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SpyIntel [72]
3 years ago
14

You’ve recently learned that the company where you work is being sold for $300,000. The company’s income statement indicates cur

rent profits of $11,000, which have yet to be paid out as dividends. Assuming the company will remain a "going concern" indefinitely and that the interest rate will remain constant at 9 percent, at what constant rate does the owner believe that profits will grow? nstruction: Enter your response rounded to one decimal place.
Growth rate of: ___ percent.
Business
1 answer:
chubhunter [2.5K]3 years ago
7 0

Answer:

5%

Explanation:

Data provided in the question:

Present value of the company, PV = $300,000

Current Profits, π₀ = $11,000

Interest rate, i = 9% = 0.09

Now,          

we know,            

PV = \pi_0(\frac{1+i}{1-g})

here,

g is the growth rate        

on rearranging, we get          

g =  i - \frac{(1+i)\pi_0}{PV}

on substituting the respective values, we get

g = 0.09 - \frac{(1+0.09)\times11,000}{300,000}

or  

g = 0.05

or

g = 0.05 × 100%

= 5%

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Assume the following​ amounts: Total fixed costs Selling price per unit Variable costs per unit If sales revenue per unit increa
sineoko [7]

Answer:

The correct option is <u>c. 129,000</u>.

Explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question as follows:

Assume the following amounts:

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selling price per unit. $19

variable costs per unit. $12

if sales revenue per unit increases to $21 and 16,000 units are sold what is the operating income?

a 159,000

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The explanation to the answer is now provided as follows:

Since sales revenue per unit increases to $21, we use it as the selling price and proceed as follows:

Computation of Operating Income

<u>Particular                                              Amount ($) </u>

Sales revenue (16,000 * $21)                336,000

Variable cost (16,000 * $12)                <u>  (195,000)  </u>

Contribution                                            144,000

Fixed cost                                             <u>   (15,000)  </u>

Operating income                             <u>    129,000    </u>

Therefore, the correct option is <u>c. 129,000</u>. That is, operatin income is $129,000.

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