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Arturiano [62]
3 years ago
12

X-treme Vitamin Company is considering two investments, both of which cost $22,000. The cash flows are as follows: Year Project

A Project B 1 $ 25,000 $ 22,000 2 12,000 11,000 3 8,000 14,000 Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a-1. Calculate the payback period for Project A and Project B.
Business
1 answer:
olga2289 [7]3 years ago
4 0

Answer:

0.88 year and 1 year

Explanation:

The computation of the payback period for Payback period for Project A and Project B is shown below:

Payback period = Initial investment ÷ Net cash flow

For Project A

Initial investment = $22,000

Year 1 = $25,000

Since the initial investment is less than the annual cash flows so the payback period is

= 0 years + ($22,000 ÷ $25,000)

= 0.88 years

For Project B

Initial investment = $22,000

Year 1 = $22,000

So, the payback period is

= $22,000 ÷ $22,000

= 1 year

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A company acquires a subsidiary and will prepare consolidated financial statements for external reporting purposes. For internal
NemiM [27]

Answer:

It is a relatively easy method to apply.

Explanation:

When accounting for a subsidiary, equity method is followed, whenever the shareholding percentage is equal or more than 20%.

But here, the parent company uses, initial value method for internal reporting.

Under initial value method the value of investment in subsidiary is recorded at cost, and then adjusted at year end at fair value, this clearly shows the gain or loss at each year end from such investment as per market norms.

There is no statutory requirement to follow such initial value method for internal reporting.

The correct reason therefore, is:

It is a relatively easy method to apply.

7 0
3 years ago
Knox Company has a new product with a projected selling price of $6.00 each. It estimates that it could sell 100,000 units annua
Pachacha [2.7K]

Answer:

350,000

And if done per unit, $3.50

Explanation:

Both sales and variable cost are dependent on the number of units sold.

The sales less the variable cost gives the contribution margin. The contribution margin less the fixed cost gives the net operating income.

The target cost of the product is the difference between the selling price and the anticipated profit.

Target cost per unit

= $6.00 - $2.50

= $3.50

Total Target cost = $3.50 * 100,000

= $350,000

6 0
3 years ago
The New Fund had average daily assets of $2.2 billion in the past year. If New Fund’s expense ratio was 1.1% and the management
Marizza181 [45]

Answer: $15,400,000

Explanation:

The fees paid to the fund's investment managers during the year would simply be the Management fee of 0.7% of the average daily assets. The expense ratio refers to other adminstrative expenses.

= 2,200,000,000 * 0.7%

= $15,400,000

8 0
3 years ago
In reviewing the firms whose stocks comprise the Dow Jones Industrial Average, we discover: a) There is an even mix between big
Svetach [21]

Answer:

C, is the correct answer.

Explanation:

7 0
3 years ago
What of these is related to financial incentives
Marrrta [24]

Answer:Examples of financial incentives

Financial incentive(Monetary incentives):

It includes salary, bonus ,commission, retirement benefits, stock incentive and other financial perquisites like free house servant, car, medical facility e.t.c.

Explanation: Following are the main types of financial incentives:

1. Pay and Allowances: Salary is the basic monetary incentive for every employee. Beside basic salary, it also includes dearness allowance, travelling allowance and at times some other allowances too. It also consists of continuous increment in the pay every year and increase in allowances from time to time.

2. Productivity Linked Wage Incentives: Sometimes wage incentive plans are linked with payment of wages to increase productivity at individual or group level. Their quantum is based on actual output against targets.

3. Bonus: It is the incentive which is given over and above the salary or wages of the employees. Many companies offer the bonus during the festivals Diwali, New Year etc.

4. Profit Sharing: It refers to providing a share to employees in the profits of the organisation. This helps in motivating the employees to improve their performance and to contribute their maximum effort for increasing the profits.

5. Co-partnership/Stock Option: Under this incentive scheme, employees are offered shares at a price which is lower than the market price. This practice helps in creating a feeling of ownership among employees and motivates them to give their maximum contribution towards organisational growth. For example, in Infosys this scheme has been successfully implemented.

6. Retirement Benefits: Various retirement benefits such as provident fund, pension and gratuity, act as an incentive to an employee when they are in service in the organisation.

7. Perquisites: Various perquisites and fringe benefits, such as car allowance, housing, medical aid, education to the children etc. provided by the companies over and above the salary, also help in motivating the employees.  

Hope this helps :)

8 0
2 years ago
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