Answer:
- Compute the return on investment (ROI) for each center.
I - 18%
II - 26%
III - 40%
Explanation:
The ROI (Return on Investment), it's a financial ratio that measure the benefit that an investor will receive in relation to their investment cost.
Div. I
$884,340 Controllable margin
$4,913,000 Average operating assets
18%
Div. II
$2,065,180 Controllable margin
$7,943,000 Average operating assets
26%
Div. III
$4,850,800 Controllable margin
$12,127,000 Average operating assets
40%
Answer:
$113,200
Explanation:
Data provided
Cost of goods sold = $101,000
Increase in Inventory = $8,100
Decrease in Accounts payable = $4,100
The calculation of Adjusted cost of goods sold is shown below:-
Adjusted cost of goods sold = Cost of goods sold + Increase in Inventory + Decrease in Accounts payable
= $101,000 + $8,100 + $4,100
= $113,200
Therefore for computing the adjusted cost of goods sold we simply applied the above formula.
Answer:
Required rate of return = 10.75%
Explanation:
<em>The value of a stock using the dividend valuation model, is the present value of the expected future dividends discounted at the required rate of return. The required rate of return is the cost of equity
</em>
The model is represented below:
P = D× (1+g)/ ke- g
Ke- cost of equity, g - growth rate, p - price of the stock
This model can used to work out the cost of equity, as follows:
Ke = D× (1+g)/p + g
Ke = (1.48× 1.05)/27 + 0.05
Ke= 0.107555556
Required return = 0.1075 × 100 = 10.75
Required rate of return = 10.75%
Answer and Explanation:
(1) Decrease in investment = Decrease in money supply / Investment multiplier
= $60 billion / 5 = $12 billion
Real planned investment will decrease by $12 billion
The Federal Reserve decreased money supply by 60 billion and we wish to determine by how much this would affect real planned investment. We have therefore applied the investment multiplier to determine decrease in real planned investment. This is based on Keynes' theory of investment multiplier
