Again, note that the actual state rate is reduced by 25% to allow for the deductibility of state income taxes on the federal income tax return. If Dana’s state tax rate increases to 10%, corporate bonds are still superior to Treasury bonds. 50. [LO 1] At the beginning of his current tax year David invests $12,000 in original issue U.S. Treasury bonds with a $10,000 face value that mature in exactly 10 years. David receives $700 in interest ($350 every six months) from the Treasury bonds during the current
I calculated an “inventory turnover ratio” which measures the number of times a company sells its inventory during a year. A high rate of turnover indicates easiness in selling inventory; a low rate indicates difficulty. In 2011, the inventory turnover was 6.1. By 2012 the ratio decreased to 5.2. The decrease may be due to a slow ability to turn around merchandise in sales and potentially due to paying a higher cost for goods.
Continue to look into the “Andy Defresne” marketing program responsible for the variation. e) Per the Inventory Manger, the increase in inventory is due to a combination of happenings throughout the year. $5,000,000 of the increase is attributable to a decrease in sales and a higher turnover rate. $11,000,000 of the increase in inventory is due to the purchase of materials from suppliers to receive a cheaper rate for the long haul. $3,000,000 of the inventory happened secondary to a reversal of a previous write down, which was incurred in 2002.
The net cash inflow and cash outflow are calculated using sales and production figures for the next 8 years. The unit cost from the first year is £0.89 which is the cost per mashing without depreciation and divided by 13,000 bottles. From this information provided, the cost will increase by 3.5% and also the selling price will increase by 4% every year (reference 4). These figures are based on the current rate inflation of 4% which is shown in appendix 9 The capital allowances are worked out on cased of 20% (Reference 5) and the annual investment allowance is £100,000 is available (Reference 6) in the first year which is restricted to £87,359. This figure is substrated from the acquisition giving a result of £332,641 which is the written down value.
New contribution margin = $70 Break-even point in passengers = fixed costs/contribution margin Passengers = 45,000 Train cars = 715 e) Springfield Express has experienced an increase in variable cost per passenger to $ 85 and an increase in total fixed cost to $ 3,600,000. The company has decided to raise the average fare to $ 205. If the tax rate is 30 percent, how many passengers per month are needed to generate an after-tax profit of $ 750,000? Before Tax Needed Profit = $1,071,428.57 Before Tax Needed Contribution Margin = $4,671,428.57 Contribution Margin per Customer = $120 Number of Customers Needed = 38,928.57 Whole Number of Customers Needed = 38,929
• Prepaid expenses increased $150,000 during the year. • Accounts payable to suppliers of merchandise decreased $340,000 during the year. • Accrued expenses payable decreased $100,000 during the year. • Operating expenses include depreciation expense of $70,000. Instructions Prepare the operating activities section of the statement of cash ﬂows for the year ended November 30, 2015, for Whitlock Company, using the indirect method.
over the 3-year period from 2003 to 2005. Total assets dropped $1 million, or 3%, but remain near $35 million. The most notable asset change is the $500,000, or 8%, decrease in accounts receivable. However, cash did increase $200,000 which gives the company the opportunity for business investment in the coming fiscal year (“University of Phoenix,” 2006). A positive trend shows that total liabilities have dropped $1.7 million, which is accounted for by a $2 million, or 42%, decrease in long-term debt.
65) The purchasing power of a dollar is decreasing at the rate of 8.5% annually, compounded continuously. How long will it take for the purchasing power of $1.00 to be worth $ 0.53? Round answers to the nearest hundreth. 66) How long will it take for $5300 to grow to $37,800 at an interest rate of 9.3% if the interest is compounded continuously? Round the number of years to the nearest hundredth.
Question 1 What do you think of the company’s policy of not operating ships over 15 years old? In year 15 of the ship’s life, is it better to scrap the ship or continue operating it until the ship is 25 years old? | 15 year Option | 25 year Option | Without Tax (Hong Kong) | - 1,267,880.18 | 365,810.92 | With 35% Tax (US) | - 8,670,868.98 | - 7,256,252.74 | Table 1: Net Present Values for 15 year and 25 year operation times, with and without tax Comparing the Net Present Value (NPV) without tax for 15 years and 25 years, a usage time of 25 years is recommended as the NPV for this option is higher. Assumptions made: * Initial Investments: Timing | Years passed (base for the PV calculation) | Value | 01/2001 | 0 | 3,900,000.00 | 01/2002 | 1 | 3,900,000.00 | Start of 2003 | 2 | 31,200,000.00 | * 500,000 increase in Working Capital is just required when the ships starts operating in year 3, and the salvage value at the end of the project is 500,000 * No capital expenditures are required for special surveys in the last year of operations Question 2 Assume that in year 15 the company follows the optimal strategy identified in question Should Ocean Carriers purchase the new $39m capsize? Make two different calculations: a) Assume that Ocean Carriers is a U.S. firm subject to 35% taxation.
We expect the long-term prospects to grow. Over 85% of the cargo carried by capsizes was iron ore and coal. A decision has to be made on the possible construction of a new ship to meet the demands of the charterer, which wants a contract of only 3 years. To reach the decision, Mary Linn, had to arrive at the “NET PRESENT VALUE” of the investment, i.e., the Ship. What are the key financial issues involved with Mary Linn's decision?