Answer:
Madison Corporation
The contribution margin per composite unit for the current sales mix is:
= $26.
Explanation:
a) Data and Calculations:
Products M N O
Current sales mix 3 1 2
Unit sales price $16 $11 $13
Unit variable costs 10 9 10
Unit contribution $6 $2 $3
Contribution margin per
composite unit $18 $2 $6
= ($6 * 3) ($2 * 1) ($3 * 2)
b) The contribution margin per composite unit is computed as the addition of the contribution margin per composite unit for each product. Each product's contribution margin per composite unit is calculated as the contribution per unit multiplied by the sales mix for each product.
Answer:
$80,500
Explanation:
Data provided as per the question
Capital asset = $23,000
Number of year = 5
Income tax rate = 30%
The computation of cash inflow from operations is as shown below:-
Before tax = capital asset × number of year
= $23,000 × 5
= $115,000
Cash inflow from operations = Before tax × (1 - Income tax rate)
= $115,000 × (1 - 0.3)
= $115,000 × 0.7
= $80,500
Answer:
- 3.21%
Explanation:
In this question, we use the PV formula which is shown in the spreadsheet.
The NPER represents the time period.
Given that,
Future value = $1,000
PMT = 1,000 × 5% = 50
NPER = 34 years - 1 year = 33 year
Rate of interest = 9%
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after solving this, the present value would be $581.42
Now the return would be
= Sale price + interest - purchase price
= $581.42 + $50 - $652.39
= -$20.97
And, the total return would be
= Return ÷ purchase price
= -$20.97 ÷ $652.39
= - 3.21%
Answer and Explanation:
Given that Bond A pays $4,000 in 14 years and Bond B pays $4,000 in 28 years, and that the interest rate is 5 percent, we see that Using the rule of 70, the value of Bond A is 70/5 = doubled after 14 years. Now if its value is 4000 in 14 years, its current value must be halved. Hence the value is 2000.
Sinilarly the value of Bond B is approximately one fourth now because it pays 4000 in 28 years. Hence its value is 4000/4 = 1000.
Now suppose the interest rate increases to 10 percent. Hence the doubling time is 70/10 = 7 years
Using the rule of 70, the value of Bond A is now approximately 1,000 and the value of Bond B is 250
Comparing each bond’s value at 5 percent versus 10 percent, Bond A’s value decreases by a smaller percentage than Bond B’s value.
The value of a bond falls when the interest rate increases, and bonds with a longer time to maturity are more sensitive to changes in the interest rate.
