Answer: 26.5% increase
Explanation:
Current profit = Sales - Variable costs - fixed costs
= ((32.50 - 16.50) * 360 bears) - 1,420
= $4,340
Sales increase by 20% = 360 * ( 1 + 20%) = 432 bears
New profit;
= ((32.50 - 16.50) * 432 bears) - 1,420
= $5,492
Effect of sales increase = ( 5,492 - 4,340) / 4,340
= 26.5% increase
Answer:
Goodwill impairment occurs when a company decides to pay more than book value for the acquisition of an asset.
An impairment is recognized as a loss on the income statement and as a reduction in the goodwill account. The amount of the loss is the difference between the current fair market value of the asset and its carrying value or amount.
Explanation:
Answer:
E) if the firm evaluates these projects and all other projects at the new overall corporate wacc, it will probably become riskier over time.
Explanation:
Before the merger, Audaco would have rejected any project with an IRR of less than 12% (more risky investments) while Careco only required a 10% IRR (less risky projects). But after the merger the combined WACC will be lower than Audaco's, but higher than Careco's. Therefore, the new merged company will start accepting more risky projects and that tendency will continue over time. Eventually, the company's WACC will have to adjust and increase, and the cycle will continue.
Answer:
Luana will save $2,493.522
Explanation:
Given:
Luana will deposit $570 every year for 4 years. This is an annuity as same amount is deposited every year.
Rate is 6% or 0.06
We have to compute Luana's savings at the end of 4th year.
Refer future value of annuity factor table at 6%, 4th year. Annuity factor is 4.3746.
Savings = Yearly deposit × Annuity factor
= 570 × 4.3746
= $2,493.522
Therefore, Luana will save $2,493.522 by the end of 4 years.
Answer:
The premium payments of all the insured clients will cover the costs for the emergencies of the few who need it. The more people that pay premiums, the less likely each insured client will experience an emergency.