All categories

1 year ago

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

Business

1 answer:

mash [69]1 year 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%.

You might be interested in

Mark Sports Inc. sold 500 pairs of skates at $50 each in 2012. The management estimates that 4% of the skates sold will need rep

In-s [12.5K]

Answer:

Warranty repair Expense (Dr.) $200

Warranty Payable (Dr.) $200

Explanation:

The warranty expense is the estimate of probable expense that will incur due to fault in the product. The estimated repair is the 4% of skates sold. If 500 pairs of skates are sold then out of them 4% will require repair. The repair for the faulty skates will cost $10. The total cost will be $200,

500 pairs of skates * 4% * $10

7 0

1 year ago

Amy and Jack were loyal customers of GreenFoods, a local grocery store. However, after a couple of incidents where they had to r

ololo11 [35]

Answer: B) Open to Trial

Explanation:

6 0

1 year ago

A customer buys a $1,000 par reverse convertible note with a 1 year maturity and a 6% coupon rate. At the time of purchase, the

USPshnik [31]

Answer:

As the knock-in was reach, it will receive the original investment plus the coupon yield: 1,060

Explanation:

<u>At maturity</u>

Because the knock-in was achieved, the customer can pick to recieve stock or cash

when the contract was made, the stock price was 50 so 1,000 are equivalent to:

1,000 / 50 = 20 shares

we multiply this by the market price.

20 x 25 = 500

between 500 in stocks and 1,000 in cash it will prefer 1,000

Then, the interest will be:

1,000 x 6% = 60

3 0

1 year ago

A company's return on assets (ROA) can be disaggregated to reveal which of the following: (Select all that apply)

Alenkinab [10]

Answer:

b. Asset Turnover &

d. Profit margin.

Explanation:

Return on asset (ROA) simply shows a percentage of how profitable companies assets are in generating the revenue. It is calculated as:

$= \frac{Net income}{Total assets}$

However, if we further break it down, we can write it as follows:

$= \frac{Net income}{Sales} * \frac{Sales}{Total Assets}$

Both formulas Represent the same things.

But, the ratio of Net income to Sales is known as the Profit margin- A degree to which company makes money. Here, we can see how the ROA can be broken down in terms of profit margin.

Also, the ratio of Sales to Total asset is know as the Asset Turnover- a measure of company's use assets in generating the sales.

Hence, we can say that the ROA can be dis aggregated to reveal the Asset Turnover and the Profit margin.

8 0

2 years ago

A portfolio has 40% of its value in IBM shares and the rest in Microsoft (MSFT). The volatility of IBM and MSFT are 35% and 30%,

Bess [88]

Answer:

Our answer is D 26.86%

Explanation:

3 0

2 years ago