As Financial Manager what would be your decision on assets and investment matters to meet profit maximization? Analyze carefully and encircle your best answer. A financial manager must choose between four alternative Assets: 1, 2, 3, and 4. Each asset costs P35,000 and is expected to provide earnings over three years as described below. 1. Based on the profit- maximization goal, the financial manager would choose ASSET YEAR YEAR A. Asset 1 2 21,000 | 15,000 6,000 9,000 15,000 21,000 3,000 20,000 | 19,000 6,000 | 12,000 | 12,000 1 B. Asset 2 1 C. Asset 3 2 D. Asset 4 3 4
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- The income statement comparison for Forklift Material Handling shows the income statement for the current and prior year. A. Determine the operating income (loss) (dollars) for each year. B. Determine the operating income (percentage) for each year. C. The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base, calculate the return on investment. Was the decision to invest additional assets in the company successful? Explain. D. Assuming an 8% cost of capital, calculate the residual income for each year. Explain how this compares to your findings in part C.Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the values. A. In the correct format, prepare the income statement using the following information: B. Calculate the profit margin, return on investment, and residual income. Assume an investment base of $100,000 and 6% cost of capital. C. Prepare a short response to accompany the income statement that explains why uncontrollable costs are included in the income statement.Using ROI and RI to evaluate investment centers Consider the following condensed financial statements of Forever Free, Inc. The Company’s target fate of return is 40% Requirements Calculate the company’s ROI. Round all of your answers to four decimal places. Calculate the company’s profit margin ratio. Interpret your results. Calculate the company’s asset turnover ratio. Interpret your results. Use the expanded ROI formula to confirm your results from Requirement 1. Interpret your results. Calculate the company’s RI. Interpret your results.
- Deuk Seon have the following investment centers. Several items are missing from the following table of rate of return on investment and residual income. Determine the missing items, identifying each item by the appropriate letter. Department Invested Assets Income from Operations Rate of Return on Investment Min. Rate of Return Min. Amt. of Income from Operations Residual Income Taek (a) (b) (c) 16% P128,000 P10,000 Jung Hwan P850,000 P153,000 (d) 12% (e) (f) Sun woo P825,000 (g) 20% (h) (i) P24,000 Dong Ryong (j) P129,000 24% (k) P60,000 (l) (a) Determine the missing items, identifying each by number. (b) Which division is most profitable in terms of income from operations? (c) Which division is most profitable in terms of rate of return on investment?In Management Accounting, there are some investment appraisal methods to analyse the performance of investment projects. The following table lists out the financial data of two projects for London Technology Ltd: Projects/Methods A B Payback Period 2 year and 4 months 2 year and 9 months Accounting Rate of Return 27.6% 15.44% Net Present Value £23,040 £21,798 Required: Which project should company accept? In the discussion, please explain which method can leads to better decision.In Management Accounting, there are some investment appraisal methods to analyse the performance of investment projects. The following table lists out the financial data of two projects for London Technology Ltd: Projects/Methods A B Payback Period 2 year and 4 months 2 year and 9 months Accounting Rate of Return 27.6% 15.44% Net Present Value £23,040 £21,798 Required: Which project should company accept? In the discussion, please explain which method can lead to better decision.
- The company is in search of resources for a new investment of TL 3,000,000. As a financial manager, a) Find the current weighted average cost of capital according to the resource distribution below.The manager of a small firm wants to know which among the three different projects should the company enter into. Details of the three projects are as follows: JOJO GINA MARIA LORINDA KANOR Initial investment P 120,000 P 125,000 P 180,000 P160,000 P35,000 Net present value 25,000 24,000 45,000 35,000 10,000 Internal rate of return 10% 15% 12% 8% 9% Profitability index 1.21 1.19 1.25 1.22 1.29 If the management has a budget of P500,000 only, which projects would be undertaken? a. Jojo, Gina, Lorinda, and Kanor b. Gina, Maria, Lorinda, and Kanor c. Jojo, Maria, Lorinda, and Kanor d. Jojo, Gina, Maria, and KanorAverage rate of return method, net present value method, and analysis for a service company The capital investment committee of Iguana Inc. is considering two capital investments. The estimated operating income and net cash flows from each investment are as follows: Year Robotic AssemblerOperating Income Robotic AssemblerNet Cash Flow WarehouseOperating Income WarehouseNet Cash Flow 1 $47,500 $152,000 $100,000 $243,000 2 47,500 152,000 76,000 205,000 3 47,500 152,000 38,000 144,000 4 47,500 152,000 17,000 99,000 5 47,500 152,000 6,500 69,000 Total $237,500 $760,000 $237,500 $760,000 Each project requires an investment of $500,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 15% for purposes of the net present value analysis. Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747…
- Suppose you are the financial manager of a firm considering the following five projects. Show formulas and work, without the use of excel or a financial calculator. Project A Project B Project C Project D Project E Initial Investment -$10,000 -$15,000 -$14,000 -$6,000 -$1,500 Year 1 $5,000 $5,000 $6,000 $4,000 $1,000 Year 2 $4,000 $5,000 $4,000 $2,000 $250 Year 3 $2,000 $5,000 $3,500 $2,000 $100 Year 4 $1,000 $5,000 $2,500 $2,000 $100 Year 5 $5,000 $2,000 $100 Year 6 $2,000 $100 Calculate the Payback Period for each project. Calculate the NPV for each project, assuming a discount rate of 11%. Calculate the IRR for each project. Which projects should the firm implement based on your analysis If the projects are mutually exclusive? What if they are independent? Write an email to your CFO explaining your rationale proving the choices based on the considerations…Suppose you are the financial manager of a firm considering the following five projects. Show formulas and work, without the use of excel or a financial calculator. Project A Project B Project C Project D Project E Initial Investment -$10,000 -$15,000 -$14,000 -$6,000 -$1,500 Year 1 $5,000 $5,000 $6,000 $4,000 $1,000 Year 2 $4,000 $5,000 $4,000 $2,000 $250 Year 3 $2,000 $5,000 $3,500 $2,000 $100 Year 4 $1,000 $5,000 $2,500 $2,000 $100 Year 5 $5,000 $2,000 $100 Year 6 $2,000 $100 Calculate the NPV for each project, assuming a discount rate of 11%.Average rate of return method, net present value method, and analysis for a service company The capital investment committee of Iguana Inc. is considering two capital investments. The estimated operating income and net cash flows from each investment are as follows: Year Robotic AssemblerOperating Income Robotic AssemblerNet Cash Flow WarehouseOperating Income WarehouseNet Cash Flow 1 $34,200 $105,000 $72,000 $168,000 2 34,200 105,000 55,000 142,000 3 34,200 105,000 27,000 100,000 4 34,200 105,000 12,000 68,000 5 34,200 105,000 5,000 47,000 Total $171,000 $525,000 $171,000 $525,000 Each project requires an investment of $360,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 10% for purposes of the net present value analysis. Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621…