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GuDViN [60]
3 years ago
6

Izzy Division of Marine Boats Corporation had the following results last year (in thousands). Sales $4,700,000​ Operating income

$700,000​ Total assets $3,900,000​ Current liabilities $300,000​ Management's target rate of return is 13% and the weighted average cost of capital is 12%. What is the Izzy Division's Residual Income (RI)?
Business
1 answer:
ASHA 777 [7]3 years ago
4 0

Answer:

Izzy Division's Residual Income is $193,000

Explanation:

given data

Sales = $4,700,000​

Operating income =  $700,000​

Total assets = $3,900,000​

Current liabilities = $300,000​

target rate of return = 13%

average cost of capital = 12%

to find out

Izzy Division's Residual Income

solution

first we find here Minimum required income that is express as

Minimum required income = Total assets × Target rate of return   ................1

Minimum required income = $ 3,900,000​ × 13%

Minimum required income = $ 507,000

and

now we find residual income that is express as

Residual income = Operating income - Minimum required income    ..........2

Residual income = $700000 - $507000

Residual income = $193,000

Izzy Division's Residual Income is $193,000

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$127.27

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If 2005 is the base/old year, then:

$700/550 = 1.27273 * 100 = $127.27

Price index is used to show inflation from year to year by the change in price for the same goods in a base year to current year. Price index for the base year compared to the base year will always be 100, so anything above that shows inflation.

4 0
3 years ago
On April 1, Lewis Company paid $14,400 for two years of insurance in advance. Lewis Company recorded the transaction by debiting
Dominik [7]

Answer:

31 Dec       Expense A/c Dr.                      $5,400

                         To Prepaid Expense A/c                   $5,400

(Therefore, expense for the current financial year recorded)

Explanation:

We know that at the time of insurance paid in advance on 1 April for 2 years, entry was;

Prepaid Insurance A/c Dr.            $14,400

                 To Cash A/c                                      $14,400

Now at year end the expense relating to current period shall be recognized properly in the books, so that matching principle of revenue against expenses shall be matched.

Thus, period from 1 April to 31 December = 9 months

Expense for 9 months = 14,400 \times \frac{9}{24} = 5,400

That means expense for the year = $5,400

Therefore, entry for such recording will be:

31 Dec       Expense A/c Dr.                      $5,400

                         To Prepaid Expense A/c                   $5,400

(Therefore, expense for the current financial year recorded)

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3 years ago
A school band performs a spring concert for a crowd of 600 people. the revenue for the concert is $3150. there are 150 more adul
Alla [95]
In this item, we let the number of tickets sold to the adults as x. With this, we can let the number of tickets sold to students with y. 

In this item, we are given that the sum of the number of students and adults is equal to 600. Further, we are also given that the difference is 150. The system of linear equation that would allow us to solve this item is,

               x + y = 600
               x - y = 150

Adding up the two equations will give us,
              2x = 750
Dividing by 2,
              x = 375

Substituting this value to the first equation,
          375 + y = 600
                 y = 225

Therefore, there are 375 and 225 number of tickets sold to adults and students, respectively. 
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Vaselesa [24]

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