He company that you manage has invested $5 million in developing a new product, but the development is not quite finished. At a recent meeting, your salespeople report that the introduction of competing products has reduced the expected sales of your new product to $4.5 million. If it would cost $3 million to finish development and make the product, you go ahead and do so. The most you should pay to complete development is $million.

( should /or should not)

Problem 9-5. net present value and taxes [lo 1, 2] penguin productions is evaluating a film project. the president of penguin estimates that the film will cost $20,000,000 to produce. in its first year, the film is expected to generate $16,500,000 in net revenue, after which the film will be released to video. video is expected to generate $10,000,000 in net revenue in its first year, $2,500,000 in its second year, and $1,000,000 in its third year. for tax purposes, amortization of the cost of the film will be $12,000,000 in year 1 and $8,000,000 in year 2. the company’s tax rate is 35 percent, and the company requires a 12 percent rate of return on its films. required what is the net present value of the film project? to simplify, assume that all outlays to produce the film occur at time 0. should the company produce the film?

The struter partnership has total partners’ equity of $510,000, which is made up of main, capital, $400,000, and frist, capital, $110,000. the partners share net income and loss in a ratio of 80% to main and 20% to frist. on november 1, adison is admitted to the partnership and given a 15% interest in equity and a 15% share in any income and loss. prepare journal entries to record the admission of adison for a 15% interest in the equity and a 15% share in any income and loss under the following independent assumptions. (1) record the admission of adison with an investment of $90,000 for a 15% interest in the equity and a 15% share in any income and loss. (2) record the admission of adison with an investment of $120,000 for a 15% interest in the equity and a 15% share in any income and loss. (3) record the admission of adison with an investment of $80,000 for a 15% interest in the equity and a 15% share in any income and loss.

Two products, qi and vh, emerge from a joint process. product qi has been allocated $34,300 of the total joint costs of $55,000. a total of 2,900 units of product qi are produced from the joint process. product qi can be sold at the split-off point for $11 per unit, or it can be processed further for an additional total cost of $10,900 and then sold for $13 per unit. if product qi is processed further and sold, what would be the financial advantage (disadvantage) for the company compared with sale in its unprocessed form directly after the split-off point?