As part of a community initiative, funding is beingsought from potential contributors to sustain a publicpark's maintenance costs. You are considering donatingto cover all future expected maintenance expenses forthe park. The projected maintenance costs are $48,000per year for the first five years, $60,000 per year fromyears 6 to 10, and $72,000 annually thereafter,assuming the park has an indefinite service life. If thefunds are placed in an account with a 15% annualinterest rate, what should be the size of your donation?

TVM refers to the concept that considers the effect of the interest-earning capacity of money, which…

Answered: As part of a community initiative,…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 5TP: You own a construction company and have recently received a contract with the local school district...

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Maintenance money for a new building at a college is being solicited frompotential alumni donors. You would like to make a donation to cover all future expected maintenance costs for the building. These maintenance costs are expected to be $40,000 each year for the first five years, $50,000 for each of years 6 through 10, and $60,000 each year after that. (The building has an indefinite service life.)(a) If the money is placed in an account that will pay 13% interest compounded annually, how large should the gift be?(b) What is the equivalent annual maintenance cost over the infinite servicelife?
The city of Oak Ridge is evaluating three mutually exclusive landscaping plans for refurbishing a public greenway. Benefits to the community have been estimated by a landscaping committee, and the costs of planting trees and shrubbery, as well as maintaining the greenway, are summarized below. The city’s discount rate is 8% per year, and the planning horizon is 10 years. Solve, a. Use the B–C ratio method to recommend the best plan when annual maintenance expenses offset annual benefits in the numerator. b. Repeat Part (a) when annual maintenance expenses add to total costs in the denominator. Which plan is best? c. Should the recommendations in Part (a) and (b) be the same? Why or why not?
Assume that, as a part of its economic development program, your governmental agency has committed to provide access to a new regional industrial park. This project must fund the construction of an on/off-interchange from an adjacent highway, a 2-mile length of 4-lane divided roadway, and a bridge that will cross a 500-foot wide river. The entire project is estimated to require 2 years to complete following planning & design.a. The interchange is projected to cost $50 million. It will need to begin construction in 18 months. Rights-of-way acquisition, surveying, and permitting have already been completed and paid for by the program. There will be 2 additional project phases: 1) planning & design, 2) construction. Each will require payment at the end of the phase. The projected cost of the 1st phase of the project is $2.5 million. The 1st phase is expected to need the entire 18 months prior to the start of construction and must be completed before construction can begin. The 2nd…
Assume that, as a part of its economic development program, your governmental agency has committed to provide access to a new regional industrial park. This project must fund the construction of an on/off-interchange from an adjacent highway, a 2-mile length of 4-lane divided roadway, and a bridge that will cross a 500-foot wide river. The entire project is estimated to require 2 years to complete following planning & design.a. The interchange is projected to cost $50 million. It will need to begin construction in 18 months. Rights-of-way acquisition, surveying, and permitting have already been completed and paid for by the program. There will be 2 additional project phases: 1) planning & design, 2) construction. Each will require payment at the end of the phase. The projected cost of the 1st phase of the project is $2.5 million. The 1st phase is expected to need the entire 18 months prior to the start of construction and must be completed before construction can begin. The 2nd…
The city of Oak Ridge is evaluating three mutually exclusive landscaping plans for refurbishing a public greenway. Benefits to the community have been estimated by a landscaping committee, and the costs of planting trees and shrubbery, as well as maintaining the greenway, are summarized below. The city's discount rate is 10% per year, and the planning horizon is 10 years. Use the Incremental benefit cost (B/C) analysis to determine the best option. Note: Use the same excel sheet that you downloaded in the previous question to solve this question. Solve it in a new sheet in the same document. Annual benefits, Annual disbenefits, Plan Initial cost, $ Annual cost, $/year $/year $/year 50,000 3,000 20,000 500 90,000 4,000 30,000 2,000 C 200,000 6,000 61,000 2,100
You own a construction company and have recently received a contract with the local school district to refurbish one of its elementary schools. You are given an up-front payment from the school district in the amount of $5 million. The contract terms extend from years 2018 to 2020. When would you recognize revenue for this payment? What method of accounting would you use for this construction project and why? What would be the benefits and challenges with your method selection? Give an example of your distribution selection and associated costs of the project (you may estimate based on other industry competitors). What might be some benefits and challenges associated with the other method of construction revenue recognition?
The following events relate to Habitat for Humanity International's activities. If appropriate, assume a discount rate of 3 percent per annum. Expenditures for house building activities are categorized as program expense. Need Part b. answer. 6. A donor contributes $15,000 in cash and signs an agreement to contribute $15,000 at the beginning of each of the next four years, to support specific Habitat for Humanity projects. a. Contribution received now Amount $ 15,000✔ Classification: Net assets without donor restrictions Amount $ x Classification: Net assets with donor restrictions Recorded? Yes b. Contributions received the next four years Recorded? Yes ◆
The city of Oak Ridge is evaluating three mutually exclusive landscaping plans for refurbishing a public greenway. Benefits to the community have been estimated by a landscaping committee, and the costs of planting trees and shrubbery, as well as maintaining the greenway, are summarized below. The city’s cost of capital is 8% per year, and the planning horizon is 10 years. Which landscaping plan will you recommend based on B/C ratio analysis? Landscaping plan A B C Initial planning cost $75,000 $50,000 $65,000 Annual maintenance expense 4,000 5,000 4,700 Annual community benefits 20,000 18,000 20,000
Fieldspring's city manager of public works has been reviewing flood data for his city and has determined a certain pattern to the associated costs. He wishes to start a perpetual fund for floods. The fund will make available $150,000 each year plus $450,000 every third year. Assume that he wants the first $150,000 made available now and can get an interest rate of 6.5%. (a) What is the EUAC of this proposed fund? Suggestion: Consider the CFD shown on the right. Find the EUAC using the A's and a A/F of the $450K of the 3rd year. $450K $150K same pattern 0 1 2 3 4 5 6... 0
Assume that, as a part of its economic development program, your governmental agency has committed to provide access to a new regional industrial park. This project must fund the construction of an on/off-interchange from an adjacent highway, a 2-mile length of 4-lane divided roadway, and a bridge that will cross a 500-foot wide river. The entire project is estimated to require 2 years to complete following planning & design.C) At the same time as the interchange is being constructed, the bridge project must also be underway. The bridge is projected to cost $48 million. It will also need to begin construction in 18 months. Rights-of-way acquisition, surveying, and permitting have already been completed and paid for by the program. There will be 2 additional project phases: 1) planning & design, 2) construction. Each will require payment at the end of the phase. The projected cost of the 1st phase of the project is $5.5 million. The 1st phase is expected to need the entire 18…
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Arlington Town uses an Internal Service Fund to account for its motor poolactivities. You have the following information:Automobiles: The Motor Pool uses two 6-passenger vans, each costing $90,000and each estimated to have a 5-year life when they were acquired in 2020.Driver salaries: The Motor Pool has a driver-administrator, who earns $90,000a year, and a driver, who earns $70,000.The town uses a rate of 33 percent (to cover benefits, including pensions)for planning purposes.Insurance: In 2020, the town purchased a 3-year automobile accident policyat a cost of $12,000.Fuel and maintenance costs: Based on experience, the driver-administratorestimates that total fuel and maintenance costs for the year will be $16,000.Billing units: To simplify its record keeping, the Motor Pool charges a fixed priceper trip. Arlington’s budget office estimates it will provide 1,600 trips to thetown’s departments in 2021.Arlington Town had the following transactions and events during January 2021:1.…

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