Answer:
The company's debt ratio at the end of the current year is 66%
Explanation:
For computing the debt ratio, we need to apply the formula which is shown below:
Debt ratio = (Total liabilities) ÷ (total assets) × 100
= ($182,200 ÷ $276,000) × 100
= 66%
The other information which are given in the question is of no use. That's why we do not consider it. Hence, ignored it.
Answer: The problem of this plan is that their income will not be able to break even, because their cost price will be grater than the selling price. Which may cause the new company to wind up
Explanation: break even is a point where the cost price is equal to the selling price. This means that profit nor loss were not made.
Because Avis and Hertz are offering rentals at a prices below average variable cost, the company may not be able to meet up with capital for production of more cars, and this will cause them to wind up.
For a new company, it is always advisable to keep it's selling price a little bit above or the same with it's cost Price, because the strength not any business is the ability to produce more to fill the space of scarcity.
Answer:
While taking a capital budgeting decision of source of fund, or the capital project to be chosen, we sometimes use Payback Period
It is defined as the tenure in which the cash flows will realize the cost of project, that is the period in which the entire cost will be paid back.
This provides the information regarding the time after which the project will be profitable, or the time at which it will reach break even.
The payback uses the criteria that if the payback period calculated is less than life of project it shall be accepted, in case it is equal to life of project then there will be no profit no loss, and in case payback is higher than life of project then there will be loss.
Answer:
The amount of the gift is 566,371.6814
Explanation:
Average rate of return = Average net profit / average investment
Average rate of return = 5.65% (5.65/100 = 0.0565)
average net profit = 32000
average investment = unknown
to calculate the amount of the gift which is investment in this case the same formula for Average rate of return will be used i.e
Average rate of return = Average net profit / average investment
0.0565 = 32, 000/ x
cross multiply
0.0565 x = 32,000
divide both sides by 0.0565
x = 32,000/0.0565
32,000/ 0.0565 = x
x = 566,371.6814
The amount of the gift is 566,371.6814
