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kolbaska11 [484]
3 years ago
11

Chevron Phillips (CP) has put into place new laboratory equipment for the production of chemicals; the cost is $1,770,000 instal

led. CP borrows 48% of all capital needed, and the borrowing rate is 13.4%. In the 1st year, 25% of the principal borrowed will be paid back. The throughput rate for in-process test samples has increased the capacity of the lab, saving a net of $X per year. In this 1st year, depreciation is $362,000 and taxable income is $329,000.
Required:
a. What is the gross income or annual savings?
b. Determine the income tax for the 1st year assuming a marginal tax rate of 40%.
c. What is the after-tax cash flow for the 1st year?
Business
1 answer:
inessss [21]3 years ago
6 0

Answer:

Chevron Phillips (CP)

a. The gross income or annual savings is:

= $804,846.

b. The income tax for the 1st year assuming a marginal tax rate of 40% is:

= $131,600.

c. The after-tax cash flow for the 1st year is:

= $559,400.

Explanation:

a) Data and Calculations;

Cost of new laboratory equipment = $1,770,000

Borrowed capital = $849,600 ($1,770,000 * 48%)

Borrowing rate = 13.4%

Borrowing interest expense for the first year = $113,846

Depreciation = $362,000

Taxable income = $329,000

Gross savings = $X

$X = $804,846 ($113,846 + $362,000 + $329,000)

Income tax for the 1st year:

Marginal tax rate = 40%

Taxable income = $329,000

= $131,600 ($329,000 * 40%)

After-tax Cash Flows for the 1st year:

Gross savings =    $804,846

Interest expense      113,846

Depreciation          362,000

Taxable income  $329,000

Income tax              131,600

Net income          $197,400

Cash Flows:

Net income               $197,400

Depreciation             362,000

After-tax cash flow $559,400

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Klio2033 [76]

Answer:

The correct answer is option c.

Explanation:

Corporate social responsibility is a modern concept regarding a companies' sense of responsibility towards the community and the ecological environment.

It means that the businesses have the responsibility to act for the benefit of the society and the environment along with profit maximization.

It is also termed as sustainable business, corporate citizenship etc.

3 0
3 years ago
A popular, local coffeeshop in one of the suburbs of New York City (NYC) estimates they use 3,500 pounds of coffee annually. The
andre [41]

a) The determination of the optimal size of the order assuming an EOQ model for the local coffee shop is <u>265 pounds</u>.

b) The total cost in the new coffee shop where the demand for coffee increased to 4,000 pounds at an order size of 265 pounds per order (assuming a unit cost of $3 per pound) is <u>$253,500</u>.

<h3>What is the EOQ Model?</h3>

The economic order quantity (EOQ) model calculates the ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs.

It is determined using the following model:

EOQ = square root of: 2 (ordering costs)(demand rate) / holding costs.

Thus, the EOQ model can be worked out as follows:

  • Determine the demand units.
  • Determine the ordering cost.
  • Determine the holding cost.
  • Multiply the demand by 2.
  • Then multiply the result by the order cost.
  • Divide the result by the holding cost.

<h3>Data and Calculations:</h3>

a) The annual demand for coffee = 3,500 pounds

Holding cost per pound = $10

Ordering cost = $100

EOQ = square root of: 2 ($100 x 3,500) / $10

= 265 pounds

The annual demand for coffee = 4,000 pounds

Holding cost per pound = $60

Ordering cost = $100

EOQ (Order size) = 265 pounds

Assumed unit cost per pound = $3

The total cost in the new coffee shop = $

Annual holding cost = $240,000 ($60 x 4,000)

Annual ordering cost = $1,500 ($100 x 4,000/265)

Annual purchase cost = $12,000 (4,000 x $3)

Total costs = $253,500

Learn more about the economic order quantity at brainly.com/question/14625177

6 0
2 years ago
Akua’s Paint Supply charges $15 per gallon of paint. Akua started with three employees, who together produced 40 gallons of pain
timofeeve [1]

Answer:

$70

Explanation:

Total revenue from three employees:

= No. of gallons of paint produced × Selling price per gallon

= 40 × $15

= $600

Total revenue from four employees:

= No. of gallons of paint produced × Selling price per gallon

= 48 × $15

= $720

Total revenue created by 4th worker:

= Total revenue from four employees - Total revenue from three employees

= $720 - $600

= $120

Cost of hiring 4th worker = $50 per day

Therefore,

Marginal profit for the fourth employee:

= Total revenue created by 4th worker - Cost of hiring 4th worker

= $120 - $50

= $70

4 0
3 years ago
As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting, or sustainable, growt
rjkz [21]

Answer:

Sustainable growth rate =  0.67148%

The firm maintains a constant ratio of liabilities to equity.

Explanation:

Sustainable growth rate = ROE *Plow back Ratio / (1-ROE * Plow back Ratio)

When ROE = Net Income / Total Assets

= $2,000,000/$300,000,000

= 0.00667

Plow back Ratio = 1 - (Dividend / Net Income)

= 1 - ($180,000/$2,000,000)

= 1 - 0.09

=0.91

Sustainable growth rate = ROE * Plow back Ratio / (1-ROE * Plow back Ratio)

= 0.00667 * 0.91 / (1 - 0.00667  * 0.91)

= 0.0060697 / 0.9039303

=0.0067148

= 0.67148%

Therefore, the sustainable growth rate is 0.67148%

The firm maintains a constant ratio of liabilities to equity is the correct assumption for the sustainable growth model.

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3 years ago
Why do some teams never reach the highest stage of team development?
bulgar [2K]

Answer:

1) Not having one or more of 4 C: Commitment, Collaboration, Communication and Contribution.

2) To supply all of 4 Cs

Explanation:

Teams cannot reach the highest performance stage by not having one or more of 4 C: Commitment, Collaboration, Communication and Contribution. For example, a team may be losing performance because of a lack of commitment to a common goal. Or a team may be discontinued because the personal styles of each team member have not been studied and their roles are not well defined. Poor communication can lead to poor team performance, such as the lack of quality contributions by one or more members.

Effective team building methods are diverse and include:

-Simple social activities - allows team members to spend time together.

-Group meeting sessions - fun activities that allow team members to get to know each other under the sponsorship of the company.

-Personal development activities - personal changes in groups, sometimes requiring physical struggle

- Team development activities - group dynamics games that reveal how individuals' problem-solving approaches and team work together

- Team roles - psychological analysis of roles and training on how to work better together

-Tam building is generally included in organizational development theory and practice.

Key Tips for Successful Teamwork:

-The goals and guidance should be clear and understandable to all team members.

-The teams should be able to take and manage acceptable risks while communicating and taking action.

- Teamwork environment should be created where team members need an open, honest and respectful communication. Even under stress, members should be expected to maintain good communication.

- A strong commitment to team decisions and actions should be motivated.

Creativity and innovation should be expected in teamwork and teams should be able to solve the problems they face with these two different norms.

-Team, talent and strategy and teams should be expected to aim for continuous development and progress.

- Teams should be motivated to solve the problems of teamwork, not individual members' problems.

- Participatory leadership should be emphasized. It should be ensured that each member of the team is actively able to assume the leadership position for a certain period of time.

- Promote effective or ideal decisions with the agreement and absolute support of the team.

3 0
3 years ago
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