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olya-2409 [2.1K]
3 years ago
14

Investing $1,500,000 in TQM's Channel Support Systems initiative will at a minimum increase demand for your products 1.7% in thi

s and in all future rounds. (Refer to the TQM Initiative worksheet in the CompXM Decisions menu.) Looking at the Round 0 Inquirer for Andrews, last year's sales were $163,712,225. Assuming similar sales next year, the 1.7% increase in demand will provide $2,783,108 of additional revenue. With the overall contribution margin of 34.2%, after direct costs this revenue will add $951,823 to the bottom line. For simplicity, assume that the demand increase and margins will remain at last year's levels. How long will it take to achieve payback on the initial $1,500,000 TQM investment, rounded to the nearest month
Business
1 answer:
vagabundo [1.1K]3 years ago
6 0

Answer:

Payback is 19 months

Explanation:

It is a capital budgeting problem. Firm has invested in TQM's Channel Support systems of $1,500,000. It will increase demand of product by 1.7%.

$166385985 x1.7071. = $166389948

Last years sales revenue was $163,608,638. A 1.7% increase will mean the saleswill be -

$166385985- $163608638 = 2781347

Thus increase in sales revenue is-

Now consider contribution margin. From total sales direct variable costs are deducted to get total contribution. It is 34.2% . So extral contribution due to 1.7% increase in sales is-

$2781347 x 34/2%= $95122

Thus increase in contribution margin will also increase profit to the same extent as there is no addition in fixed cost due to this project. So firm will be able to recover $951,221of initial investment of $1,500,000 in one year. Pay back is the time required to recover this full initial investment. It ascertained by dividing $1,500,000 amount by the net addition in profit per year. Answer is-

1,500,000+ 951221= 1.6759yrs x12months= 19months

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Based on the scenario analysis on stocks and bonds, we know the following:

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<h3>What does the scenario analysis on Bonds and Stocks show?</h3>

In a recession, Bond returns will be 15%. This is much higher than Bond returns in a boom of only 5%.

The expected return on bonds will be:

= ∑(Probability of Scenario x Returns in scenario)

= (0.30 x 15%) + (0.60 x 8%) + (0.10 x 5%)

= 9.8%

The expected return on stocks will be:

= (0.30 x -6%) + (0.60 x 18%) + (0.10 x 26%)

= 11.6%

Using a spreadsheet, you can input the expected returns of the stocks and the bonds to find the standard deviation to be 9.24% and 11.76%, respectively.

Find out more on stock expected returns at brainly.com/question/18724022.

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3 0
2 years ago
Halka Company is a no-growth firm. Its sales fluctuate seasonally, causing total assets to vary from $345,000 to $410,000, but f
mihalych1998 [28]

Answer:

$345,000

Explanation:

Since Halka Company uses a maturity matching approach, it must match its short term working capital with its short term debts, and its long term working capital with its long term debts. Halka's assets should be compensated with a corresponding debt instrument of similar maturity.

Since Halka's assets vary form $345,000 to $410,000, its long term debt plus equity should match at least $345,000.

3 0
3 years ago
Alpha Corporation reported the following data for its most recent year: sales, $670,000; variable expenses, $420,000; and fixed
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Answer:

the degree of operating leverage is 5

Explanation:

The computation of the degree of operating leverage is given below:

= Contribution margin ÷ EBIT

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= $250,000 ÷ $50,000

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Hence, the degree of operating leverage is 5

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2 years ago
General Mills conducted focus groups to collect and interpret data to gain insights into customer preferences and loyalty. Which
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Answer:

The correct answer is (C)

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It is very important to understand what consumers want and what they expect from a brand. In order to understand costumer’s preferences and loyalty, various techniques are used from questionnaires to interview. General mills conducted focus groups and estimated the results to better understand customer’s insight by asking various questions related to preferences, taste and expectations.

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3 years ago
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Answer:

b- $2,400

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= $2,400

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Therefore the option b is correct

The same should be considered

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