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Bad White [126]
3 years ago
10

Ring Technology has a capital budget of $850,000, it wants to maintain a target capital structure of 35% debt and 65% equity, an

d it also wants to pay a dividend of $400,000. If the company follows the residual dividend model, how much net income must it earn to meet its capital budgeting requirements and pay the dividend, all while keeping its capital structure in balance?
a. $ 904,875
b. $ 952,500
c. $1,000,125
d. $1,050,131
e. $1,102,638
Business
1 answer:
Bad White [126]3 years ago
3 0

Answer:

b. $ 952,500

Explanation:

The computation of the amount of the net income for earning to meet out the requirement is shown below:

Dividend = Net income - Target Equity ratio × Total capital budget

$400,000 = Net income - 0.65 × $850,000

$400,000 = Net income - $552,500

So, the net income is

= $400,000 + $552,500

= $952,500

Hence the Net income is $952,500

Therefore the correct option is b. $952,500

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The Harrisburg Store has net working capital of $2,715, net fixed assets of $22,407, sales of $31,350, and current liabilities o
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Answer:

a. $1.08

Explanation:

Total assets include net fixed assets, working capital and current liabilities. Harrisburg Store's total assets are:

A= \$22,407+\$2,715+\$3,908\\A=\$29,030

The total asset turnover is the amount of money worth of sales generated from every $1 in total assets and is given by:

TAT=\frac{sales}{assets}=\frac{\$31,350}{\$29,030} \\TAT = \$1.08

$1.08 worth of sales are generated from every $1 in total assets.

7 0
3 years ago
Consider a two-step mortgage for $150,000, 30 years, monthly payments, an initial interest rate of 5%, a cap of 5%, and a single
gladu [14]

Answer:

Consider the following calculations

Explanation:

This 2-step mortgage problem requires a 2-step solution.

To solve for the PMT for the last 23 years of the loan, we first need to know what the principal is at the end of the 7th year.

Thus, step I uses the initial info to solve for the PMT for each month of the first 7 years. N=360, I/Y=5(%)/12 = 0.416667(%), PV=150,000, => PMT = 805.

The discount rate will change to 5% index rate plus 2% margin = 7% at the beginning of the 8th year.

In Step II we first determine the remaining balance at the end of year 7. This requires using the amortization worksheet.

On the TI BA II Plus, AMORT is the secondary function of PV.

Set P1, the periods at which the calculations begin, equal to 1. We cursor down to P2, which is the last period of the calculation, and set it equal to 84. Cursoring down once again, we see that BAL at month 84 = 131,917.52.  

Going back to the TVM row, we set PV remaining at the end of 23 years = 131,917.52. I/Y is calcluated as 5(%) index rate plus 2(%) margin =7%; dividing 7(%) by 12 = 0.583333(%).  N=360-84 = 276 months left.

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3 years ago
Based on the expectancy theory, managers who want to motivate their employees should: (select 2 that are true)
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Determine the rewards valued by each employee, link rewards to performance, determine what factors might counteract the effectiveness of a reward, and make sure the rewards are adequate for the level of performance.

<h3><u>What is expectancy theory?</u></h3>

Expectancy theory is a thought method that emphasizes personal preference and the decision-making process. The process that different people go through when making decisions is outlined by expectancy theory. These options could be decisions for the real world, educational decisions, or fun decisions.

These people base their decisions on expectations of the outcomes of their decisions. We frequently make clothing decisions based on our desire to be both comfortable and ready for the day's events.

Learn more about managers with the help of the given link:

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8 0
2 years ago
Calculating the Amount for a Home Equity Loan. A few years ago, Michael Tucker purchased a home for $100,000. Today the home is
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Answer:

The maximum amount that Michel can borrow is 70,000 dollars.

Explanation:

Please see attachment .

3 0
3 years ago
The lower the user's switching costs:
JulijaS [17]

Answer:

more intense the competitive pressures posed by substitute products.

Explanation:

The lower the user's switching costs: the more intense the competitive pressures posed by substitute products.

Switching costs can be defined as the cost of a consumer switching from a product to a substitute good.

Therefore when such switching costs are low, it will be easier to switch from one product to another, implying that the competitive pressure from substitute goods are higher.

8 0
3 years ago
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