Answer:
The options include:
[A] cannot implement the plan
<em>[B] can implement the plan
</em>
[C] can implement the plan only if no commissions are charged
[D] can implement the plan only if no management fee is charged
<em>[B] can implement the plan is Correct</em>
Explanation:
Because the client or consumer has been fully disclosed and he agrees that the Adviser / Representative will obtain a management fee and commissions the Advisor / Representative will be allowed to progress with the project.
Spending analysis would use data to analyze purchasing data.
Answer:
EPS=$3
Explanation:
Net income =1,098,000
Dividend on preferred stock=2*265,500=$531,000
Outstanding shares=189,000
EPS= (Net income-preferred dividends)/Weighted Average share outstanding
EPS=($1,098,000-$531,000)/189,000
EPS=$3
Answer:
1a. Payback period = <u>Initial outlay</u>
Annual cost saving
= <u>$484,500</u>
$85,000
= 5.7 years
b. The equipment should not be purchased because it has a longer payback period than the company's required payback period.
2a. $
Annual cost saving 85,000
Less: Depreciation <u>40,375</u>
Annual profit <u>44,625</u>
Simple rate of return = <u>Annual profit</u> x 100
Initial outlay
<u>$44,625</u> x 100
$484,500
= 9.21%
Depreciation = <u>Cost - Residual value</u>
estimated useful life
= <u>$484,500 - 0</u>
12 years
= $40,375 per annum
2b, The equipment should not be purchased because the simple rate of return is lower than the company's required rate of return.
Explanation:
Payback period is the ratio of initial outlay to annual cost saving. It is the period in which the initial outlay is recouped.
Simple rate of return is the ratio of annual profit to initial outlay. It measures the rate of return on capital invested.
