Answer:
The home repair companies and building supplies companies wanted to maintain their long term relationship.
Explanation:
Because the companies were considerate on their pricing after the clients lost their homes, a bond will be formed that has long term value and loyalty to the company.
This is a great strategy to get clients that will stick with the companies for a long time to come.
Answer:
ROI 15%
Residual Income $1,350,000
Explanation:
Residual Income is the difference between net income of the company and the required rate of return. It determines the excess of income generate than the minimum return. The formula to calculate the residual income is,
RI = Net operating Income - (Required rate of return * Cost of operating assets)
RI = $4,500,000 - (21% * $15,000,000 )
RI = $1,350,000
ROI = 
Capital Employed = Sales - Average operating assets
ROI = 15%
Residual income is positive when the department has meet the minimum return requirement. Minimum return is the return that is required by the company stakeholders. The particular projects and activities are selected on the basis of residual income.
Answer:
a. Levered beta = unlevered beta * ( 1 + (1-tax rate)*D/E ) = 1.2 * (1 + ( 1 - 0) * (40/60) ) = 2.0
Answer:
Break-even Sales revenue =$220,600
Explanation:
<em>B</em><em>reakeven point is the level of activity that equates the total cost to the total revenue.</em>
<em>At the break-even point the business makes no profit and no loss</em>.
Break-even point = Total fixed cost for the period / Contribution margin ratio
<em>Contribution margin = total contribution/ total sales</em>
<em>Contribution = Fixed cost + profit</em>
Contribution = $42,028 + $83,828
= $125,856.00
<em>Contribution to sales ratio</em>
= (125,856.00 /331, 200) × 100
= 38%
Break-even sales revenue = $83,828/0.38
=$220,600
