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denis-greek [22]
3 years ago
13

Pendant Publishing is considering a new product line that has expected sales of $1,100,000 per year for each of the next 5 years

. New equipment that is required to produce the new product will cost $1,200,000. The equipment has a useful life of 5 years and a $300,000 salvage value and will be sold at the end of year 5 for its’ salvage value. Total variable costs of the product line are $450,000 per year, total fixed costs (not including depreciation) will be an additional $180,000 per year and the initial working capital investment, to buy inventory, will be $15,000. The discount rate (interest rate) for the project is 10% and the company’s tax rate is 35%. What is the operating cash flow of year 1 for the company?
Business
1 answer:
Katyanochek1 [597]3 years ago
5 0

Answer:

The operating cash flow of year 1 for the company is $368,500

Explanation:

In order to calculate the operating cash flow of year 1 for the company first we need to calculate the Cashflow before tax and depreciation as follows:

Cashflow before tax=Sales-Variable cost-fixed cost

Cashflow before tax=$1,100,000-$450,000-$180,000      

Cashflow before tax=$470,000

 

Depreciation = Original cost - Salvage / fixed Cost

Depreciation= $1,200,000 - $300,000 / 5

= $180,000

Therefore, to calculate the operating cash flow of year 1 for the company we would have to make the following calculation:

Operating Cash Flow=(CFBT×65%)+Depreciation×35%

Operating Cash Flow=($470,000×65%)+($180,000×35%)

Operating Cash Flow=$368,500

The operating cash flow of year 1 for the company is $368,500

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For a recent year, Best Buy reported sales of $42,410 million. Its gross profit was $9,690 million. What was the amount of Best
LiRa [457]

Answer:

The amount of Best Buy's cost of goods sold was $32,720 million

Explanation:

cost of goods sold = sales - gross profit

                               = $42,410 million - $9,690 million

                               = $32,720 million

Therefore, The amount of Best Buy's cost of goods sold was $32,720 million

6 0
3 years ago
Joe decided to start washing cars on his street. The other kids in the neighbourhood noticed Joe was making a lot of money washi
Norma-Jean [14]

Joe decided to start washing cars on his street. The other kids in the neighborhood noticed Joe was making a lot of money washing cars and decided to open their own car wash. When they opened their own car wash, the equilibrium price decreased and the equilibrium quantity increased.

The price at which the quantity provided and demanded are equal is referred to as the equilibrium price. It is established by where the demand and supply curves cross. If more goods or services are produced than are needed to satisfy demand at the going rate, there is a surplus, which pushes prices lower.

Reduced demand will result in a drop in the equilibrium price and a reduction in supply. With everything else remaining constant, an increase in supply will result in a decrease in the equilibrium price and an increase in the amount required. The equilibrium price will increase as the supply declines, while the quantity needed will go down.

Learn more about equilibrium price and quantity here

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8 0
1 year ago
Moyas Corporation sells a single product for $10 per unit. Last year, the company's sales revenue was $310,000 and its net opera
MissTica

If fixed expenses totaled $108,000 for the year, the break-even point in unit sales was:21, 600 Units

Explanation:

The Break Even Point in units is 21,600units.

We follow the below  steps in order to arrive at the answer:

First we find Total variable costs of Moyas Corporation

<u></u>

<u>Net operating income=Sales-variable cost-Fixed cost</u>

47000=310000-variable cost-108000

Variable cost=310000-108000-47000

Variable Cost=155000

<u>Next we find the number of units sold</u>

<u>No:of unit sold= Total Sales/Selling price per unit</u>

No:of unit sold =310000/10=31,000

<u>Then we find Variable Cost per unit</u>

<u>Variable cost per unit=Total Variable cost/Number of unit sold</u>

Variable cost per unit=155000/31000=5

<u>We calculate Contribution Margin per unit </u>

<u></u>

<u>Contribution Margin per unit =Selling price per unit-Variable cost per unit</u>

<u />

Contribution Margin per unit = 10-5= 5

<u></u>

<u>Finally we calculate Break Even Point (BEP) in units as:</u>

<u>BEP=</u><u>Fixed cost per unit/</u>Contribution Margin per unit

BEP=108,000/5=21600 Units

<u></u>

<u></u>

6 0
3 years ago
The Ramirez Company's last dividend was $1.5. Its dividend growth rate is expected to be constant at 15% for 2 years, after whic
AnnyKZ [126]

Answer:

current stock price, P_{0} = $26.84

Explanation:

Given,

Most recent dividend, D_{0} = $1.50

Growth rate, g_{1} = 15% = 0.15 (Next 2 years)

g_{2} = 5% = 0.05 (remain constant after 2 years)

required rate of return , r_{s} = 12% = 0.12

We know,

Current stock price, P_{0} = [D_{1} ÷ (1 + r_{s})] + \frac{D_{2} + P_{2}}{(1 + r_{s})^{2}}

or, P_{0} = [{D_{0} × (1 + g_{1})} ÷ (1 + r_{s})] + \frac{D_{0} (1 + g_{1})^{2} + \frac{D_{3}}{r_{s} - g_{2}}}{(1 + r_{s})^{2}}

or, P_{0} = [{$1.50 × (1 + 0.15)} ÷ (1 + 0.12)] + \frac{1.50*(1+0.15)^{2} + \frac{D_{2} (1 + g_{2})}{(0.12 - 0.05)}}{(1+0.12)^{2}}

or, P_{0} = ($1.725 ÷ 1.12) + \frac{1.98375 + \frac{1.98375*(1 + 0.05)}{0.07}}{1.2544}

or, P_{0} = $1.5402 + [(1.98375 + 29.75625) ÷ 1.2544]

or, P_{0} = $1.5402 + (31.74 ÷ 1.2544)

or, P_{0} = $1.5402 + 25.3029

Therefore, current stock price, P_{0} = $26.84

8 0
3 years ago
Which of the following is NOT part of a successful quality​ strategy?
Romashka-Z-Leto [24]

Answer:

D. Minimize quality costs throughout the organization

Explanation:

  • A quality strategy is part of the organization's strategy to maintain quality standards and to maintain productivity at a higher significance level.
  • For the same various companies have a TQM total quality management systems in place that checks the quality must be maintained as a standard, the company must be aware and must show the participation in its implementation, must be of least cost and rewarding in nature.
  • Thus to build or forester an organization's culture of quality and to engage all employees in building these principles through a well-maintained standard of the organization.
7 0
3 years ago
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