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2 years ago

Othman Inc. has a $800,000 investment opportunity with the following characteristics:

Business

1 answer:

mash [69]2 years ago

3 0

Answer:

The correct answer is option (b).

Explanation:

According to the scenario, the given data are as follows:

Sales = $2,240,000

Contribution margin ratio = 50%

Fixed expenses = $1,008,000

So, First we calculate the contribution margin by using following formula:

Contribution margin = Contribution margin ratio × Sales

= 50% × $2,240,000

= $1,120,000

So, we can calculate the margin for this investment by using following formula:

Margin = Net operating income ÷ Sales

Where, Net operating income = Contribution margin - Fixed expenses

= $1,120,000 - $1,008,000

= $112,000

Now by putting the value in the formula, we get

Margin = $112,000 ÷ $2,240,000

= 0.05

= 5%

Hence, the margin for this investment opportunity is 5%.

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Given an optimal capital structure that is 50% debt and 50% common stock, calculate the weighted average cost of capital for the

klemol [59]

Answer:

As the WACC is more than 7.5%, option D is the correct answer.

Explanation:

The weighted average cost of capital or WACC is the cost of a firm's capital structure. To calculate the WACC, we multiply the weight of each component of the capital structure by the cost of that component. The components of capital structure can be one or all of the following namely debt, preferred stock and common stock.

The formula for WACC is,

WACC = wD * rD * (1-tax rate) + wP * rP + wE * rE

Where,

w represents the weight of each component
r represents the cost of each component
D, P and E represents debt, preferred stock and common stock respectively

First we need to determine the cost of debt and equity for this firm.

We use the market value of debt and thus, rate for the calculation of WACC.

The cost of debt will be its yield to maturity as it is the current rate or cost. Thus, rD will be 6%.

The cost of equity can be determined using the constant growth model of DDM 's formula for prcie today.

P0 = D0 * (1+g) / (r - g)

80 = 5 * (1+0.05) / (r - 0.05)

80 * (r - 0.05) = 5.25

80r - 4 = 5.25

80r = 5.25 + 4

r = 9.25 / 80

r = 0.115625 or 11.5625%

WACC = 0.5 * 0.06 * (1-0.3) + 0.5 * 0.115625

WACC = 0.0788125 or 7.88125%

As the WACC is more than 7.5%, option D is the correct answer.

8 0

2 years ago

Read 2 more answers

A manufacturing company producing medical devices reported $60,000,000 in sales over the last year. At the end of the same year,

kumpel [21]

Answer:

a) The company turn its inventory at 1.5.

b) Per unit inventory cost for a product that costs $1000 is $166.67.

Explanation:

a) number of units sold = ($60000000/year)*(1 unit/$2000)

= 30000 units/year

COGS = 30000 units/year*$1000/unit

= $30000000/year

inventory = $20000000

flow time = inventory/flow rate

= $20000000/30000000 per year

= 0.67 years

inventory turns = 1/flow rate

= 1/(0.67)

= 1.5

Therefore, The company turn its inventory at 1.5.

b) %inventory cost per computer = 25%*0.6667 years

= 16.667%

16.667%*$1000 = $166.67 per unit

Therefore, Per unit inventory cost for a product that costs $1000 is $166.67.

8 0

2 years ago

During the current year, Swallow Corporation, a calendar year C corporation, has the following transactions. Income from operati

Free_Kalibri [48]

Answer:

a. Taxable Income = $42,000

b. Taxable Income = $28,000

Explanation:

Given

Income from operations $660,000

Expenses from operations $760,000

Dividends received from Brown Corporation $240,000

Taxable Income is calculated

Dividend received + Income from operations - Expenses from Operations

Taxable Income = $240,000 + $660,000 - $760,000

Taxable Income = $140,000

Swallow Corp owns 12% of Browns Corporation stock;

And 12% is not up to 20% owned by Browns Corporation.

So. The Dividend Received is 70% of $140,000

Dividend = $98,000

Taxable Income = $140,000 - $98,000

Taxable Income = $42,000

Dividend Received + Taxable Income (ii) = Taxable Income (i)

Where Taxable Income (I) = $140,000

Calculating Dividend

Dividend = 80% of $140,000

Dividend = $112,000

Taxable Income = $140,000 - $112,000

Taxable Income = $28,000

8 0

2 years ago

Any attempt to improve managerial performance by imparting knowledge, changing attitudes, or increasing skills is called _______

makvit [3.9K]

Ashshbekaagbajajahabauaha susgababa

5 0

2 years ago

1. Estratégia é o caminho para ir de um ponto a outro, obedecendo a restrições e respeitando determinado prazo. Para se definir

NeX [460]

Answer:

Olá, realizei algumas pesquisas e encontrei a opção que você precisava.

d. Não definir forças, oportunidades, fraquezas e ameaças, as quais a empresa está inserida.

Explanation:

A estratégia organizacional é definida de acordo com as metas e objetivos que a empresa deseja alcançar no curto e longo prazo.

Por isso é necessário implementar planos que auxiliem a empresa na obtenção dos resultados esperados.

A análise SWOT é uma ferramenta de gestão estratégica utilizada para que uma organização tenha conhecimento das variáveis internas (forças e fraquezas) e externas (oportunidades e ameaças) que influenciam no seu desempenho e consequentemente nos resultados.

Portanto a alternativa D é falsa, visto que a análise das forças, oportunidades, fraquezas e ameaças organizacionais, irão orientar a empresa a identificar os seus pontos positivos e negativos de forma a coordenar, corrigir e controlar seus ambientes para que se alcance maior eficácia organizacional.

5 0

2 years ago