Answer:
Explanation:
Net Income = 20m
Sales = 100m
Debt-equity ration = 40%
Asset turnover = 0.60
A)
Profit Margin = Net Income / Sales = $20 million / $100 million = 20%
Equity Multiplier = 1 + Debt-Equity Ratio = 1 + 0.40 = 1.40
Return on Equity = Profit Margin * Asset Turnover * Equity Multiplier = 20% * 0.60 * 1.40 = 16.80%
B)
Debt-equity ratio = 60%
Equity Multiplier = 1 + Debt-Equity Ratio = 1 + 0.60 = 1.60
Return on Equity = Profit Margin * Asset Turnover * Equity Multiplier = 20% * 0.60 * 1.60 = 19.20%
As calculations provide, if debt-equity ratio increases to 60%, Return on equity will increase by 2.40% (19.20% - 16.80%)
Answer:
5.37%
Explanation:
According to the scenario, computation of the given data are as follow:-
We can calculate the company’s after tax return on preferred by using following formula:-
Company’s After Tax Return = Before Tax Dividend Yield Rate on Preferred Stock × [1 - (1 - Dividend Exclusive) × (Tax Rate)]
= 6% × [1 - (1 - 70%) × (35%)]
= 0.06 × [1 - (1 - 0.70) × (0.35)]
= 0.06 × [1 - (0.30) × (0.35)]
= 0.06 × (1 - 0.105)
= 0.0537
= 5.37%
We simply applied the above formula to determine the company after tax return
To break even they must be able to sell 1,100 tickets during the event.
The immediate cost is set at
$2,000 (player fees) + $1600 (worker fees) = $3,600
Assuming that fans would reach around 200 people that would be:
$3 X 200 =$600 (free bat costing)
Overall cost would be at: $3,600 + $600 = $4,200
To break even the computation will be as follows:
2,500 tickets X $5 = $12,500
$12,500 - $4,200 = $8,300 in earnings
