Required rate of return is 12% a year. Sales revenue is $2,000. Investment (operatiassets) is $4,000. Profit is $160. Compute the residual income (RI).O $480O (8%)O 4%O ($320)O ($80)Question 4

Residual income is the amount of extra earnings that an entity has, after paying of all the…

Answered: Required rate of return is 12% a year.…

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter4A: Nopat Breakeven: Revenues Needed To Cover Total Operating Costs

Section: Chapter Questions

Problem 1EP

See similar textbooks

Similar questions

Income is $100,000; revenues are $800,000; investment is $400,000; and the minimum rate of return is 10%. The return on investment is _____. 0.10 0.25 0.50 2.00 none of the above
The Company has debtors of Rs. 6,00,000, Credit period is 2 months. PV ratio is 80%. Rate of return is 10%. Then how much is the Opportunity cost of investment? O a. Rs. 12,000 O b. Rs. 10,000 O C. Rs. 6,000 O d. Rs. 8,000
Variable expenses are 60% of sales. At a R400 000 sales level, the degree of operating leverage is 5. Determine the profit R Determine the fixed cost R If sales increase by R40 000, determine: the new contribution the new profit the new degree of operating leverage will be (rounded to two decimals)
Income is $100,000; revenues are $800,000; investment is $400,000; and the minimum rate of return is 10%. The investment turnover is _____. 0.10 0.25 0.50 2.00 none of the above
Income is $100,000; revenues are $800,000; investment is $400,000; and the minimum rate of return is 10%. The residual income is _____. $40,000 $60,000 $100,000 $140,000 none of the above
Suppose that there is a customer expected to annually generate $1,500 of gross contribution. With 10% of annual discount factor, the NPV of the expected profits for the next THREE YEARS from this customer is about A) $4,500 B) $4,103 C) $5,462 D) $3,730
Consider an investment with an initial cost of $10,000 and uniform annual revenue of $2,500 per year over the next five years. (a) Show that the IRR for this investment is 7.9308%. (b) Explain why is the IRR in (a) less than 2,500/10,000 = 25%.
Net cost of investment is 100,000. Profitability index is 1.3 while cost of capital is 10%. Useful life is 10 years. Use up to two decimal places for the PVF. What is the ARR? A• 42.35% B• 21.17% C• 22.34% D• 30%
Sales are 150,000. COGS are 100,000. SG&A Overhead is 20,000. Depreciation is 15,000. Interest Expense is 10,000. Capital Expenditures is 15,000. Net Working Capital is not expected to rise by 1,000. The tax rate is 35%. What is FCF? Is the answer 160,000?
Felton Co. produces rubber bands for commercial and home use. Felton reported $1 million residualincome (RI) with $20 million net book value (NBV) of assets and $5 million in operating income forthe year. What was the required rate of return?
Net cost of investment is 100,000. Profitability index is 1.3 while cost of capital is 10%. Useful life is 10 years. Use up to two decimal places for the PVF. What is the ARR?
1. Summer Company has annual fixed costs of P90,000. This year, it recorded profit of P30,000 which is 10% of its sales. In the coming year, sales volume is expected to increase by P200,000 and the profit ratio will go up to 22%. What is Summer's break even sales ratio in the coming year? (Show forluma and solution) a. 45% b. 40% c. 55% d. 22%

SEE MORE QUESTIONS

Recommended textbooks for you

Entrepreneurial Finance

Finance

ISBN:

9781337635653

Author:

Leach

Publisher:

Cengage

Entrepreneurial Finance

Finance

ISBN:

9781337635653

Author:

Leach

Publisher:

Cengage

SEE MORE TEXTBOOKS

Required rate of return is 12% a year. Sales revenue is $2,000. Investment (operat assets) is $4,000. Profit is $160. Compute the residual income (RI). O $480 O (8%) 4% O ($320) O ($80)