Accounting

Introduction and information regarding the assignment

$2900, 000

$180,000

$2940, 000 per year for the first two years, $3, 160,000 per year for 3rd and 4th, $ 3,240,000 per year for 4th and 5th and hence, 3,600,000 during the last two years of operation i.e. 7th and 8th year.

$ 2,200,000 per year for the first two years, $2,500,000 per year for 3rd and 4th, $ 2,600,000 per year for 4th and 5th and hence, $ 2,600,000 during the last two years of operation i.e. 7th and 8th year.

$ 160,000.

Task A)

(See attachment)

Working Of ARR

ARR =

Average Profit

Average Investment

Year

Profit

1

269,500

2

269,500

3

213,500

4

213,500

5

199,500

6

199,500

7

451,500

8

291,500

*

451500

-160000

Average Profit =

263,500

* Restoration cost of $150,000 is subtracted from Year 8 Profit

Average Investment =

2900000 + 60,000

2

Average Investment =

1,480,000

ARR = 263,500 1,480,000

ARR =

17.80%



The cash budget, also known as projected cash flow , is a budget that shows the forecast of future cash inflows and outflows (cash) of a company, for a period of time. The importance of cash budget is that we can predict the future availability of cash (whether we will have a deficit or a surplus of cash) and, on that basis, to make decisions, for example:

If we anticipate that we will have a deficit or is going to be needed more cash, we can, for example:

Timely request for funding.

Seek to refinance debt.

Apply for commercial credit (pay for purchases on credit instead of cash) or, in any event claim more credit.

Collect cash and no credit or, in any case, give a lesser credit.

If we anticipate that we will have a surplus of cash, we can, for example:

Invest in new machinery and new equipment.

Invest in the purchase of more merchandise.

Invest in business expansion.

Use in investments outside the company, for example, ...