Answer: 4%
Explanation:
From the question, we are informed that Sheffield Company had an investment which cost $250000 and had a salvage value at the end of its useful life of zero and that Mussina's expected annual net income is $5000.
It should be noted that the annual rate of return is calculated as the average Income divided by the average investment. Here, the average Income is $5,000 while the average investment will be ($250,000/2) = $125,000.
Therefore, annual rate of return will be:
= $5000/$125,000
= 4%
Answer:
A promise to deliver a deed
Explanation:
The term, 'strict performance' is used to describe a contract between two parties. A contract is an agreement between two parties, and it is legally binding. When discharging contracts involving services, 'substantial performance' is required. For example, if I tell a painter to paint my house blue except for the kitchen and storeroom which should be painted white, and he does accordingly but failed in painting the kitchen white, he has performed substantially even though there was a minor breach. The consequences of which would be borne by him.
'Strict performance' is required in contracts where the terms are stated in express terms and the standards are very high. A 'deed' is such a contract because it is a document specifying the legal rights of a person or the ownership of a property. It requires the signatures of the two parties. Therefore, strict performance and adherence to the contractual deed are required.
<h2>
<u>Disclamer:</u></h2>
As it ask to run simulations the values calculates will difer even if you follow the same step as I did.
Answer:
Mean Profit: $ 4,295
Probability of loss: 29.80%
As the product has a mean profit it will on average generate gains
but:
as the standard deviation of the simulation was $ 7,778.40
<u>we should not invest on the product as it is to variable</u>
<u>Explanation</u>:
We are going to use the =RAND() function of excel
which, generates a random number between 0 and 1
This will be done 1,000 times 500 for the variable cost
and 500 for the demand.
Then we copy and paste this numbers to get them fixed.
Then, we convert them into actual cost and demand in units considering their distribution
using excel dist.norm.inv
Now, with this values we solve for profit on each one.
<u></u>
FOr the complexity I attached the excel file as the plataform interface cannot handle large tables.
Answer:
A.
Explanation:
The Contribution Margin Ratio is the ratio of contribution margin to sales revenue.
Contribution Margin Ratio = contribution margin / sales revenue
Contribution Margin = sales price - variable cost
If the sale price is increasing, and the variable cost remains the same, the contribution margin is going to increase.
Break even point shows the amount of sales volume where the total cost is equal to the company´s full income. The point where total costs are equal total revenue is known as the break even point.
If sales increase, and the costs remains the same, the break even point is going to decrease.
Answer:
The best illustration of a firm adhering to the goal of financial management is:
b. Decrease in the per-unit production costs
Explanation:
Financial management is the process by which a firm plans, controls and monitors their financial resources to ensure that the cost is minimized, while at the same time maximizing their profit. Since financial resources is the fuel that drives a business, its usage has to be managed to ensure short-term and long-term financial success. This is done by increasing the value creating efficiency with very minimal financial resources. To achieve the goal of financial management, various strategies have to be applied to achieve this goal. They include;
1. Financial planning: good financial management indicates that a firm needs have prior information on how their business operates. With this information, the financial managers can therefor plan for the future. Each firm has it's organizational and operational financial needs. These needs if known earlier, a financial plan can be drafted and implemented to adequately meet these needs.
2. Budgeting: this is a tool that can be used to know how much a firm is willing to spend in terms of cost. Budgets are usually broken down into categories in order to know which sectors utilize the highest amount of financial resources to minimize wastage.
3. Risk management: a firm needs to first assess sources and levels of risk, then mitigate against the risk. Risk mitigation if done appropriately can help save on costs associated with the risk.
4. Monitoring: all the strategies applied need to be constantly evaluated to ascertain that they are productive. This is beneficial in determining the strategies that work and those that need improvement.
In our case the best illustration of a firm adhering to the goal of financial management is a decrease in the per-unit production costs.