During the past year, Stacy McGill planted a new vineyard on 150 acres of land that she leases for $30,120 a year. She h...
During the past year, Stacy McGill planted a new vineyard on 150
acres of land that she leases for $30,120 a year. She has asked
you, as her accountant, to assist her in determining the value of
her vineyard operation.
The vineyard will bear no grapes for the first 5 years (1–5). In
the next 5 years (6–10), Stacy estimates that the vines will bear
grapes that can be sold for $62,250 each year. For the next 20
years (11–30), she expects the harvest will provide annual revenues
of $112,900. But during the last 10 years (31–40) of the vineyard’s
life, she estimates that revenues will decline to $73,490 per
year.
During the first 5 years, the annual cost of pruning, fertilizing,
and caring for the vineyard is estimated at $9,260; during the
years of production, 6–40, these costs will rise to $12,550 per
year. The relevant market rate of interest for the entire period is
5%. Assume that all receipts and payments are made at the end of
each year.
DickButton has offered to buy Stacy’s vineyard business by assuming the 40-year lease. On the basis of the current value of the business, what is the minimum price Stacy should accept? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)
Homework Answers
Answer:
Minimum price Stacy should accept = $488,297
Workings:
Factor values used are as follows:
Add Answer to:
During the past year, Stacy McGill planted a new vineyard on 150 acres of land that she leases for $30,120 a year. She h...
During the past year, Stacy McGill planted a new vineyard on 150 acres of land that she leases for $30,120 a year. She h...
During the past year, Stacy McGill planted a new vineyard on 150 acres of land that she leases for $30,120 a year. She has asked you, as her accountant, to assist her in determining the value of her vineyard operation. The vineyard will bear no grapes for the first 5 years (1–5). In the next 5 years (6–10), Stacy estimates that the vines will bear grapes that can be sold for $62,250 each year. For the next 20 years (11–30),...
During the past year, Julia McGill planted a new vineyard on 150 acres of land that she leases for $30,380 a year. She h...
During the past year, Julia McGill planted a new vineyard on 150
acres of land that she leases for $30,380 a year. She has asked
you, as her accountant, to assist her in determining the value of
her vineyard operation.
The vineyard will bear no grapes for the first 5 years (1–5). In
the next 5 years (6–10), Julia estimates that the vines will bear
grapes that can be sold for $62,770 each year. For the next 20
years (11–30),...
During the past year, Maria McGill planted a new vineyard on 150 acres of land that...
During the past year, Maria McGill planted a new vineyard on 150 acres of land that she leases for $31,610 a year. She has asked you, as her accountant, to assist her in determining the value of her vineyard operation. The vineyard will bear no grapes for the first 5 years (1-5). In the next 5 years (6-10), Maria estimates that the vines will bear grapes that can be sold for $62,540 each year. For the next 20 years (11-30),...
During the past year, Pearl McGill planted a new vineyard on 150 acres of land that...
During the past year, Pearl McGill planted a new vineyard on 150 acres of land that she leases for $31,210 a year. She has asked you, as her accountant, to assist her in determining the value of her vineyard operation. The vineyard will bear no grapes for the first 5 years (1-5). In the next 5 years (6-10), Pearl estimates that the vines will bear grapes that can be sold for $63,370 each year. For the next 20 years (11-30),...
Instructions If money is worth 2%2% per quarter, compounded quarterly, which option would you recommend that...
Instructions If money is worth 2%2% per quarter, compounded quarterly, which option would you recommend that Brent exercise? P6.6 (L05) (Purchase Price of a Business) During the past year, Stacy McGill planted a new vineyard on 150 acres of land that she leases for €30,000 a year. She has asked you as her accountant to assist her in determining the value of her vineyard operation The vineyard will bear no grapes for the first 5 years (1-5). In the next...
What would you pay for a $200,000 debenture bond that matures in 15 years and pays...
What would you pay for a $200,000 debenture bond that matures in
15 years and pays $10,000 a year in interest if you wanted to earn
a yield of:
2%? (Round factor values to 5 decimal places, e.g.
1.25124 and final answer to 0 decimal places, e.g.
458,581.)
Amount to Pay
3%? (Round factor values to 5 decimal places, e.g.
1.25124 and final answer to 0 decimal places, e.g.
458,581.)
Amount to Pay
4%? (Round factor values to 5 decimal...
During the past year, Julia McGill planted a new vineyard on 150
acres of land that she leases for $30,380 a year. She has asked
you, as her accountant, to assist her in determining the value of
her vineyard operation.
The vineyard will bear no grapes for the first 5 years (1–5). In
the next 5 years (6–10), Julia estimates that the vines will bear
grapes that can be sold for $62,770 each year. For the next 20
years (11–30),...
During the past year, Maria McGill planted a new vineyard on 150 acres of land that she leases for $31,610 a year. She has asked you, as her accountant, to assist her in determining the value of her vineyard operation. The vineyard will bear no grapes for the first 5 years (1-5). In the next 5 years (6-10), Maria estimates that the vines will bear grapes that can be sold for $62,540 each year. For the next 20 years (11-30),...
During the past year, Pearl McGill planted a new vineyard on 150 acres of land that she leases for $31,210 a year. She has asked you, as her accountant, to assist her in determining the value of her vineyard operation. The vineyard will bear no grapes for the first 5 years (1-5). In the next 5 years (6-10), Pearl estimates that the vines will bear grapes that can be sold for $63,370 each year. For the next 20 years (11-30),...
Instructions If money is worth 2%2% per quarter, compounded quarterly, which option would you recommend that Brent exercise? P6.6 (L05) (Purchase Price of a Business) During the past year, Stacy McGill planted a new vineyard on 150 acres of land that she leases for €30,000 a year. She has asked you as her accountant to assist her in determining the value of her vineyard operation The vineyard will bear no grapes for the first 5 years (1-5). In the next...
What would you pay for a $200,000 debenture bond that matures in
15 years and pays $10,000 a year in interest if you wanted to earn
a yield of:
2%? (Round factor values to 5 decimal places, e.g.
1.25124 and final answer to 0 decimal places, e.g.
458,581.)
Amount to Pay
3%? (Round factor values to 5 decimal places, e.g.
1.25124 and final answer to 0 decimal places, e.g.
458,581.)
Amount to Pay
4%? (Round factor values to 5 decimal...
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