Information provided by the consultant is as follows: initial investment: $120 million composed of $50 million for the plant and $70 million net working capital (NWC) yearly expenses from year 1 to year 3: $30 million yearly revenues from year 1 to year 3: $0 yearly expenses from year 4 to year 10: $55 million yearly expected revenues from year 4 to year 10: $95 million yearly expenses from year 11 to year 15: $60 million yearly expected revenues from year 11 to year 15: $105 million Revenues will vary between $80 million (minimum) and $105 million (maximum) for years 4 to 10, and between $90 million (minimum) and $110 million (maximum) for years 11 to 15. You also have the following information: The asset beta of the project is 1.5. The expected return to the market is 8 percent, and the market risk premium is 5 percent. Assume that both expenses and revenues for a year occur at the end of the year. NWC pays the bills during the year but has to be replenished at the end of the year. Android01 is expected to cannibalize the sales of Processor01 while also reducing the variable costs for the production of Processor01. From years 4 to 10, revenues are expected to fall by $5M, whereas variable costs will go down by $1 million. Processor01 is to be phased out at the end of the 10th year. At the end of the 15th year, the plant will be scrapped for a salvage value of $10 million. NWC will be recovered. Question 10: Calculate the expected cash flows from the Android01 project based on the information provided. Question 11: Calculate the NPV for a required rate of return of 6.5 percent. Also, calculate the IRR and the Payback Period.

1. :
Acct 220:
Final Exam
Student
Name:
ACCT 220 Final Exam Answer Sheet
Question 1 (40points)
a. General Journal Entries:
Date Account Debit Credit
b. Adjusting Entries:
Date Account Debit Credit

2. :
Acct 220:
Final Exam
Student
Name:
c. Adjusted Trial Balance:
Adjusted Trial Balance
Account Titles Debit Credit

3. :
Acct 220:
Final Exam
Student
Name:

4. :
Acct 220:
Final Exam
Student
Name:
d. Classified Balance Sheet:

5. :
Acct 220:
Final Exam
Student
Name:
e. Closing Entries:
Date Account Debit Credit
Question 2 (8points)
a. Cost of Goods Available for Sale
b. Sales
c. Value of: Ending Inventory COGS
(1) LIFO method
(2) FIFO method
(3) Average-cost method

6. :
Acct 220:
Final Exam
Student
Name:
Question 3 (7points)
Date Account Debit Credit

7. :
Acct 220:
Final Exam
Student
Name:
Question 4: (9points)
a. Answer:
Year Depreciation Expense
Total Accumulated
Depreciation
End-of-Year
Book Value
b. Answer:
Year Depreciation Expense
Total Accumulated
Depreciation
End-of-Year
Book Value
c.
Answer
Question 5 (7points)
Date Account Debit Credit

8. :
Acct 220:
Final Exam
Student
Name:
Question 6 (4points)
Date Account Debit Credit