David is buying a new car for $21,349.00. He plans to make a down payment of $3,000.00. If he's to
1 answer:
Answer: (D) 5.90%
Explanation: David is going to buy a new car at $21,349.
The down payment is $3,000.
Loan amount (Present value) = $21,349 - $3,000
Loan amount (Present Value) = $18,349
Installment amount (pmt) = $352
As the payment is made monthly (12 months in a year),
Number of payments = 5 * 12
Number of payments = 60
Using the rate option in excel,
Insert the variables into the option, we get
By inserting the above formula in excel we get,
Rate = 0.47%
Rate of 0.47% is monthly, to get APR
APR = 0.0586
APR = 5.86% or 5.90%
Therefore the correct option is 5.90%.
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Answer: The company's current sales is 9,333 units.
It has to sell a total of 10,695 units in order to achieve a target pre tax income of $1,125,000.
First we calculate the number of units sold at the current sales level.
We compute this as:
Next we find the contribution margin per unit.
Contribution Margin per unit is <u>$180.</u>
Flannigan Company's current per-tax income is calculated as :
Sales 4200000
less:Variable costs @ $270 for 9333.33 units -2520000
Contribution 1680000
less:Fixed Costs -800000
Pre tax income 880000
With this information, we can calculate the Contribution Margin required if the pre tax income should be $1,125,000. We work backwards in order to find the Contribution Margin from Pre-tax income.
Targeted Pre Tax income $1,125,000
Add: Fixed Costs $ 800,000
Contribution Margin $1,925,000
Since we know the per unit contribution, we can calculate the number of units to be sold as:
Since products can't be sold in parts, any decimal value after a whole number will be rounded up. Hence the targeted sales will be 10,695 units.