Westwick Inc. is an advertising agency. Its employees are allowed to take decisions and work in ways that will help maximize the
1 answer:
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Answer:
$98.02
Explanation:
Data provided in the question:
Value of contract = $1,330
Maximum value = $86
Minimum value = $65
Exercise price = $78
Risk-free rate = 3%
Now,
Current value of stock =
also,
a standard contract has 100 shares
thus,
Call price = Value of contract ÷ 100 shares
or
Call price = $1,330 ÷ 100 = $13.30
Thus,
Current value of stock =
or
Current value of stock = ( 2.625 × $13.30 ) + $63.1068
= $98.0193 ≈ $98.02
Answer:
Gross profit percentage = Gross profit / Net sales
= (Net sales - COGS) / Net sales
= (250,000 - 150,000) / 250,000
= 40%
Return on sales ratio = EBIT / Net sales
= (Gross profit + other income - Administrative expenses - Other expense - Selling expenses) / Net sales
= (250,000 - 150,000 + 15,000 - 10,000 - 10,000 - 50,000) / 250,000
= 18%
<u>With new product:</u>
Gross profit percentage = Gross profit / Net sales
= (Net sales - COGS) / Net sales
= (250,000 + 45,000 - 150,000 - 38,000) / (250,000 + 45,000)
= 36.3%
Return on sales ratio = EBIT / Net sales
= (Gross profit + other income - Administrative expenses - Other expense - Selling expenses) / Net sales
= (250,000 + 45,000 - 150,000 - 38,000 + 15,000 - 10,000 - 10,000 - 50,000) / (250,000 + 45,000)
= 52,000 / 295,000
= 17.6%
