Answer:
Vera Incorporated
Change in annual operating income from discontinued business:
Annual Operating Income would reduce by $78,000.
Explanation:
a) Calculation of the Net Income Lost:
Loss of Contribution ($99,000)
Avoidable fixed cost $21,000
Reduction of Income ($78,000)
b) The line of purses contributes $80,000 towards the company's fixed cost. Therefore, discontinuing this line of business would lead to the loss of this steam of income. The amount of reduced operating income will be $78,000 ($80,000 - 2,000).
Answer:
$12,000
Explanation:
Calculation for how much more tax will Logan pay currently if MG is a C corporation compared to the tax he would pay if it were an S corporation
First step is to calculate the amount he will pay for the taxes if Military Gear Inc. is a C corporation
Tax amount=($75,000 × 24%)
Tax amount=$18,000
Second step is to calculate the amount he will pay for the taxes if Military Gear Inc. is a S corporation
Tax amount=($75,000 -$50,000)*24%
Tax amount=$25,000*24%
Tax amount=$6,000
Now let calculate how much more tax will Logan pay currently
Tax amount=$18,000-$6,000
Tax amount=$12,000
Therefore how much more tax will Logan pay currently if MG is a C corporation compared to the tax he would pay if it were an S corporation will be $12,000
Answer:
(a) 14.84
(b) (i) 10.78%
(ii) 9.97%
Explanation:
D1 = D0 × (1 + Growing rate)
= 1.6 × 1.2
= 1.92
D2 = D1 × (1 + Growing rate)
= 1.92 × 1.2
= 2.304
P2 = [D2 × (1 - gn)] ÷ (rs + gn)
= (2.304 × 0.94) ÷ (10%+6%)
= 13.536
Current price:
= 14.84
Expected dividend yield = D0 ÷ Current price
= 1.6 ÷ 14.84
= 10.78%
P1 = [D2 ÷ (1+rs)] + [P2 ÷ (1+rs)]
= 2.304/1.1 + 13.536/1.1
= 14.4
Capital gains yield = P1 - Current price + (D1 ÷ Current price)
= 14.4 - 14.84 + (1.92 ÷ 14.84)
= 9.97%
Answer:
I could not find the exact details required to solve this so I will use a similar question that you can reference;
The impact of dropping the Eastern division is;
= Consolidated operating income + Direct Fixed costs avoided - Contribution margin lost
= (-75,000 + 15,000) + 180,000 - ( 550,000 - 275,000)
= -60,000 + 180,000 - 275,000
= -$155,000
Loss of $155,000