Question 1 (16 points) Carol Inc is taking into consideration the following 3 prices to charge consumers for each from the candy packets they produce: i) $2. 20 ii) $2. 00 iii) $1. 70 The relevant data pertaining to decision-making is usually below: Set Costs sama dengan $1200 Changing Costs = $0. 55 per unit Calculate the subsequent: a) The Breakeven Level for each selling price level b) Using price of $2. 20 what would be the new breakeven point if (1) fixed costs decreased to $1000 everything else remaining a similar, (2) Changing costs improved to $0. 75 all else remaining precisely the same. Draw a graph to represent scenario (1) and (2) comparing together with the original info for selling price of $2. 20. [Total of two graphs] Question 2 (12 points) Better Manufacturing is usually evaluating two different operating structures that are described listed below. The organization has interest per annum expense of $250, common shares spectacular of 1, 1000, and a tax price of 40 percent.
(a) For each working structure, compute (a1) EBIT and EPS at twelve, 000, 20, 000, and 30, 500 units. (a2) the degree of operating leverage (DOL) and amount of total leveraging (DTL) using 20, 500 units as a base revenue level. (a3) the operating breakeven reason for units. (b) Which operating structure features greater operating leverage and business risk? (c) If perhaps Greater Developing projects product sales of 20, 000 products, which functioning structure is recommended?
Question 3 (14 points) Stand 13. you
a) Assuming a forty five percent duty rate, precisely what is the financial breakeven level for each strategy? (See Stand 13. 1) b) Precisely what is the degree of economical leverage by a base level EBIT of $120, 500 for equally financing programs? The company has a 40 percent taxes rate. (See Table 13. 1) c) What is the EPS below Financing Prepare 1, in case the firm tasks EBIT of $200, 500 and provides a tax level of forty percent? (See Table 13. 1) d) At about what EBIT level should the financial manager become indifferent to either strategy? (See Stand 13. 1) e) Which plan includes a higher degree of financial power and economic risk? (See Table 13. 1) Query 4 (12 points) A firm has had the indicated income per discuss over the last three years:
(a) If the firm's dividend policy was based on a consistent payout ratio of 50 percent, determine the annual dividend for each yr. (b) In case the firm's dividend policy was based on a set dollar pay out policy of 50 cents per share additionally an extra gross equal to 75 percent of earnings every share above $1. 00, determine the annual gross for each year. Question a few (12 points) Mongoose Firm has released the following information.
(a) What are Mongoose Company's current earnings every share? (b) What is Mongoose Company's current P/E proportion? 3
(c) Mongoose Company wants to employ half of the earnings possibly to pay shareholders dividends or to repurchase shares for inclusion in the firm's worker stock possession plan. In case the firm pays off a cash dividend, and what will be the dividend per share received by existing shareholders? (d) Instead of paying the cash gross, what if the firm uses half of its earnings to pay $55 per reveal to repurchase the stocks and shares, what will be the business's new EPS? What needs to be the firm's new share price? (e) Assess the impact of a stock gross and share repurchase about shareholder riches. Question six (12 points) Farrah Incorporation. 's accounts receivable totaled $451, 1000 on January 30, the year 2003. An the aging process summary of receivables at this date follows:
The company extends 30-day credit conditions to all it is credit clients. (a) Prepare an maturing schedule to get Farrah Inc.. (b) Measure the firm's collection performance. Problem 7 (6 points) Penelope Production Grow uses 2, 400 products of a product per year over a continuous basis. The product carrying costs happen to be $60 per year and placing your order costs are $250 per order. It requires 20 days to receive a shipment after an purchase is placed plus the firm requires a safety inventory of almost 8 days of usage in inventory. (a) Estimate the economic order volume (round to the nearest whole unit. (b) Calculate the whole cost each year to buy and hold this item....