Maurice Tutor

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About Maurice Tutor

Levels Tought:
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Expertise:
Algebra,Applied Sciences See all
Algebra,Applied Sciences,Biology,Calculus,Chemistry,Economics,English,Essay writing,Geography,Geology,Health & Medical,Physics,Science Hide all
Teaching Since: May 2017
Last Sign in: 398 Weeks Ago, 2 Days Ago
Questions Answered: 66690
Tutorials Posted: 66688

Education

  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

Experience

  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Management Posted 03 Jan 2018 My Price 10.00

Chilton Resort.

Marengo is a popular restaurant located in Chilton Resort. Management feels that enlarging the facility to incorporate a large outdoor seating area will enable Marengo to continue to attract existing custom-

 

 

U
 

through Using Multiple Models

LO4

 

ers as well as handle large banquet parties that now must be turned away. Two proposals are currently under consideration. Proposal A involves a temporary walled structure and umbrellas used for sun protection; Proposal B entails a more permanent structure with a full awning cover for use even in inclement weather. Although the useful life of each alternative is estimated to be 10 years, Proposal B results in higher salvage value due to the awning protection. The accounting department of Chilton Resort and the manager of Marengo have assembled the following data regarding the two proposals:

 

 

Proposal A

Proposal B

Required investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$400,000

$500,000

Estimated life of fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10 years

10 years

Estimated salvage value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$20,000

$50,000

Estimated annual net cash flow . . . . . . . . . . . . . . . . . . . . . . . . . .

80,000

95,000

Depreciation (straight-line basis)  . . . . . . . . . . . . . . . . . . . . . . . . .

38,000

45,000

Estimated annual net income . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Instructions

a.       For each proposal, compute the (1) payback period, (2) return on average investment, and

(3) net present value, discounted at management’s required rate of return of 15 percent. (Round the payback period to the nearest tenth of a year and the return on investment to the nearest tenth of a percent.) Use Exhibits 26–3 and 26–4 where  necessary.

b.       On the basis of your analysis in part a, state which proposal you would recommend and explain the reasons for your choice.

Answers

Maurice Tutor
(5)
Status NEW Posted 03 Jan 2018 09:01 PM My Price 10.00

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