Answer: 1. Capital Budgeting
2. Payback Period
3. Number of Years Prior to Full Recovery + (Unrecovered Cost at Start of Year / Cash flow during the year)
Explanation:
Payback period was the earliest <u>Capital Budgeting</u> selection criterion. The <u>Payback Period</u> is a "break-even" calculation in the sense...
The Payback period is one of the most simple methods in Capital Budgeting and the earliest as well. It simply checked how long it would take to pay back an investment which made it very alluring to investors who wanted to know how long it would be till they started getting a profit.
It therefore essentially checked when the project would Break-Even.
The formula is,
Number of Years Prior to Full Recovery + (Unrecovered Cost at Start of Year / Cash flow during the year)
This means that to calculate the Payback Period, for example, say the investment was $500 and the project brought in $120 for 5 years.
That would mean that in year 4 it would have brought it $480. Year 4 is the <em>Number of Years prior to Full recovery</em>.
The $20 left is the <em>Unrecovered cost at the start of the year</em> and the <em>Cashflow for the year is $120</em>. The Payback is therefore,
= 4 + (20/120)
= 4.17
<span>Changes in real income per capita</span>
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Answer:
2.4
Explanation:
Frontier corporation sells unit for $57
The unit variable cost is $29
Fixed cost is $164,000
Frontier sells 10,000 units
The first step is to calculate the contribution margin
= 57-29×10,000
= 28×10,000
= 280,000
Profit = 280,000-164,000
= 116,000
Degree of operating leverage can be calculated as follows
= 280,000/116,000
= 2.4
