Answer:
The answer is 11.2%
Explanation:
Cost of acquisition: $16 per share
Annual dividend: $1
The stock increases by $2 every year for 3 years. Therefore, we have:
First year is $16 per share
Second year is $18 per share
Third year is $20 per share.
The arithmetic average annual capital gain will be
($2/$16 + $2/$18 + $2/$20)/3
(0.125 + 0.111 + 0.1) / 3
0.336/3
0.112
Expressed as a percentage:
= 11.2%
Answer:
173,500
Explanation:
Operating income is income derived from a business's operations, after deducting operating expenses e.g. wages, depreciation, and cost of goods sold
Operating income = sales - operating expenses- cost of merchandise sold
$764,000 - 52,500 - 538,000 = 173,500
I hope my answer helps you
Answer:
B. 66.67%
Explanation:
Contribution is the difference between the company's total revenue and the total variable cost. The ratio of the contribution to sales or revenue gives the contribution margin ratio.
The contribution may also be derived from the addition of the fixed cost and the operating income.
Contribution margin
= $115,000 + $54,000
= $169,000
Let the number of units to be sold to achieve targeted income be U
6U - 2U - 115,000 = 54,000
4U = 169,000
U = 42,250
Contribution margin ratio = 169000/(6 * 42,250)
= 66.67%
I would ask them if they were comfortable with a fluctuating rate, which though at the moment is lower than the fixed rate, could go up in the future. I would also ask them if they needed to be sure of the rate say for example for a 5 year term like in a mortgage for peace of mind or if they are willing to take a risk with the fluctuations. If the latter, I would tell them that at any time they could lock it in for a 5 year term if they saw it going up.
