1-15 (b) Total assets $7,891.6; total liabilities $3,109.9. 1-16 (c) Dividends $40,000. (f) Total revenues $125,000. P1-3A Net income $3,300, Retained earnings $1,300, Total assets, $40,000 P1-4A Net cash provided by operating activities $24,000 P1-5A (b) Total assets $79,000 P1-3B Net income $3,500, Retained earnings $1,800, Total assets $77,200 P1-4B Net cash provided by operating activities $24,000 P1-5B (b) Net income $40,000 BYP 1-1 (e) Decrease in net income $14,294,000 BYP 1-2 Hershey’s net income $214,154; Tootsie Roll’s net income $51,625 BYP 1-7 Total assets $39,000 Chapter 2 Exer. No.
State the place value of the underlined digit in 6 953 742. A Hundreds C Ten thousands B Thousands D Hundred thousands ( 3. Round off 5 987 341 to the nearest hundred thousand. A 5.8 million C 6.0 million ( B 5.9 million D 6.1 million 4. Which of the following numbers, when rounded off to the nearest thousand, becomes 7 541 000?
What is the probability of A and C occurring, but not B? Event Probability of Occurrence A B C A) 8.9%. B) 10.5%. C) 3.8%. 25% 15% 42% www.LotBook.net End of Year 1 2 3 4 5 6 7 8 9 Cash Flows $5,000 $5,000 $5,000 $5,000 $5,000 -0-0$2,000 $2,000
1991 = (280,000 – 150,000) / 290,000 = .448 C. Average Collection Period i. 1991 = 120,000 / (1,200,000 * .6 / 360) = 60,000 days D. Inventory Turnover i. 1991 = 900,000 / 150,000 = 6.00 E. Fixed Asset Turnover i. 1991 = 1,200,000 / 920,000 = 1.304 F. Total Asset Turnover i. 1991 = 1,2000,000 / 1,200,000 = 1.00 G. Debt Ratio i.
$35,000 0.8 1st Investment, 40,000 1.4 2nd Investment Total $75,000 ($35,000/$75,000)(0.8) + ($40,000/$75,000)(1.4) = 1.12 6-2 Required Rate of Return Assume that the risk-free rate is 6% and that the expected return on the market is 13%. What is the required rate of return on a stock that has a beta of 0.7? rRF = 6%; rM = 13%; b = 0.7; Solve for : rs = ? rs = rRF + (rM - rRF)b = 6% + (13% - 6%)0.7 = 10.9% 6-7 Required Rate of Return Suppose rRF = 9%, rM = 14%, and bi = 1.3. a. What is ri, the required rate of return on Stock i?
APV vs. WACC Problem Given the following information, answer questions 1 and 2 below. Company and market data: Rf = 4% Rm = 10% βu = 0.9 D/V (target) = 40% RD = 4% Tc = 30% Project CFs: I0 = 1000, CF1 = 300, CF2 = 400, CF3 = 500 1) Calculate the project’s value using WACC 2) Calculate the project’s value using APV -Oops, we can’t until we know the financing (debt) pattern over time. (a) OK, assume the project is financed with 60% debt which is paid off in three equal, annual installments. (b) Now assume instead of (a) that the debt is rebalanced to be consistent with the firm’s target debt ratio (i.e. D/V = 40%).
| Cost | Machine Hours | April | $61,255 | 1,189 | May | $82,714 | 1,806 | June | $97,496 | 2,474 | Using the high-low method, determine the variable cost per unit, and the total fixed costs. Select the correct answer. $28.20 per unit and $69,775 respectively. | | | $28.20 per unit and $27,721 respectively. | | | $30.45 per unit and $27,721 respectively.
Redo questions a, b, c, and d under these conditions. a. Total revenue | (100x7500) | | $750,000 | Total Var Cost | (25x7500) | | 187,500 | Total contribution margin | | $562,500 | Fixed Costs | | | 500,000 | Profit | | | $62,500 | b. Contribution margin: $75; breakeven point: Contribution margin x Volume=FC $75 x Volume = $500,000 Volume = 6,667 c. ($75 x Volume)-$500,000 = $100,000 $75 x Volume = $600,000 Volume = 8,000 ($75 x Volume)-$500,000 = $200,000 $75 x Volume = $700,000 Volume = 9,333 d. | | | | | | | | | | | | e. Total revenue | (80x7500) | | $600,000 | Total Var Cost | (25x7500) | | 187,500 | Total contribution margin | | $412,500 | Fixed Costs | | | 500,000
e. Which project should be accepted? Why? PROJECT A PP =100,000/32,000= 3.125 IRR = 18.03 NPV a = 32,000( 1/ (1 + .11)1) – 100,000 = 18,268.70 PI = 160,000/ 100,000= 1.6 Project A CFo = -100,000 F1 = 5 CF1 = 32,000 = 18,268.70 NET PRESENT VALUE Project A Project B Cash Flow Cash Flow Initial Outlay -100,000 Initial Outlay -100,000 Year 1 32,000 Year 1 0 Year 2 32,000 Year 2 0 Year 3 32,000 Year 3 0 Year 4 32,000 Year 4 0 Year 5 32,000 Year 5 200,000 PV $118,268.70 PV $118,690.27 -100,000.00 -100,000 NPV= 18,268.70 NPV= 18,690.27 INTERNAL RATE OF RETURN year project A year Project B 0 --100000 0 -100000 1 32000 1 0 2 32000 2 0 3 32000 3 0 4 32000 4 0 5 32000 5 200000 18.03% 14.87% The conflict is started by the projects containing two different cash flows in different periods of time. The return cash flows of Project A looks to be consistent over the course of five years after the initial $100,000 investment. They are receiving almost a 1/3 of the original investment back every year and thus can recover more quickly.
Question 1 : What is the break-even volume in units? In sales dollars? 1) Normal Volume 3,000 units 2) Selling Price @ Unit Price $4,350 3) Contribution Margin per unit = Unit Price - Unit Variable Costs $4,350 - $2,070 $2,280 4) Contribution Percent $2,280 / $4,350 0.524138 5) Unit Variable Cost $550 + $825 + $420 + $275 $2,070 6) Unit Fixed Cost $660 + $770 $1,430 7) Total Fixed Cost (TFC) = Unit Fixed Cost * Normal Volume $1,430 * 3,000 $4,290,000 8) Break-even Volume (in units) = Fixed Cost / Unit Contribution $4,290,000 / $2,280 1,882 unit 9) Break-even Volume (in sales) = Fixed Cost / Contribution Percent $4,290,000 / 0.524138 $8,184,867 Question 2 : Market research estimates that monthly volume could increase to 3,500 units, which is well within hoist production capacity limitations, if the price were cut from $4,350 to $3,850 per unit. Assuming the cost behavior patterns implied by he data in Exhibit 1 are correct would you recommend that this action be taken? What would be the impact on monthly sales cost, and income?