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vichka [17]
2 years ago
15

The Italian Bread Company purchased land as a factory site for $70,000. An old building on the property was demolished, and cons

truction began on a new building. Costs incurred during the first year are listed as follows:
Demolition of old building $9,000

Sale of salvaged materials (1,100)

Architect fees (for a new building) 20,000

Legal fees (for title investigation of land) 3,000

Property taxes on the land (for the first year) 4,000

Building construction cost 600,000

Interest cost related to the construction 23,000

Required:


Determine the amounts that the company should record in the Land and the Building accounts.
Business
1 answer:
Monica [59]2 years ago
7 0

Answer:

Land $80,900

Building $643,000

Explanation

Land

Demolition of old building $9,000

Sale of salvaged materials (1,100)

Legal fees (for title investigation of land) 3,000

Purchase price of land $70,000

Total $80,900

Building

Architect fees (for new building) 20,000

Building construction cost 600,000

Interest cost related to the construction 23,000

Total $643,000

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BabaBlast [244]

Answer:

The answer is below

Explanation:

The graph is attached below.

a) The price elasticity of demand is given by:

price elasticity of demand = \frac{\%\ change\ in\ quantity }{\%\ change\ in\ price}=\frac{\Delta Q}{\Delta P}

\Delta Q=\frac{Q_2-Q_1}{(Q_2+Q_1)/2} \\\\\Delta P=\frac{P_2-P_1}{(P_2+P_1)/2}

Price of elasticity demand =   \frac{\frac{Q_2-Q_1}{(Q_2+Q_1)/2} }{\frac{P_2-P_1}{(P_2+P_1)/2} }

Price of elasticity demand =   \frac{\frac{50-100}{(50+100)/2} }{\frac{4.5-4}{(4.5+4.0)/2} }=\frac{-0.6667}{0.1176} =5.7

Since the price of elasticity demand > 1, it is elastic

b) Price of elasticity demand =   \frac{\frac{200-300}{(200+300)/2} }{\frac{3-2}{(3+2)/2} }=\frac{-0.4}{0.4} =1

Since the price of elasticity demand = 1, it is unitary

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6 0
2 years ago
McDonald's Corp has a preferred stock paying a dividend of $19 and has a market price of $178. Calculate the cost of capital for
Iteru [2.4K]

Answer:

McDonald's Corp

The cost of capital for the preferred stock is:

10.67%

Explanation:

a) Data and Calculations:

Market price of preferred stock = $178

Preferred stock dividend = $19

Cost of capital = Preferred stock dividend/Market price of preferred stock * 100

= $19/$178 * 100

= 10.67%

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2 years ago
An all-equity firm is considering the following projects:
FromTheMoon [43]

Answer:

Projects Y and Z

b. Projects W and Z

c. Projects W and Y

Explanation:

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X = 4% + (0.92 x 7%) = 10.44%

Y = 4% + (1.09 x 7%) = 11.63%

Z = 4% + (1.35 x 7%) = 13.45%

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b. Projects W and Z should be accepted because its expected return is higher than the IRR

c. Project W would be incorrectly rejected because the expected rate of return is less than the overall cost of capital (i.e. 9.95 is less than 11). But its expected rate of return is greater than the IRR

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4 0
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The common stock of Royal Ranch House is selling for $20.23. The firm pays dividends that are expected to grow at a rate of 4.40
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E3.3 (LO 3) (Unknown Rate) HQ Ltd. purchased a used truck from Trans Auto Sales Inc. HQ paid a $4,000 down payment and signed a
ivolga24 [154]

Answer: $35,000

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7 0
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