Which would you trade on a stock exchange? A.)shares B.)bonds C.)annuities

Maggie's Muffins, Inc., generated $2,000,000 in sales during 2015, and its year-end total assets were $1,400,000. Also, at year-

Ksenya-84 [330]

Answer:

The Sales will increase by $350,000 (2000,000 * 17.5%)

Explanation:

As we know that,

Self Supporting Growth Rate = Return on Equity * (1 - Payout Ratio) ...Eq1

Here

Payout ratio given is 50%

and

Return on Equity = 35% (Step 1)

By putting values in Eq1, we have:

Self Supporting Growth Rate = 35% * (1 - 50%)

Self Supporting Growth Rate = 17.5%

Which means that Sales will increase by $350,000 (2000,000 * 17.5%) which is 17.5%.

Step 1: Find Return on Equity

We know that:

Return on Equity = Net Income / Equity ..............Eq2

As we are not given value of Net Income we can not calculate the value of return on equity. But there is another way that we can calculate by simply multiplying and dividing by sales on Left hand side of the Eq2 equation.

Return on Equity = Net Income / Equity * Sales / Sales

By rearranging, we have:

Return on Equity = Net Income / Sales * Sales / Equity

Now here,

Net Income / Sales = Profit Margin

By putting this in the above equation, we have:

Return on Equity = Profit Margin * Sales / Equity

Here

Profit Margin is 7% given in the question.

Sales were $2,000,000

And

Equity is $400,000 (Step 2)

By putting values, we have:

Return on Equity = 7% * $2,000,000 / $400,000

Return on Equity = 35%

Step 2. Find Equity

Equity = Assets - Liabilities

Here,

Assets are worth $1,400,000

Liabilities are standing at $1,000,000 which includes only current liabilities because company doesn't have any long term borrowings

By putting the values, we have:

Equity = $1,400,000 - $1,000,000 = $400,000

Brother, don't forget to rate the answer.

5 0

3 years ago

A firm is reviewing an investment opportunity that requires an initial cash outlay of $336,875 and promises to return the follow

Fofino [41]

Answer:

The NPV of this investment is $64,581.75

Explanation:

Hi, we need to discount to present value all the future cash flows, the formula to use is as follows:

$NPV=-Investment+\frac{CF1}{(1+r)^{1} }+\frac{CF2}{(1+r)^{2}} +\frac{CF3}{(1+r)^{3}} +\frac{CF4}{(1+r)^{4}} +\frac{CF5}{(1+r)^{5}}$

Where

NPV = Net Present Value

CF = The cash flow stated in the problem by year

r= discount rate (in our case, 0.08 or 8%)

Now, let´s solve this.

$NPV=-336,875+\frac{100,000}{(1+0.08)^{1} }+\frac{82,000}{(1+0.08)^{2}} +\frac{76,000}{(1+0.08)^{3}} +\frac{111,000}{(1+0.08)^{4}} +\frac{142,000}{(1+0.08)^{5}}$

$NPV=-336,875+ 92,592.59 + 70,301.78 + 60,331.25 + 81,588.31+96,642.81$

$NPV=64,581.75$

So, the net present value of this project is $64,581.75

Best of luck.

7 0

3 years ago

Why does a country need to have a comparative advantage in a particular product in order to engage in trade with another country

harkovskaia [24]

Answer:

Countries have a comparative advantage in production when they can produce a good or service at a lower opportunity cost than other producers.

5 0

2 years ago

Khalid is a 39-year-old, married business owner who runs a dry cleaning service with three locations. His personal obligations a

madam [21]

Answer:

D. A limited liability company because he will only be liable for what he has invested in the business. His personal assets will be protected, and he can be taxed like a sole proprietorship.

3 0

3 years ago

A company with a labor agreement under which union membership cannot be required as a condition of employment is considered a

frez [133]

A company with a labor agreement under which union membership cannot be required as a condition of employment is considered an open shop.
This means that the employees do not have to join a trade union in order to work there at this particular company. So regardless of the fact whether these workers are members of the union or not, they will be employed and paid equally.

7 0

3 years ago