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Nastasia [14]
3 years ago
6

ou are comparing two mutually exclusive projects. The crossover point is 12.3 percent. You have determined that you should accep

t project A if the required return is 13.1 percent. This implies you should:
Business
1 answer:
Verdich [7]3 years ago
3 0

Answer:

the options are missing:

  1. Always accept Project A.
  2. Accept Project B if the required return is less than 13.1 percent.
  3. Be indifferent to the projects at any discount rate above 13.1 percent.
  4. Accept Project B only when the required return is equal to the crossover rate.
  5. Always accept Project A if the required return exceeds the crossover rate.

the answer is:

5. Always accept Project A if the required return exceeds the crossover rate.

The crossover point tells us that one project must be chosen if the IRR is higher than the cross over point, but if the IRR is lower, then the other alternative should be selected.

In this case, the cross over point is 12.3% and we are told that project A should be selected if the required IRR is 13.1%. That tells us that the alternative that we must choose above 12.3% is project A. Project B should be selected if the IRR is less than 12.3%.

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A company had a beginning balance in retained earnings of $430,000. It had net income of $60,000 and paid out cash dividends of
snow_lady [41]

Answer:

Ending retained earning will be $433750

Explanation:

We have given beginning balance = $430000

Net income = $60000

Dividend paid = $56250

We have to find the ending balance

We know that ending retained earning is given by

Ending retained earning = beginning retained earning + net income - dividend paid

So Ending retained earning = $430000+$60000-$56250 = $433750

6 0
3 years ago
Lusk company produces and sells 15,900 units of product a each month. the selling price of product a is $29 per unit, and variab
Shkiper50 [21]
<span>Decrease by $57,400 per month. Looks look at the cash flow for continuing to produce product a and discontinuing product a. Continuing to produce Income = 15900 * $29 = $461,100 Variable Expenses = 15900 * 23 = $365,700 Fixed overhead = $109,000 Total cash flow = $461,100 - $365,700 - $109,000 = -$13,600 So the Lusk company is losing $13,600 per month while producing product a. Let's see what happens if they stop producing it. Income = $0 Variable Expenses = $0 Fixed overhead = $71,000 Total cash flow = $0 - $71,000 = -$71,000 So if they stop producing it, their fixed overhead decreases, but is still at $71,000 per month, for a total loss per month of $71,000. The conclusion is to either lose $13,600 per month, or $71,000 per month. So if they stop production of product a, their loss per month will increase by $57,400.</span>
6 0
3 years ago
Pat's Custom Tuxedo Shop maintains its records on the cash basis. During this past year Pat's collected $43,300 in tailoring fee
Luba_88 [7]

Answer:

net income = $31,500

Explanation:

given data

collect tailoring fees = $43,300

paid expenses = $12,300

Depreciation expense=  $2,500

Accounts receivable =  $1,050

supplies increased = $4,300

liabilities increased = $2,350

to find out

accrual basis net income

solution

we get here net income by given expression that is

net income = tailoring fees - expenses paid + account receivable + supplies increased - liabilities increased - Depreciation expense .......1

put here value

net income =  $43,300 - $12,300 + $1,050 + $4,300 - $2,350 - $2,500

net income = $31,500

8 0
3 years ago
Steve owns Barb, Inc. and has grown the business over the last 15 years and is the sole owner. He decides to sell 40 percent of
Mamont248 [21]

Answer:

a. Steve will not have a capital gain in Year 1 for tax purposes.

Explanation:

Since Steve (the owner of Barb) sold his stocks to an ESOP (employee stock ownership plan), then he will be able to avoid capital gains taxes at least for the first year. ESOPs are qualified retirement plans and when they invest in stocks of the same sponsoring company, the transaction is not taxed if the seller reinvests (buys other stocks). As long as ESOP holds at least 30% of the company's stocks, then Steve can defer his taxes.

3 0
3 years ago
A leading beverage company sells its signature soft drink brand in vending machines for $0.87 per 12 oz. can. A vending machine
ycow [4]

Answer:

655

Explanation:

Breakeven quantity are the number of  units produced and sold at which net income is zero

Breakeven quantity = fixed cost / price – variable cost per unit

$190  / ( 0.87 - 0.58) = 655.2 = 655 to the nearest whole number

8 0
3 years ago
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