1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
skelet666 [1.2K]
3 years ago
6

In working on a bid for project you have determined that $245,000 of fixed assets will be required and that they will be depreci

ated straight-line to zero over the 5-year life of the project, and you can get $23,200 for these fixed assets at the end of 5 years. You will also need to increase net working capital by 15,000 initially and recoup the investment in net working capital at the end of the project. You have also determined that the discount rate should be 14 percent and the tax rate will be 35 percent. In addition, the annual cash costs will be $68,500. What is the minimum amount of annual sales revenue that is required for you to make money on the project? PLEASE SHOW WORK
A. $151,627.90

B. $155,119.00

C. $162,515.75

D. $102,627.90

E. $227,012.50

Assume BGL Enterprises increases its operating efficiency by lowering its costs while holding its sales constant. As a result, given all else constant, the: A. return on assets will decrease.

B. profit margin will decline.

C. equity multiplier will decrease.

D. return on equity will increase.

E. price-earnings ratio will increase.
Business
1 answer:
mote1985 [20]3 years ago
7 0

Answer:

Question 1:

required investment $245,000

depreciation expense per year = ($245,00 - $23,200) / 5 = $44,360

you will also require $15,000 in working capital

annual cash costs = $68,500

what is the minimum amount of cash sales for accepting the project:

net cash flow₁ = {[(sales revenue - $68,500 - $44,360) x 0.65] + $44,360} / 1.14 = (0.65SR - $28,999) / 1.14 = 0.5702SR - $25,437.72

net cash flow₂ = {[(sales revenue - $68,500 - $44,360) x 0.65] + $44,360} / 1.14² = (0.65SR - $28,999) / 1.14² = 0.5002SR - $22,313.79

net cash flow₃ = {[(sales revenue - $68,500 - $44,360) x 0.65] + $44,360} / 1.14³ = (0.65SR - $28,999) / 1.14³ = 0.4387SR - $19,573.50

net cash flow₄ = {[(sales revenue - $68,500 - $44,360) x 0.65] + $44,360} / 1.14⁴ = (0.65SR - $28,999) / 1.14⁴ = 0.3849SR - $17,169.74

net cash flow₅ = {[(sales revenue - $68,500 - $44,360) x 0.65] + $44,360 + $15,000} / 1.14⁵ = (0.65SR - $13,999) / 1.14⁵ = 0.3376SR - $7,270.64

NPV = -initial outlay + cash flows

NPV = 0

initial outlay = cash flows

$260,000 = 0.5702SR - $25,437.72 + 0.5002SR - $22,313.79 + 0.4387SR - $19,573.50 + 0.3849SR - $17,169.74 + 0.3376SR - $7,270.64

$260,000 = 2.2316SR - $91,765.39

$351,765.39 = 2.2316SR

sales revenue = $351,765.39 / 2.2316 = $157,629.23

the closest answer is B = $155,119, but its NPV will be negative.

<u>so we have to select C = $162,515.75 that results in an NPV = $10,887. </u>

Question 2:

<u>The correct answer is D. return on equity will increase.</u>

If you lower your costs while your sales remain the same, your profits will increase as well as your ROE.  

You might be interested in
One of the key roles that salespeople play in society is the distribution of knowledge about new technology. In other words, sal
kvasek [131]

Answer: diffusion of innovation

Explanation: Diffusion refers to the spreading of something widely and aggressively and innovation refers to the generation of a new idea or method.

Thus, the role played by the salespeople regarding the distribution of knowledge in the society is the distributor of information.

Thus, we can conclude that salespeople help with diffusion of innovation.

8 0
3 years ago
Without doing any calculations, determine the missing number that will make the value of Expression B half the value of Expressi
yawa3891 [41]

Answer:

B (8 + 54 + 91) × _____ If im wrong apologies

Explanation:

3 0
3 years ago
Jackie has determined some possible careers that would suit her include being a photographer, a graphic artist, a web designer,
BaLLatris [955]
The answer is D. Gather information. Took the test and it was correct. 
7 0
3 years ago
Read 2 more answers
The funded status of Hilton Paneling Inc.'s defined benefit pension plan and the balances in prior service cost and the net gain
krok68 [10]

Answer:

1. Actual return on Plat assets

= Ending plan assets - beginning assets - employer contribution + retirees payment

= 2,591 - 2,400 - 245 + 270

= $216,000

2. Gain(loss) on plan assets

= Actual return - expected return

= 216,000 - (10% * 2,400,000-beginning assets)

= ($24,000) loss

3. Service cost

= Ending Projected benefit obligation - Beginning Projected benefit obligation - Interest cost + Retiree benefits

= 2,501 - 2,300 - (7% * 2,300) + 264

= $304,000

4. Pension expense

= Interest cost + expected return + Amortization of prior service cost + amortization of net gain + Service cost

= Interest cost + expected return + (beginning prior service cost - ending prior cost) + (Beginning net gain - ending net gain - loss on plan asset)  + Service cost

= (7% * 2,300)  + 240 + (325 - 300) + (330 - 300 - 24) + 304

= $736,000

5. Average remaining service life of active employees

= (Beginning Net gain - expected return) / Amortization of net gain

= (330 - 300) / (330 - 300 - 24)

= 5 years

4 0
3 years ago
During January, 7,000 direct labor hours were worked at a standard cost of $20 per hour. If the direct labor rate variance for J
igor_vitrenko [27]

Answer:

$17.50

Explanation:

Given that,

Direct labor hours = 7,000

Standard cost = $20 per hour

Direct Labor Rate Variance = $17,500 Favorable

(Standard Rate - Actual Rate) × Actual Hours = $17,500 Favorable

(20 - Actual Rate) × 7,000 = $17,500 Favorable

140,000 - 7,000 Actual Rate = $17,500 Favorable

Therefore,

7,000 Actual rate = (140,000 - $17,500)

Actual rate = 122,500 ÷ 7,000

                  = $17.50

8 0
3 years ago
Other questions:
  • In your own words explain two functions of a public protector
    10·1 answer
  • Which type of employee is most likely to report ethical issues in the workplace? rank and file. middle managers. executives. tem
    6·1 answer
  • John opens a furniture company and decides to specialize in custom furniture for medical professionals. Which economic question
    10·1 answer
  • QUESTION 4 / 10
    9·1 answer
  • Misu Sheet, owner of the Bedspread Shop, knows his customers will pay no more than $110 for a comforter. Misu Sheet wants to adv
    15·1 answer
  • Harry owes the bank money. To repay his debt, he paid 150 dollar sign, 150 back to the bank each month. After 10 months, his rem
    7·1 answer
  • What are the management principles of henry fayol?
    5·1 answer
  • DJH Enterprises has 3 departments. Operating results for 2019 are as follows:
    7·1 answer
  • The total factory overhead for Landen Company is budgeted for the year at $675,000. Landen manufactures two drapery products: sh
    8·1 answer
  • 1. Which of the following is an example of an intermediary?
    14·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!