Edmonds Industries is forecasting the following income statement:SalesOperating costs excluding depreciation & amortizationEBITDADepreciation and amortization$10,000,0005,500,000$4,500,0001,400,000EBIT$3,100,000Interest600,000EBT$2,500,000Taxes (25%)625,000$1,875,000Net income.The CEO would like to see higher sales and a forecasted net income of $2,660,000. Assume that operating costs (excluding depreciation and amortization) are 55% ofsales and that depreciation and amortization and interest expenses will increase by 12%. The tax rate, which is 25%, will remain the same. (Note that while the tax-rate remains constant, the taxes paid will change.) What level of sales would generate $2,660,000 in net income? Round your answer to the nearest dollar, if necessary.Grade it NowSave & Continue

Variable costs are costs which change along with change in activity level. The variable cost usually…

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Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

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The firm is contemplating the following: Crane acquisition cost $ 1,000,000 Years of useful life (economic life) 5 Tax rate 0% Required rate of return on equity 10% Annual revenues $ 2,000,000 OCF analysis Economic Profit analysis
Rose Trading had RM210,000 of net profit in year 2021 when the selling price per unit was RM150, the variable costs per unit were RM90, and the fixed costs were RM570,000. Management expects per unit data and total fixed costs to remain the same in year 2022. The manager of Rose Trading is under pressure from investors to increase net profit by RM52,000 in year 2022.Required:(iii) Assume that Rose Trading sells the same number of units in year 2022 as it did in year 2021. What would the selling price have to be to reach the shareholders’ desired profit level?(iv) Assuming actual sales in year 2022 are 16,000 units with the new selling price as computed in (c), compute the margin of safety in (i) units and (ii) as a ratio. Briefly explain your findings. (Tips: Interpret about margin of safety)
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Edmonds Industries is forecasting the following income statement: Sales Operating costs excluding depreciation & amortization EBITDA Depreciation and amortization EBIT Interest $6,000,000 3,300,000 $2,700,000 300,000 $2,400,000 480,000 EBT $1,920,000 Taxes (25%) 480,000 $1,440,000 Net Income The CEO would like to see higher sales and a forecasted net income of $2,720,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 6%. The tax rate, which is 25%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $2,720,000 in net income? Round your answer to the nearest dollar, if necessary. $
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Assume the Hiking Shoes division of the Simply Shoes Company had the following results last year (in thousands). Management's target rate of return is 10% and the weighted average cost of capital is 30%. Its effective tax rate is 40%. Sales Operating income Total assets Current liabilities What is the division's Residual Income (RI)? OA. $100,000 O B. $4,400,000 Ⓒ C. $700,000 O D. $280,000 $11,000,000 1,100,000 4,000,000 780,000
Standard Media has a required rate of return of 5 percent, a cost of capital of 4 percent, and an income tax rate of 30 percent. The following information about its two divisions has been provided by management: Audio Division Video Division NOPAT $1,400,000 $2,000,000 Sales $10,000,000 $12,500,000 Invested capital $15,000,000 $17,500,000 How much is the ROI of the Audio Division?
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10. Use the information below provided by Angel Baby Angel Company: Sales 8,250,000.00 Operating costs 4,725,000.00 Operating income 3,525,000.00 Interest expense 1,750,000.00 Earnings before taxes 1,775,000.00 Taxes (40%) 621,250.00 Net income 1,153,750.00 WACC = 8%, Total invested capital 24,875,000. Calculate the EVA. (2 decimal places) Refer to Angel Baby Angel Company, what is its TIE ratio? Use 4 decimal places in your final answer.
Q1. A company has direct production costs equal to 57.74 percent of total annual sales, and fixed charges, overhead, and general expenses equal to 0.29. If management proposes to increase present annual sales of 4.5 million by 29.4 percent with a 15.33 percent increase in fixed charges, overhead, and general expenses. Estimate a) Annual sales amount that is required to provide the same gross earnings as the present plant operation? b) Net profit if the expanded plant were operated at full capacity with an income tax on gross earnings of 35 percent? c) Net profit for the enlarged plant if total annual sales remained at 4.5 million? d) Net profit for the enlarged plant if the total annual sales actually decreased by 100,000?
5 Edmonds Industries is forecasting the following income statement: Sales Operating costs (excl. Depr. & Amort.) EBITDA Depreciation EBIT Interest EBT Taxes (40%) Net income $10,000,000 5,500,000 4,500,000 1,200,000 $ 3,300,000 500,000 $ 2,800,000 1,120,000 $ 1,680,000 The CEO would like to see higher sales and a forecasted net income of $2,100,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 6%. The tax rate, which is 40%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $2,100,000 in net income?

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