After adding $15,300 to the $15,000 in savings, the cash flow for year 2 would equal $30,300. For year 3, the depreciation expense would equal $85,000 * .15, or $12,750. The tax on the year 3 deprecation would then be $12,750 * .40, which equals $5,100. After adding $5,100 to the $15,000 in savings, the cash flow for year 3 would equal
This cost is a bit special, because it evolves stage in function of the number of unit sold. Answer Considering the semi fixed cost that derives from the new trucks, Health Spring needs to sell 25% additional units, which is 500 more bottles. Calculations Step 1 Calculate Iso-Contribution change in sales volume for a 10% price decrease. Use this formula: ∆Q/Q=(-∆P)/((P-v)+∆P) ∆P/P=-10%→∆P=-10%*20=-2 ∆Q/Q=(-(-2))/((20-8)+(-2) )=(+2)/10=0,2=20% ∆Q/Q=+20%→∆Q=+20%*2000=+400 With a 10 percent price decrease we need to sell 20% additional units. However, this does not take into account the increase in Fixed Cost we will have since we will deliver
If she were to move to another state where her marginal state rate would be 10 percent, would her choice be any different? Assume that Dana itemizes deductions. When the state rate is 5 percent, Dana would achieve the following returns from the Treasury bond or the corporate bond: The Treasury bond yields $1,125 or $30,000 x [.05 x (1-.25)] after tax. The corporate bond yields $1,282.50 or $30,000 x [.06 x (1 - .25 - .05(1-.25))] after tax. 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.
c. What volume is required to provide a pretax profit of $100,000? A pretax profit of $200,000? d. Sketch out a CVP analysis graph depicting the base case situation. e. Now assume that the practice contracts with one HMO, and the plan proposes a 20 percent discount from charges. Redo questions a, b, c, and d under these conditions.
Margin of Safety (DOLLARS) Budgeted – break even = 100,000-62500= 37500 (Percentage) 37.500/100.000= 37.5% (Units) 37500/250= 150 3.Compute the company’s margin of safety in units assuming the proposal is accepted. Margin of Safety (Dollars) 137500-58929= 78571 (Units) 78571/275= 286 4. Compute the increase or decrease in profit assuming the proposal is accepted, show the contribution Income Statement for current and proposed. Present Proposed Sales 100,000 137500 Variable expense 64000 80000 CM 36000 57500 Fixed cost 22500 244750 Net income 13500 32750 difference: 19250 4a. What is the operating leverage for the current and proposed?
See below. Example Problems | Find the NPV for the following Capital Budgeting project. | Year | | Cash Flow | | 0 | $ | -10 | | 1 | $ | 5 | | 2 | $ | 2 | | 3 | $ | 2 | | 4 | $ | 2 | | 5 | $ | 2 | | Cost of Capital: | | 10 | % | NPV: | $ | 0.31 | | | (cost done in millions) (http://www.zenwealth.com/businessfinanceonline/CB/NetPresentValue.html) 7-21 NPVs and IRR's for Mutually Exclusive Projects You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $10 million. Investment A will generate $2 million per year (starting at the end of the first year) in perpetuity.
Now suppose Yoklic could use the capacity released under the buy alternative to make a different subassembly that it currently purchases from a vendor for $20. The manufacturing engineer believes that the company can use the existing equipment to manufacture the subassembly for $13 each (direct materials, direct labor, and variable overhead). The firm uses about 5,000 of these subassemblies. Create a schedule that shows the difference between the two alternatives. (5000 units) (5000 units) Manufacture Purchase Direct Materials 52 0 Direct Labour 390 0 Variable Overhead 195 0 Fixed Overhead 325 25 Purchase Cost 0 20
Cash flow per share= $3.00 Price /cash flow ratio= 8.0 8.0 x 3.00 = $24.00 $24.00 / $1.50 = 16 (P/E) 3-5 ROE $100millions (sales) x 3% (profit margin) = $30 million (Net income) Net Income/assets= ROE $30 millions/$50 millions (total assets) = 6% 6% x 2.0 (equity multiplier) = 12% (ROE) 3-6 Du Pont Analysis ROA=10% Profit margin= 2% ROE= 15% ROA x Equity Multiplier= ROE (Profit Margin) (Total asset turnover)= ROA 10/2=5 (this is the firm’s total asset turnover) 15/10=1.5 (this is the firm’s equity multiplier) 3-7 Current and Quick Ratios Current assets= $3 million Current ratio= 1.5 Quick ratio= 1.0 Current assets/ Current liability= current ratio $3million/1.5= $2 million (level of current liability) Current Assets - Current Liability= Inventory $3millions – $2 millions = $1 million (level of
Question : (TCO 7) Pritchard Company manufactures a product that has a variable cost of $30 per unit. Fixed costs total $1,500,000, allocated on the basis of the number of units produced. Selling price is computed by adding a 20% markup to full cost. How much should the selling price be per unit for 300,000 units? 6.
20,000 bags: 200,000- 80,000 (fixed cost)- 100,000 (variable cost)= $20,000 DFL= 20,000 = 2 20,000 – 10,000 DFL= 2 25,000 bags: DFL= 45,000 = 1.29 45,000 – 10,000 DFL=1.29 e. What is the degree of combined leverage at both sales levels? DCL= DOL x DFL 20,000 Bags: DCL=