Last year, Cayman Corporation had sales of $27 million, total variable costs of $13 million, and total fixed costs of $5,000,000. In addition, they paid $3 million in interest to bondholders. Cayman has a marginal tax rate of 21 percent. If Cayman's sales increase by 15%, what should be the increase in operating income? SET YOUR CALCULATOR TO 4 DECIMAL PLACES THEN ROUND TO 2 DECIMAL PLACES AT THE END. DO NOT ENTER THE % SIGN. FOR EXAMPLE, IF YOUR ANSWER IS 12.7125, ENTER IT AS 12.71.
Last year, Cayman Corporation had sales of $27 million, total variable costs of $13 million, and total fixed costs of $5,000,000. In addition, they paid $3 million in interest to bondholders. Cayman has a marginal tax rate of 21 percent. If Cayman's sales increase by 15%, what should be the increase in operating income? SET YOUR CALCULATOR TO 4 DECIMAL PLACES THEN ROUND TO 2 DECIMAL PLACES AT THE END. DO NOT ENTER THE % SIGN. FOR EXAMPLE, IF YOUR ANSWER IS 12.7125, ENTER IT AS 12.71.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Last year, Cayman Corporation had sales of $27 million, total variable costs of $13 million, and total
fixed costs of $5,000,000. In addition, they paid $3 million in interest to bondholders. Cayman has
a marginal tax rate of 21 percent. If Cayman's sales increase by 15%, what should be the increase in
operating income? SET YOUR CALCULATOR TO 4 DECIMAL PLACES THEN ROUND TO 2
DECIMAL PLACES AT THE END. DO NOT ENTER THE % SIGN. FOR EXAMPLE, IF YOUR
ANSWER IS 12.7125, ENTER IT AS 12.71.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc89f64d2-f38c-4bfd-b939-bfa4169e76ff%2F04db708b-b568-446d-abaf-d61854de4984%2F19tg1id_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Last year, Cayman Corporation had sales of $27 million, total variable costs of $13 million, and total
fixed costs of $5,000,000. In addition, they paid $3 million in interest to bondholders. Cayman has
a marginal tax rate of 21 percent. If Cayman's sales increase by 15%, what should be the increase in
operating income? SET YOUR CALCULATOR TO 4 DECIMAL PLACES THEN ROUND TO 2
DECIMAL PLACES AT THE END. DO NOT ENTER THE % SIGN. FOR EXAMPLE, IF YOUR
ANSWER IS 12.7125, ENTER IT AS 12.71.
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