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mr_godi [17]
3 years ago
5

The Huffman Tire Company has 3,000 tires in its inventory which are considered obsolete. Each unit originally cost the company $

35. Management is considering options to reduce these inventory levels. Units can be sold directly to car dealerships for $30 per tire as opposed to the normal selling price of $45 per tire. The other option is to offer their current customers a $10 per tire rebate on their purchase. In addition to the $10 rebate, the program would cost the company approximately $24,000 to manage. They predict that either option will rid them completely of their excess The decision to sell directly to the car dealerships over offering the rebate will result in: A. A $21,000 increase in profits. B. A $9,000 increase in profits. C. A $15,000 decrease in profits. D. A $24,000 decrease in profits.
Business
1 answer:
bogdanovich [222]3 years ago
4 0

Answer:

The correct answer is;

A $9,000 increase in profits (B)

Explanation:

This question is asking us to compare the net selling prices between selling to the current customers and selling to the car dealership, to determine if an increase or decrease in profit was made.

First of all, we have to calculate the net selling prices to the two group;

To the car dealership

price of 1 tire = $30

total number of tires = 3,000

Therefore total price of sales = 3000 × 30 = $90,000

To the current customers;

price of 1 tire = $45 - $10 rebate = $35

Number of tires = 3000

Therefore total selling price = 35 × 3000 = $105,000

Next, we are told that when they decide to sell to direct customers,  the program would cost $24,000. This amount will be removed from the total selling price; Therefore net amount gotten from sales to customers

= $105,000 - $24,000 (cost of program) = $81,000

Now, comparing the prices of the two groups,

Total sale to car dealership = $90,000

Total sales to customers = $81,000

difference = 90,000 - 81,000 = $9,000.

If the company makes a decision to sell to the car dealership, they will make a $9,000 increase in profit (Option B), because the price in selling to the car dealership is higher than that in selling to the direct customers by $9,000.

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he next dividend payment by Savitz, Inc., will be $2.34 per share. The dividends are anticipated to maintain a growth rate of 4.
Elan Coil [88]

Answer:

The Required Return is 10.82%.

Explanation:

The Dividends Model for the Constant Growth is given below:

                                          P0 = D1 / (Ke - g)

Arranging the above equation for "Ke", that is the Required Return:

                                      ⇒ Ke = (D1 / P0) + g

Putting Values and we get:

Required Return = Ke = (2.34 / 37) + .045 = .1082 = 10.82%.

Thanks!

8 0
3 years ago
Explain why the monopsonist's marginal-revenue-product curve is downward sloping. Include the role of the price for the final go
alekssr [168]

Answer:

A monopsony is market where there is only one buyer, e.g. the government is the sole buyer for nuclear submarines in the US.

The demand curve of a monopsony is similar to the demand curve of any other type of market, i.e. it is downward sloping. Since there is only 1 buyer, the demand curve is also the supply curve. If the monopsonist wants to increase the quantity demanded at a lower price, the supplier (or suppliers) must be able to lower its costs and that generally results in lower labor costs.

3 0
2 years ago
Classify this form of business:
Viktor [21]

Answer:

Limited Liability Partnership / Limited Liability Company.

Explanation:

  • Limited Liability Partnership: A limited liability relationship is a company in which certain or all members have defined obligations, based on the law. Consequently, it can show collaboration and organizational features. Each partner in an LLP is not accountable or liable for any wrongdoing or incompetence of another party.
  • Limited Liability Company: A limited liability company is a management structure whose proprietors are not personally responsible for the obligations or responsibilities of the business. Limited liability corporations are hybrid organizations that combine a company's features with that of a partnership or sole business entity.
7 0
3 years ago
A loan is being amortized by means of level monthly payments at an annual effective interest rate of 8%. The amount of principal
suter [353]

Answer:

d) 216

Explanation:

We need to equate the value of 12th payment and t^th payment through the below formula.

=> 1000*(1+8%)^[(t-12)/12] =3700

=> (1.08)^[(t-12)/12] =3.7

=> [(t-12)/12] =17

=> t=216

4 0
3 years ago
Last year Randolph Company had sales of $325,000 and a net income of $19,000, and its year-end assets were $250,000. The firm's
alexdok [17]

Answer:

13.82%

Explanation:

Data provided in the question:

Sales = $325,000

Net income = $19,000

Assets = $250,000

Total-debt-to-total-assets ratio = 45.0% = 0.45

Now,

Total asset turnover = Sales ÷ Total assets

= $325,000 ÷ $250,000

= 1.3

Profit margin = Net income ÷ Sales

= $19,000 ÷ $325,000

= 0.05846

Equity multiplier = 1 ÷ [ 1 - Debt to asset ratio]

= 1 ÷ [ 1 - 0.45 ]

= 1.818

thus,

ROE = Profit margin × Total asset turnover × Equity multiplier

= 0.05846 × 1.3 × 1.818

= 0.1382

or

= 0.1382 × 100%

= 13.82%

7 0
3 years ago
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