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Gnesinka [82]
4 years ago
9

Rosa's Designer Gowns creates exquisite gowns for special occasions on a prepaid basis only. Rosa's required return is 7%, and s

he has been offered $160,000 today in exchange for delivering the gown in one year.
Should Rosa sell this gown if it will cost her $180,000 to produce the gown in one year? Show work please.
Business
1 answer:
notsponge [240]4 years ago
5 0

Answer:

No she should not sell this gown and should not accept the offer.

Explanation:

To assess whether she should sell the gown or not, we need to calculate the one year future value of the payment she is getting today for the gown.

The future value of $160000 after one year will be:

Future value = Present value ( 1 + r )

Where r is the required rate or interest rate.

Future value = 160000 ( 1 + 0.07)  = $171200

The cost to Rosa will have a value of $180000 in one year.

There is a loss to Rosa of $8800 on this sale.

Loss = 171200 - 180000 = $8800

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The following information relates to last year's operations at the Legumes Division of Gervani Corporation:
yanalaym [24]

Answer:

The Legume Division's net operating income last year was d. $45,000

Explanation:

Turnover (on operating assets) = Total Sales/ Operating assets

From the formula,

Operating assets = Total Sales/Turnover (on operating assets) = $900,000/3 = $300,000

Return on investment (ROI) is calculated by using following formula:

ROI = Net income/Total investment

Net Income = ROI x Total investment

At the Legumes Division of Gervani Corporation, Total investment  = Operating assets = $300,000

Net Income = 15% x $300,000 = $45,000

7 0
3 years ago
Hayes Bakery has sales of $30,600, costs of $15,350, an addition to retained earnings of $4,221, dividends paid of $469, interes
scZoUnD [109]

Answer:

$8,013

Explanation:

The computation of the amount of the depreciation expense is shown below:

The net income is

= An addition to retained earnings + cash dividend paid

= $4,221 + $469

= $4,690

Now the earning before tax

= (Net income) ÷ (1 - tax rate)

= ($4,690) ÷(1 - 0.21)

= $5,937

Now the earning before tax and interest is

= $5,937 + $1,300

= $7,237

So, the depreciation expense is

= $30,600 - $15,350 - $7,237

= $8,013

8 0
3 years ago
Costello Corporation reported pretax book income of $500,900. During the current year, the reserve for bad debts increased by $6
raketka [301]

Answer:

Deferred income tax expense = $7,161

Explanation:

Given:

Bed debts increase = $6,800

Depericiation increase = $40,900

Tax-exempt life insurance = $3,450

Computation:

Assume tax rate = 21%

Taxable difference = 40,900 - 6,800

Taxable difference = 34,100

Deferred income tax expense = 34,100 × 21%

Deferred income tax expense = $7,161

6 0
3 years ago
How auto insurance companies manage risk ?<br>​
Nana76 [90]

____________________________________________________

Answer:

Insurance companies manages risk by balancing the low-risk drivers and the high-risk drivers. Insurance would charge higher rates for high risk drivers.

____________________________________________________

Explanation:

Insurance companies manages risk by sorting out the people who have a lower chance of risking a crash, with people who have a higher chance of risking a crash. They do this by charging low rates to the people that have a lower chance of causing a risk. They charge them low because they are trustworthy, and don't need to rack up a lot of money quick if they ever get into a crash. Remember, insurance makes people pay monthly so they could use that money in a accident.

But, this is different for people with higher risk. People that have a high risk of getting into an accident would be charged with a higher rate than people with lower risk. Insurance companies charge them with higher rates because since higher risk drivers get are more likely to get into an accident, insurance companies want to make sure that they can get the money for the accident as soon as possible. Insurance companies are the ones that pay for the accident, and that's why most places require you to have insurance while you drive.

____________________________________________________

4 0
4 years ago
Read 2 more answers
Parne Two large American beer producers have decided to merge and seek government approval. They claim that by joining forces th
leonid [27]

Answer:

The correct answer is letter "A": Beer prices will go down.

Explanation:

Usually, when two large companies merge they take most or almost all part of their market causing a monopoly. This implies the recently-merged company to set the price of the goods according to what they believe is suitable which does not necessarily match with the consumers' expectations. However, for the companies in the case to prove the government that the merger will benefit the economy, they must show that the price of the beer will go down which is the opposite of what is expected under other regular situations.

5 0
4 years ago
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