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rusak2 [61]
3 years ago
12

The Lynx Manufacturing Company produces components used in electronic toys. In fiscal year 2017, Lynx earned an accounting profi

t of $3 million. However, Lynxes production facilities might have also been used to produce components for mobile phones, which would have generated $2 million in revenues and saved the company $500,000 in production costs. Which of the following statements is true?a) lynx earned an economic profit of $5.5 million. b) lynx earned an economic profit of $500,000.c) lynx suffered an economic loss of $500,000.d) lynx suffered an economic loss of $2.5 million.
Business
1 answer:
zmey [24]3 years ago
8 0

Answer:

Option "B" is the correct answer to the following statement.

Explanation:

During the fiscal year 2017, The Lynx Manufacturing Company Received $2,000,000 Profit that helps the company to earn a profit of $5,000,000 in production cost.

This extra saved income in the fiscal year 2017 is called economic profit for the firm.

Therefore, Option "B" is the correct answer to the following situation.

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3 years ago
Marble Construction estimates that its WACC is 10% if equity comes from retained earnings. However, if the company issues new st
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Answer:

Project Size IRR

A $650,000 14.0%

B 1,050,000 13.5

C 1,000,000 11.2

D 1,200,000 11.0

Explanation:

Based on the information given the set of projects that should be accepted should be the project that has higher Internal rate of return (IRR) than the Weighted average cost of capital (WACC) percentage of 10.8% . Hence, the set of projects that should be accepted are: Project A,B,C,D

Project Size IRR

A $650,000 14.0%

B 1,050,000 13.5

C 1,000,000 11.2

D 1,200,000 11.0

Total $3,900,000

Based on the above we can see that Project A,B,C,D has a total of $3,900,000 which is higher than the retained earnings amount of $2,500,000.

Therefore the set of projects that should be accepted should be Project A,B,C,D

6 0
3 years ago
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4 years ago
Record the following transactions for Red Wood Trails in a general journal.
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Answer:

Date         Account, title and description                 debit              credit

June 3      Merchandise inventory                           3,985

                Accounts payable                                                           3,985

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                from JVC Co.

June 9      Merchandise inventory                           2,300

                Accounts payable                                                           2,300

                Merchandise purchased on account

                from Prime Target, terms 2/10, n/30

June 12    Store supplies                                          675

                Accounts payable                                                           675

                Merchandise purchased on account

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June 13    Accounts payable                                    3,985

                Cash                                                                                3,985

                Paid for June 3 purchase of

                merchandise from JVC Co.

June 19    Accounts payable                                    2,300

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                Paid for June 9 purchase of

                merchandise from Prime Target and

                obtained a 2% discount

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