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jeyben [28]
3 years ago
9

Non-toxic-toys currently has $400,000 of equity and is planning a $160,000 expansion to meet increasing demand for its product.

The company currently earns $100,000 in net income and the expansion will yield $50,000 in additional income before any interest expense. The company has 3 options; do not expand, expand and issue $160,000 in debt that requires 8% annual interest, or expand and raise $160,000 from equity financing. For each of the 3 options compute a) net income b) return on equity.
Business
1 answer:
Rashid [163]3 years ago
5 0

Answer:

1. $100,000 and 25%

2. $137,200 and 34.3%

3. $150,000 and 27%

Explanation:

1. It does not expand

    a. Net income= $100,000 (as given in the question)

    b. Return on equity= (net income)/(shareholder’s equity)

Shareholder’s equity= $400,000

Thus return on equity= 100000/400000 = 0.25  or 25%

2. It expands and issue $160,000 in debt

    a. Net income= $100000 + 50000 –  12800 (debt interest 8% of     $160000)

= $137,200

b. Return on equity= (net income)/(shareholder’s equity)

= 137200/400000

=0.343  or 34.3%

3. It expands and raises equity of $160000

a. Net Income= $100000 + 50000

= $150000

b. Return on equity= (net income)/(shareholder’s equity)

= 150000/(400000 + 160000)

Where ($560,000) 400000 + 160000 is shareholder’s equity

= 0.27 or 27%

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James Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two department
GREYUIT [131]

Answer:

Total cost= $9395

Explanation:

Giving the following information:

The company has two departments: Assembly and Sanding.

The Assembly Department:

Departmental overhead rate of $35 per machine hour.

The Sanding Department:

Departmental overhead rate of $20 per direct labor hour.

Job 603:

Direct labor hours used 85

Machine hours used 107

The cost of direct labor is $30 per hour

Direct materials used= $1,400.

Total cost= direct materials + direct labor + manufacturing overhead

Total cost= 1400 + $30*85 + [(107*$35)+(85*$20)]

Total cost= 1400 + 2550 + 5445

Total cost= $9395

6 0
3 years ago
Which of the following is not an example of how you can reduce the full
andrezito [222]

To reduce the cost of higher education, what should not be done is to get low grades, because they can sanction you and you will have to repeat some subjects.

<h3>What is higher education?</h3>

Higher education is the education that a person accesses to specialize professionally in an area of ​​knowledge. Higher education is found in universities and there different specialized subjects are taken around a profession.

<h3>What to do to reduce the value of higher education?</h3>

To reduce the value of higher education, some students access scholarships that allow them to reduce these costs. However, scholarships generally require them to have high grades and maintain a high level of academic performance.

Therefore, if we want to reduce these costs we must get high grades and maintain a high average. On the other hand, if our grades are low, we are going to increase costs because we are going to have to pay for additional classes or repeat some of them.

Learn more about higher education in: brainly.com/question/2500637

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7 0
2 years ago
Cahalane Corporation has provided the following data for its two most recent years of operation: Selling price per unit $ 91 Man
ankoles [38]

Answer:

A. The amount of fixed overhead deferred in inventories is $60,000

Explanation:

Unit product cost      

                                            Year 1      Year 2  

Direct materials                      $12         $12

Direct labor                              $5        $5  

Variable manufacturing

overhead                                     $5      $5  

Fixed overhead

                                                   $48      $36  

                           ($432,000 ÷ 9,000)   ($432,000 ÷ 12,000)

unit product cost                       $70      $58

Fixed overhead deferred (1,000 × $48)   $48,000  

Fixed overhead released                                             -$48000  

Fixed overhead deferred (3000 × $36)                        $108,000  

Net                                                             $48,000        $60,000

The amount of fixed overhead deferred in inventories is $60,000

8 0
3 years ago
On January 1, 2001, El Salvador "dollarized" its economy. The U.S. dollar circulated throughout the country along with the Salva
solniwko [45]

Answer:

1. The government could not finance it's deficit budget.

2. The Dollar was stable and Through dollar adoption, interest rate would be lowered and investments would increase.

Explanation:

The colon was changed to dollars because El Salvador wanted a boost in it's economy through the US Dollar.

Printing money to finance deficit would no longer be done by the government and inflation would be brought under control. Because of the adoption El Salvador has no control over it's monetary policy.

the government would still be able to run deficits by printing money

with dollars, shocks caused by demand in the economy will be offset more effectively by using monetary policy.

By printing U.S. dollars, the government would still be able to finance deficits.

6 0
3 years ago
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Andrej [43]
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The express warranty is given in Fact 1 where the Sales Rep promised that the system was "A-1" and "perfect". There is a breach in express warranty here IF the written contract also expresses the same promises. 

However, the written contract </span>disclaimed all warranties, express and implied. AND BOTH PARTIES SIGNED THIS CONTRACT. It implies that the buyer has read through the contract and has agreed with what is written in the contract. Thus, they can't file a suit against BB for breaching an express warranty since the written and signed contract has already disclaimed all warranties. 

4 0
3 years ago
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