Sovrano Café is considering a major expansion of its business. The details of the proposed expansion project are summarized below: The company will have to purchase $900,000 equipment, that require installation cost and transportation cost equal $100,000.
The sources of fund will be 250,000 loan from bank at interest 8% and the remaining will be from equity.
The company will pay interest equal to $120,000 each year.
The project has an economic life of 4 years.
The cost can be depreciated using straight line method.
At t = 0, the project requires that increase Account receivable by $80,000 and inventory by $120,000 while Account payable will increase by $160,000.
The project’s salvage value at the end of 4 years is expected to be Zero.
The company forecasts that the project will generate $725,000 in sales the first 2 years and $650,000 in sales during the last 2 years
Each year the project’s operating cost excluding depreciation is expected to be 50% of sales revenue.
The company’s tax rate is 40%
The bond yield premium in Egypt was 18% at that time
The company already pays marketing expenses equal 80,000.
The government treasury bond earn interest equal to 5%
Requirements:
Using the Net present value, what do you recommend?
What is your expectation about the country risk premium of Egypt next year? And why?

During january 2018, the following transactions occur: january 1 purchase equipment for $20,600. the company estimates a residual value of $2,600 and a five-year service life. january 4 pay cash on accounts payable, $10,600. january 8 purchase additional inventory on account, $93,900. january 15 receive cash on accounts receivable, $23,100 january 19 pay cash for salaries, $30,900. january 28 pay cash for january utilities, $17,600. january 30 firework sales for january total $231,000. all of these sales are on account. the cost of the units sold is $120,500. the following information is available on january 31, 2018. depreciation on the equipment for the month of january is calculated using the straight-line method. the company estimates future uncollectible accounts. at the end of january, considering the total ending balance of the accounts receivable account as shown on the general ledger tab, $4,100 is now past due (older than 90 days), while the remainder of the balance is current (less than 90 days old). the company estimates that 50% of the past due balance will be uncollectible and only 3% of the current balance will become uncollectible. record the estimated bad debt expense. accrued interest revenue on notes receivable for january. unpaid salaries at the end of january are $33,700. accrued income taxes at the end of january are $10,100

Slimwood corporation made sales of $ 725 million during 2018. of this amount, slimwood collected cash for $ 670 million. the company's cost of goods sold was $ 300 million, and all other expenses for the year totaled $ 400 million. also during 2018, slimwood paid $ 420 million for its inventory and $ 285 million for everything else. beginning cash was $ 110 million. carter's top management is interviewing you for a job and they ask two questions: (a) how much was carter's net income for 2018? (b) how much was carter's cash balance at the end of 2016? you will get the job only if you answer both questions correctly.

Warner inc. sells a high-speed retrieval system for mining information. it provides the following information for the year. budgeted actual overhead cost $965,700 $905,000 machine hours 58,570 49,200 direct labor hours 107,300 104,200 overhead is applied on the basis of direct labor hours. compute the predetermined overhead rate. predetermined overhead rate $ per direct labor hour link to text determine the amount of overhead applied for the year. the amount of overhead applied $