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nataly862011 [7]
2 years ago
13

A proposed new investment has projected sales of $585,000. Variable costs are 44 percent of sales, and fixed costs are $187,000;

depreciation is $51,000. Prepare a pro forma income statement assuming a tax rate of 21 percent. What is the projected net income? (Input all amounts as positive values.)

Business
1 answer:
Tema [17]2 years ago
8 0

Answer:

The projected Net Income is $70,784

Explanation:

The Pro- forma income Statement

Working Note:

Variable cost = Sales × 44%

= $585,000 × 44%

= $257,400

EBT (Earnings before Tax) = Sales - Variable cost - fixed cost - depreciation

= $585,000 - $257,400 - $187,000 - $51,000

= $89,600

Net Income = EBT × Tax rate

= $89,600 × 21%

= $70,784

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DedPeter [7]

Answer:

P3 = $96.9425 rounded off to $96.94

Explanation:

To calculate the market price of the stock three years from today (P3), we will use the constant growth model of DDM. The constant growth model calculates the values of the stock based on the present value of the expected future dividends from the stock. The formula for price today under this model is,

P0 = D1)  /  (r - g)

Where,

  • D1 is the dividend expected for the next period
  • g is the constant growth rate
  • r is the required rate of return on the stock

To calculate the price of the stock today (P0), we use the dividend expected for the next period (D1). So, to calculate the price at the end of 3 years (P3) we will use D4.

We first need to calculate r using the CAPM equation. The equation is,

r = rRF + Beta * rpM

Where,

  • rRF is the risk free rate
  • rpM is the market risk premium

r = 0.058 + 0.6 * 0.05  

r = 0.088 or 8.8%

Using the price formula for DDM above and the values for P0, D1 and r, we can calculate the g to be,

 

80 = 1.75 / (0.088 - g)

80 * (0.088 - g) = 1.75

7.04 - 80g = 1.75

7.04 - 1.75 = 80g

5.29/80 = g

g = 0.066125 or 6.6125%

We first need to calculate D4.

D4 = D1 * (1+g)^3

D4 = 1.75 * (1+0.066125)^3

D4 = 2.12061793907

Using the formula from DDM for P3, we can calculate P3 to be,

P3 =  2.12061793907 / (0.088 - 0.066125)

P3 = $96.9425 rounded off to $96.94

4 0
3 years ago
ice Manager uses a Periodic Review Inventory System: they check the inventory in the Office Supply Closet once every 10 days, pl
gladu [14]

Answer:

910 days

Explanation:

Calculation to determine the Minimum Restocking Level needed to cover expected demand over time without stocking out

Using this formula

Minimum Restocking Level= (Average daily demand × Reorder period)+ (Average daily demand × Lead time)

Let plug in the formula

Minimum Restocking Level= (70 days × 10 days) + (70 days × 3 days)

Minimum Restocking Level=700 days + 210 days

Minimum Restocking Level= 910 days

Therefore the Minimum Restocking Level needed to cover expected demand over time without stocking out is 910 days

4 0
3 years ago
Steven's Co. provides the following sales forecast for the next three months: July August September Sales units 5,000 5,700 5,56
Ipatiy [6.2K]

Answer:

d. 5,175 units.

Explanation:

The computation of the budgeted production units for July is shown below:

= Sale units + ending inventory units - beginning inventory units

where,  

Sale units is 5,000 units

Ending finished inventory units = 5,700 units × 25% = 1,425 units

Beginning finished inventory units = 1,250 units

Now put these units to the above formula  

So, the units would equal to  

= 5,000 units + 1,425 units - 1,250 units

= 5,175 units

5 0
2 years ago
On January 1, 2017, Hage Corporation granted incentive stock options to purchase 25,000 of its common shares at $9 each. The opt
MAVERICK [17]

Answer:

$211,750

Explanation:

The computation of diluted earnings per share for the quarter is shown below:-

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Proceeds from exercise of options a          $225,000

(25,000 × $9)

Used to repurchase of common stock b     $18,750

( $225,000 ÷ $12)

Number of shares if option is exercised c   $25,500

Less: Shares assume repurchased d           $18,750

Potential Diluted common shares (e = c-d)  $6,750

Add: Number of common f                             205,000

Number of shares diluted earning per share $211,750

(e + f)

Therefore the Number of shares diluted earning per share is $211,750

3 0
3 years ago
​Alice, Betty, and Cathy are interested in forming a business venture. Alice is quite wealthy and is ready to contribute money t
jolli1 [7]

Answer:

I agree with that, because all of them have good bussiness ideas.

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