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fgiga [73]
3 years ago
7

Allison engines corporation has established a target capital structure of 40 percent debt and 60 percent common equity. the firm

expects to earn $150,000 in after-tax income during the coming year, and it will retain 40 percent of those earnings. what is the break point of retained earnings?
Business
1 answer:
mariarad [96]3 years ago
6 0

Answer: $100,000

Explanation: Allison engines corporation has a profit of $150,000 after Tax.

Rate of retained earning : 40%

Retained earnings : $150,000 × 40% = $60,000

Percentage of equity in the capital is 60%

Break even point of retained earnings = Retained Earnings ÷ Percentage of equity in the capital

Break even point of retained earnings = $60,000 ÷ 0.6

Break even point of retained earnings = $100,000

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Answer:

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7 0
3 years ago
You have just purchased a new warehouse. To finance the purchase, you've arranged for a 25-year mortgage for 80 percent of the $
Ahat [919]

Answer:

  • <u><em>7.67%</em></u>

Explanation:

Monthly payments from <em>mortgages</em> are calculated with the compounding montly interest rate.

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Monthly\text{ }Payment=Loan\times \bigg[\dfrac{r(1+r)^t}{(1+r)^t-1}\bigg]

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Substitute:

      \$10,800=\$1,440,000\times \bigg[\dfrac{r(1+r)^{300}}{(1+r)^{300}-1}\bigg]

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  • 0.005                    $ 9,277.94    < $10,800 ⇒ increase
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3 years ago
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ending inventory before adjustment: 12,875

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