in the year it was purchased under Section 179 (see Chapter 5) versus depreciating it using 200% declining balance and the half-year convention. The company’s marginal tax rate is 34% and its MARR is 15%. ...

Verified Answer:

If the truck were to be written off during the yea...

Question: 18.2

You are looking at setting up a C corporation to develop real estate. The company is looking at two alternatives. The first alternative produces a taxable income for the company of $10,000, $100,000, and $10,000 for the next three years. The second alternative produces a taxable income for the ...

Verified Answer:

The pretax net present value for the first alterna...

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