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2 years ago

Joetz Corporation has gathered the following data on a proposed investment project (Ignore income taxes.):

Business

1 answer:

marin [14]2 years ago

3 0

Answer:

13.3%

Explanation:

The formula to compute the simple accounting rate of return is shown below:

= Annual net income ÷ average investment

where,

Average investment is $30,000

And, the net income would be

= Annual net cash flows - depreciation expense

= $6,000 - $2,000

= $4,000

The depreciation expense

= (Original cost - residual value) ÷ (useful life)

= ($30,000 - $0) ÷ (15 years)

= ($30,000) ÷ (15 years)

= $2,000

Now put these values to the above formula

So, the rate would equal to

= $4,000 ÷ $30,000

= 13.3%

This is the answer and the same is not given in the options

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FCOJ, Inc., a prominent consumer products firm, is debating whether or not to convert its all-equity capital structure to one th

Strike441 [17]

Answer:

a. $684

b. $480.6

c. 63 shares

Explanation:

a. The calculation of cash flow under the current capital structure is given below:-

Earning per share = Net income ÷ Shares

= $26,220 ÷ 6,900

= $3.8 per share

Cash flow = Earning per share × Stock shares

=$3.8 × 180 shares

= $684

b. The calculation of cash flow be under the proposed capital structure is given below:-

Value = $59 × 6,900

= $407,100

Under the capital structure suggested the company would collect new debt in the amount of:

Debt = 0.35 × $4071,00

= $142,485

Which means the amount of the repurchased shares will be:-

Shares repurchased = $142,485 ÷ $59

= $2,415

The Company will have to make an interest payment on the new debt under the new capital structure. The net income with the interest payment will be:-

Net income = $26,220 - 0.10 × $142,485

=$11,971.5

This means that the EPS will come under the new capital structure

Earning per share = $11,971.5 ÷ 4,485 shares

= $2.67 per share

Since all profits are paid out as dividends, the shareholder receives:-

Shareholder cash flow = Earning per share × Stock shares

= $2.67 × 180 shares

= $480.6

c. The shareholder would sell 35% of their shareholdings

= Shares × Debt percentage

= 180 × 35%

= 63 shares

5 0

2 years ago

Wehrs Corporation has received a request for a special order of 9,700 units of product K19 for $47.20 each. The normal selling p

Grace [21]

Answer:

See below.

Explanation:

We can compute the profitability of this special order by accounting for the incremental costs,

Sales (9700 * 47.20) = $457,840

Incremental Variable costs = (18 + 7.30 + 4.50 + 6.90) = $36.7/unit

The incremental variable costs include the $6.9 for modifications and does not include 7.4 which is a part of non incremental fixed costs.

Profits from this special order are as follows,

Sales 457,840

Less:

Variable costs (36.7*9700) 355,990

Incremental Fixed costs 46,700

Profits from this special order 55,150

Since the order has positive contribution and as it yields profits, it should be accepted.

Hope that helps.

8 0

2 years ago

Moody Farms just paid a dividend of $2.65 on its stock. The growth rate in dividends is expected to be a constant 3.8 percent pe

NISA [10]

Answer:

$34.63.

Explanation:

The Gordon Dividend Discount Model will be used to calculate the current share price. This model helps us to determine how much should we pay for a stock and the analysis is based on dividends, growth rate, and our required rate of return. The model is as follows:

$Po = D1 / (1 + r )^1 + D2 / (1 + r )^2 + D3 / (1 + r )^3 + D4 / (1 + r )^4 + D5 / (1 + r )^5 + D6 / (1 + r )^6 + [(D7 / r - g) / (1 + r)^6]$

where

Po = Current market Price

D1 = Dividend Paid * (1 + g)

D2 = D1 (1 + g) ; D3 = D2 (1 + g) ; D4 = D3 (1 + g) ; D5 = D4 (1 + g)

D6 = D5 (1 + g) ; D7 = D6 (1 + g)

This implies that:

$Po = 2.7507 / (1.15)^1 + 2.8552 / (1.15)^2 + 2.9637 / (1.15)^3 + 3.0763 / (1.13)^4 + 3.1932 / (1.13)^5 + 3.3146 / (1.13)^6 + [(3.4405/.11 - .038) / (1.13)^6]$

⇒ Current Market Price = $34.63.

Note: Figures are rounded up-to 4 decimal points. A difference of up-to $2 would not affect your scores as far as the methodology is correct.

8 0

2 years ago

At its height, what percentage of american workers were employed in an automotive-related industry?

USPshnik [31]

The percentage of American workers that were classified as employed in the industry that is automotive-related is only 20%. There were only 2 out 10 Americans who are working on this job. Automotive jobs cover auto dealerships, and manufacturing plants.

7 0

2 years ago

Read 2 more answers

If an investor purchases $1,000 face amount of an 8% corporate bond at 93. The bond is scheduled to mature in 2028. What will ha

sdas [7]

Answer:

The amount to be paid is $100,440

Explanation:

When the bond matures, it is the due date on which the bond issuer need to pay off the bond on that particular date.

In this case, the bond matures in 2028, so

Interest amount = Face value of bond × Price × Interest

= $1,000 × 93 × 8%

= $7,440

The amount to be paid on maturity will be:

= $7,440 + $93,000

= $100,440

7 0

2 years ago