Ayayai co. purchased land as a factory site for $432,000. the process of tearing down two old buildings on the site and constructing the factory required 6 months. the company paid $45,360 to raze the old buildings and sold salvaged lumber and brick for $6,804. legal fees of $1,998 were paid for title investigation and drawing the purchase contract. ayayai paid $2,376 to an engineering firm for a land survey, and $73,440 for drawing the factory plans. the land survey had to be made before definitive plans could be drawn. title insurance on the property cost $1,620, and a liability insurance premium paid during construction was $972. the contractor’s charge for construction was $2,959,200. the company paid the contractor in two installments: $1,296,000 at the end of 3 months and $1,663,200 upon completion. interest costs of $183,600 were incurred to finance the construction. determine the cost of the land and the cost of the building as they should be recorded on the books of ayayai co. assume that the land survey was for the building.
cost of the land $.
cost of the building $.

If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. there are two approaches to use to account for flotation costs. the first approach is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investment cost. because the investment cost is increased, the project's expected return is reduced so it may not meet the firm's hurdle rate for acceptance of the project. the second approach involves adjusting the cost of common equity as follows: . the difference between the flotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the flotation cost adjustment. quantitative problem: barton industries expects next year's annual dividend, d1, to be $1.90 and it expects dividends to grow at a constant rate g = 4.3%. the firm's current common stock price, p0, is $22.00. if it needs to issue new common stock, the firm will encounter a 6% flotation cost, f. assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. what is the flotation cost adjustment that must be added to its cost of retaine

Bonds often pay a coupon twice a year. for the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. using the values of cash flows and number of periods, the valuation model is adjusted accordingly. assume that a $1,000,000 par value, semiannual coupon us treasury note with three years to maturity has a coupon rate of 3%. the yield to maturity (ytm) of the bond is 7.70%. using this information and ignoring the other costs involved, calculate the value of the treasury note:

A4-year project has an annual operating cash flow of $59,000. at the beginning of the project, $5,000 in net working capital was required, which will be recovered at the end of the project. the firm also spent $23,900 on equipment to start the project. this equipment will have a book value of $5,260 at the end of the project, but can be sold for $6,120. the tax rate is 35 percent. what is the year 4 cash flow?