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3 years ago

In the following information, what is the times interest earned ratio?

Business

1 answer:

Ilya [14]3 years ago

7 0

Answer:

TIE = 150,000 / 5,000 = 30

Explanation:

Times Interest Earned (TIE) = Earnings Before Interest and Tax (EBIT) / Interest Expense

TIE ratio shows the ability of a company to meet its interest payments on its debt (solvency), expressed in times.

In this case 3.33% of the operating profits goes towards servicing the debt or the operating income are 30 times the annual interest expense.

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Gareth bought a home for $135,000. The home gained 2. 2% in value every year for eight years until Gareth sold it. How much prof

saw5 [17]

The amount of profit made by Gareth upon the sale of the home is $26,700.

Computation:

Given,

$P$ = Principal Amount of $135,000

$i$ = interest rate of 2.20%

$n$ =number of years are 8 years

First, the value of the home at the end of the 8th year will be computed by using the formula of future value.

$\begin{aligned}\text{Future Value}&=P\times(1+i)^n\\&=\$135,000\times(1+0.022)^8\\&=\$160,672.27\end{aligned}$

Now, the profit will be computed by taking the difference of the future value of the home and the purchase price or the principal amount of the home.

$\begin{aligned}\text{Profit}&=\text{Future Value\;-\;Principal Amount}\\&=\$160,672.27-\$135,000\\&=\$25,672.27\;\text{or}\;\$25,700\end{aligned}$

Therefore, at the time of sale of the home, the amount of profit gained by Gareth is $25,700.

To know more about future value, refer to the link:

brainly.com/question/1759639

3 0

2 years ago

The postal service of St. Vincent, an island in the West Indies, obtains a significant portion of its revenues from sales of spe

klemol [59]

Answer:

It is more profitable to maintain the price at $10

Explanation:

Giving the following information:

The souvenir sheets cost the postal service $1.15 each. St. Vincent has been selling these souvenir sheets for $10.00 each and ordinarily sells about 61,000 units. To test the market, the postal service recently priced a new souvenir sheet at $11.00 and sales dropped to 51,000 units.

We need to calculate the actual revenue and decide whether it is more convenient to increase the price or leave it as it is.

Actual revenue= 61,000 units* (10 - 1.15)= $539,850

New revenue= 51,000 units*(11 - 1.15)= $502,350

It is more profitable to maintain the price at $10

8 0

3 years ago

Townsend Industries Inc. manufactures recreational vehicles. Townsend uses a job order cost system. The time tickets from Novemb

Sati [7]

Answer:

Part a.

Work In Process : Job 201 $64,200 (debit)

Work In Process : Job 202 $32,100 (debit)

Work In Process : Job 203 $25,350 (debit)

Work In Process : Job 204 $47,100 (debit)

Salaries Payable $168,750 (credit)

Part b.

Work In Process : Job 201 $94,160 (debit)

Work In Process : Job 202 $47,080 (debit)

Work In Process : Job 203 $37,180 (debit)

Work In Process : Job 204 $69,080 (debit)

Overheads $168,750 (credit)

Explanation:

Calculation of Labor Cost :

Job 201 = 4,280 hours × $15 = $64,200

Job 202 = 2,140 hours × $15 = $32,100

Job 203 = 1,690 hours × $15 = $25,350

Job 204 = 3,140 hours × $15 = $47,100

Application of overhead to jobs :

Job 201 = 4,280 hours × $22 = $94,160

Job 202 = 2,140 hours × $22 = $47,080

Job 203 = 1,690 hours × $22 = $37,180

Job 204 = 3,140 hours × $22 = $69,080

6 0

4 years ago

Josh purchased 100 shares of XOM for $76.63 per share at the beginning of 2007. He received dividends per share of $1.37 (2007),

never [62]

Answer:

The IRR is 4.08%

Explanation:

In calculating the internal rate of return in excel,the cash outflow of $76.63 is shown in year 0 with a negative sign to indicate that it is the initial investment on the share, followed by dividends in received in later years shown as positive figures ,however in the fifth the dividend received and the cash received from disposing of the share were added together to show total cash inflow in the last year.

The computation of IRR is shown below

IRR for the share purchase

Years Cash flow

0 -76.63

1 1.37

2 1.55

3 1.66

4 1.74

5 86.61

IRR 4.08%

Find attached for detailed computation.

Download xlsx

4 0

3 years ago

An investor can invest money with a particular bank and earn a stated interest rate of 13.20%; however, interest will be compoun

mr_godi [17]

The effective compound interest rate is 13.87%.

<h3><u>What is Compound Interest?</u></h3>

The interest on a loan or deposit that is calculated based on both the initial principle and the accumulated interest from prior periods is known as compound interest (also known as compounding interest).
Compound interest, sometimes known as "interest on interest," is said to have its roots in 17th-century Italy. Compared to simple interest, which is calculated solely on the principal amount, it will cause a sum to grow more quickly.
The frequency of compounding determines the rate at which compound interest accumulates.
The compound interest increases with the number of compounding periods.
For instance, during the same period of time, the amount of compound interest accrued on $100 compounded at 10% yearly will be less than $100 compounded at 5% semi-annually.

Nominal = interest rate

That is Nominal rate is also known as interest rate.

Nominal rate = 13.20%

The invested money is compounded quarterly.

Periodic = 13.2%/4 (quarterly)

Periodic rate = 3.30%

Now,

The interest rate that accounts for compounding over a specific time period is called the Effective Annual Interest Rate (EAR). The rate of interest that an investor can earn (or pay) in a year after taking into account compounding is known as the effective annual interest rate, to put it simply.

Effective annual rate = EFF% = [1 + (0.13200 / 4)]⁴ - 1 = 13.87%

Know more about Compound Interest with the help of the given link:

brainly.com/question/14295570

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3 0

2 years ago