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**Richardses' Tree Farm, Inc. has branched into gardening over the years and is now**

- From Business, General Business

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**1) Cost.** Richardses' Tree Farm, Inc. has branched into gardening over the years and is now considering adding patio furniture to its product lineup. Currently, the area where the patio furniture is to be displayed is a vacant slab of concrete attached to the indoor shop. The company originally paid $8,000 to put in the slab of concrete three years ago. It would now cost $15000 to put in the same slab of concrete. Should the company consider the concrete slab when expanding its outdoor garden shop to include patio furniture? If yes, which value should it use?**Should the company consider the concrete slab when expanding its outdoor garden shop to include patio furniture? If yes, which value should it use? (Select the best response.)****A.** Yes, use $8000 as the cost.**B.** Yes, use $15,000 as the cost.**C.** No. The slab is a sunk cost unless there is another use for the slab that could provide cash flow to Richardses' Tree Farm. The additional cash flow that the slab could provide is the opportunity cost, not the current replacement cost or the original cost.**2)** Working capital cash flow. Cool Water, Inc. sells bottled water. The firm keeps in inventory plastic bottles at 10% of the monthly projected sales. These plastic bottles cost $0.004 each. The monthly sales for the first four months of the coming year are as follows:

January 2,100,000

February: 2,200,000

March: 2,900,000

April: 3,200,000**What is the monthly increase or decrease in cash flow for inventory given that an increase is a use of cash and a decrease is a source of cash? Note: Enter a decrease as a negative number.**

What is the change in working capital for January? (Round to the nearest dollar.)

What is the change in working capital for February? (Round to the nearest dollar.)

What is the change in working capital for March? (Round to the nearest dollar.)**3) Snow Tires Rain Tires All-Terrain Tires All-Purpose Tires**

Cost per tire 41 31 45 38

Sales: January 41,000 21,000 5,000 63,000

Sales: February 36,000 35,000 4,400 55,000

Sales: March 15.000 41,000 7,000 50,000

Sales: April 2000 22,000 8,000 61,000

Working capital cash flow. Tires for Less is a franchise of tire stores throughout the greater Northwest. It has projected the unit sales and costs for each tire type for the next four months in the popup window The company policy is to have the next month's anticipated sales for each tire type in the warehouse. Shipments are made to the various stores throughout the Northwest from the central warehouse. Calculate the monthly increase or decrease in cash flow for inventory for the first three months of the year given that an increase in inventory is a use of cash and a decrease in inventory is a source of cash.

Snow Tires:

What is the change in working capital for January? (Round to the nearest dollar.)

What is the change in working capital for February? (Round to the nearest dollar.)

What is the change in working capital for March? (Round to the nearest dollar.)

Rain Tires:

What is the change in working capital for January? (Round to the nearest dollar.)

What is the change in working capital for February? (Round to the nearest dollar.)

What is the change in working capital for March? (Round to the nearest dollar.)

All-Terrain Tires:

What is the change in working capital for January? (Round to the nearest dollar.)

What is the change in working capital for February? (Round to the nearest dollar.)

What is the change in working capital for March? nothing (Round to the nearest dollar.)

All-Purpose Tires:

What is the change in working capital for January? (Round to the nearest dollar.)

What is the change in working capital for February? (Round to the nearest dollar.)

What is the change in working capital for March? (Round to the nearest dollar.)**4) **Depreciation expense. Richardses' Tree Farm, Inc. has just purchased a new aerial tree trimmer for $89,000. Calculate the depreciation schedule using a seven-year life (for the property class category of a single-purpose agricultural and horticultural structure from Table 10.3) for both straight-line depreciation and MACRS, LOADING...**.Use the half-year convention for both methods. Compare the depreciation schedules before and after taxes using a 40% tax rate. What do you notice about the difference between these two methods?**

Using a seven-year life, straight-line depreciation, and the half-year convention for the first and last years, what is the annual depreciation of the trimmer? (Round to the nearest dollar.)

Using a seven-year life, straight-line depreciation, and the half-year convention for the first and last years, what is the depreciation for the first and last years? (Round to the nearest dollar.)**Using a seven-year life and MACRS depreciation, **

,what is the annual depreciation of the trimmer for year 1? (Round to the nearest dollar.)

What is the annual depreciation of the trimmer for year 2? (Round to the nearest dollar.)

What is the annual depreciation of the trimmer for year 3? (Round to the nearest dollar.)

What is the annual depreciation of the trimmer for year 4? (Round to the nearest dollar.)

What is the annual depreciation of the trimmer for year 5? (Round to the nearest dollar.)

What is the annual depreciation of the trimmer for year 6? (Round to the nearest dollar.)

What is the annual depreciation of the trimmer for year 7? (Round to the nearest dollar.)

What is the annual depreciation of the trimmer for year 8? (Round to the nearest dollar.)**Compare the depreciation schedules before and after taxes using a 40% tax rate. What do you notice about the difference between these two methods? (Select the best response.)****A. **The difference is that the MACRS moves up the tax shield to the early years of depreciation yet the total tax shield is the same under both depreciation schedules.**B. **The difference is that the Straight-line moves up the tax shield to the early years of depreciation yet the total tax shield is the same under both depreciation schedules.**5)** Brock Florist Company bought a new delivery truck for $29,000. It was classified as a light-duty truck. The company sold its delivery truck after three years of service. If a five-year life and MACRS, was used for the depreciation schedule, what is the after-tax cash flow from the sale of the truck (use a 40% tax rate) if**a.** the sales price was $14,000?**b.** the sales price was $10,000?**c. **the sales price was $3,000?**a.** If the sales price was $14,000, what would be the after-tax cash flow? (Round to the nearest cent.)**b. **If the sales price was $10,000, what would be the after-tax cash flow? (Round to the nearest cent.)**c. **If the sales price was $3,000, what would be the after-tax cash flow?

**Richardses' Tree Farm, Inc. has branched into gardening over the years and is now**

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- Submitted On 16 Jun, 2017 06:07:19

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