BUSINESS COLLEGE

A manufacturer contemplates a change in technology that would reduce fixed costs from $800,000 to $600,000, and reduce depreciation expense from $125,000 to $100,000. However, the ratio of variable costs to sales would increase from 68% to 80%. What would be the change in the break-even level of revenues?

Answers

Answer 1
Answer:

Answer:

break-even level of revenues increases from $2,890,625 to $3,500,000

Explanation:

Break even point is the level of sales at which the company makes neither a Profit nor a loss.

Break -even Sales revenue = Fixed Cost / Contribution Margin Ratio

Old Break -even Sales revenue

Break -even Sales revenue =  ( $800,000 + $125,000)/(1.00-0.68)

                                              =  $925,000/ 0.32

                                              =   $2,890,625

Old Break -even Sales revenue

Break -even Sales revenue =  ( $600,000 + $100,000)/(1.00-0.80)

                                              =  $700,000/ 0.20

                                              =   $3,500,000

                                             

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Inflation is 14 percent. Debt is $4 trillion. The nominal deficit is $360 billion. What is the real deficit or surplus

Answers

Answer:

Real Surplus is $200 billion

Explanation:

Inflation = 14%

Debt = $4 trillion = $4,000 billion

Nominal deficit = $360 billion

Real Deficit = Nominal deficit - (Inflation*Debt)

= $360 - 14% * 4,000

= $360 - 560

= -$200

Hence, the answer is Real Surplus of $200 billion

A bond was issued three years ago at a price of $1,050 with a maturity of six years, a yield-to-maturity (YTM) of 6.50% compounded semi-annually, and a face value of $1,000 with semi-annualy coupons. What is the price of this bond today immediately after the receipt of today's coupon if the YTM has risen to 7.75% compounded semi-annually

Answers

Answer:

$967.20

Explanation:

the YTM formula = {coupon + [(face value - present value)/time]} / [(face value + present value)/2]

to determine the coupon rate we fill the equation with the known factors:

0.065 = {coupon + [(1,000 - 1,050)/12]} / [(1,000 + 1,050)/2]

0.065 = (coupon - 41.67) / 1,025

66.625 = coupon - 4.167

coupon = 66.625 + 4.167 = $70.792  

three years later, the YTM = 7.5%, what is the PV? Again we use the YTM formula:

0.0775 = {70.792 + [(1,000 - x)/6]} / [(1,000 + x)/2]

0.0775(500 + 0.5x) = 70.792 + 166.67 - 0.1667x

38.75 + 0.03875x = 237.462 - 0.1667x

0.20545x = 198.712

x = 198.712 / .20545

x = $967.20

Tall Guys Clothing has a 45-day collection period. Sales for the next calendar year are estimated at $2,100, $1,600, $2,500 and $2,300, respectively, by quarter, starting with the first quarter of the year. Given this information, which one of the following statements is correct? Assume a year has 360 days.(A)The firm will collect a total of $800 in Quarter 2.
(B) The accounts receivable balance at the beginning of Quarter 4 will be $1,150.
(C) The firm will collect a total of $2,000 in Quarter 3.
(D) The firm will have an accounts receivable balance of $2,300 at the end of the year.
(E) The firm will collect a total of $2,400 in Quarter 4.

Answers

Answer:

(E) The firm will collect a total of $2,400 in Quarter 4.

Explanation:

We will calcualte under two assumptions:

  1. the sales are done uniformly over the quarter
  2. and the collection period is the same over the entire year

With this we conclude the following:

each quarter has 90 days

the sales from day 1 to 45 will be collected within the quearter while the sales from 46 to 90 will be collected on the next quarter.

so half the sales will be collected during the quarter as sales are done uniformly.

Collection on Q1

2,100 / 2 = 1,050

collection on Q2

1,050 + 1,600/2 = 1,850

collection on Q3

800 + 2,500/2 =2,050

collection on Q4

1,250 + 2,300/2 = 2,400

Vilas Company is considering a capital investment of $183,600 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $10,557 and $51,000, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment.Required:
a. Compute the cash payback period. (Round answer to 1 decimal place, e.g. 10.5.)
b. Compute the annual rate of return on the proposed capital expenditure. (Round answer to 2 decimal places, e.g. 10.52%)
c. Using the discounted cash flow technique, compute the net present value.

Answers

Answer:

Payback period    = 3.6  years

Annual rate of return = 11.50%

NPV  = 243.59  

Explanation:

The payback period: The estimated number of years it will take the initial cost to be recouped.

Payback period= initial cost/ Net cash inflow

                          = 183,600/51,000

                         = 3.6  years

Annual rate of return is the average annual income as a percentage of average investment

Annual rate of return = annual net income/ average investment

Average investment =( Initial,cost + scrap value)/2

                                 = (183,600 + 0)/2 = 91,800

Annual rate of return = (10,557/91,800)× 100

                                   = 11.50%

Net Present Value = The present value of cash inflow less the initial cost

PV of cash inflow = A × (1- (1+r)^(-n))/r

                             = 51,000 × (1- (1.12)^(-5)/0.12

                             =  183,843.59  

NPV = 183,843.59 - 183,600

       = 243.59  

Suppose that Tucker Industries has annual sales of $6.60 million, cost of goods sold of $2.94 million, average inventories of $1,205,000, and average accounts receivable of $660,000. Assuming that all of Tucker's sales are on credit, what will be the firm's operating cycle? (Round your answer to 2 decimal places.)

Answers

Answer:

186.10 days

Explanation:

The operating cycle = Days inventory outstanding + days sale outstanding

where,

Day inventory outstanding = (Beginning inventory + ending inventory) ÷ cost of goods sold × number of days in a year

= ($1,205,000) ÷ $(2,940,000) × 365 days  

= 149.60 days

Day sale outstanding = (Beginning Accounts receivable + ending Accounts receivable) ÷ Net sales × number of days in a year

= ($660,000) ÷ ($6,600,000) × 365 days

= 36.5 days

Now put these days to the above formula  

So, the days would equal to

= 149,60 days + 36.5 days

= 186.10 days

A company plans to enclose three parallel rectangular areas for sorting returned goods. The three areas are within one large rectangular area and yd of fencing is available. What is the largest total area that can be​ enclosed

Answers

Answer:

A lot of information is missing, so I looked for similar questions:

  • 1,064 yd of fencing is available

since 1,064 is the perimeter and we have a rectangle, we can write the perimeter equation as: 2L + 2W = 1,064

area = L · W

2W = 1,064 - 2L

W = 532 - L

now we replace in the area equation:

area = (532 - L) · L = -W² + 532W (quadratic equation format)

the value of L as our X coordinate:

L = 532 / 2 = 266

W = 532 - 266 = 266

area = -(266)² + (532 x 266) = -70,756 + 141,512 = 70,756 sq yards

or

area = 266 · 266 = 70,756 sq yards

When you have a rectangle, the largest possible area is a square, where both sides have the same length.

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