Need help with this financial accounting If sales increase from $100,000 per year to$150,000 per year, and the operating leverage is 4,then net income should increase by:A. 200%B. 150%C. 300%D. 250%

Step 1: Define Operating LeverageOperating leverage measures how changes in sales volume affect a…

Answered: If sales increase from $100,000 per…

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

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Assuming a cost of capital of 5% and that $60,000 is the correct profit estimate each year for the next 10 years, what is the IRR if NPV=463,304 a. 32.0% b. 8.1% c. 21.0% d. 2.8%
Assume that a firmʹs earnings are expected to be $11 million next year and that this number is expected to grow by 3.5% a year indefinitely. If the appropriate cost of capital is 11%, what is this firmʹs P/E ratio? 10.1 13.3 2.3 14.5
ANSWER IS D $ 21,600
what is the projected net income Accounting Solution
Revenues generated by a new fad product are forecast as follows: Year Revenues 1 $50,000 2 20,000 3 10,000 4 5,000 Thereafter 0 Expenses are expected to be 60% of revenues, and working capital required in each year is expected to be 20% of revenues in the following year. The product requires an immediate investment of $52,000 in plant and equipment. a. What is the initial investment in the product? Remember working capital. b. If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight-line depreciation, and the firm’s tax rate is 40%, what are the project cash flows in each year? Assume the plant and equipment are worthless at the end of 4 years. c. If the opportunity cost of capital is 10%, what is the project's NPV? d. What is project IRR?
Assume that Money Demand takes the form: where Y 1,400 and r=0.2 Assume that, in the short run, x is constant and equal to 25%. Calculate the amount of seignorage for each annual rate of money growth, AM listod below: M. AM is 25%, then the amount of seignorage isO If the- M AM is 50%, then the amount of seignorage is. If the AM If the is 75%, then the amount of seignorage is.
What will the percentage change in operating cash flow?
Assume that an investment of 100,000 produces a net cash flow of 60,000 per year for two years. The discount factor for year 1 is 0.89 and for year 2 is 0.80. The NPV is a. 0 b. 6,800 c. 1,400 d. (4,000)
Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1 and by 5% in Year 2. Its operating profitability ratio (OP) is 10%, and its capital requirement ratio (CR) is 80%? What are the projected sales in Years 1 and 2? What are the projected amounts of net operating profit after taxes (NOPAT) for Years 1 and 2? What are the projected amounts of total net operating capital (OpCap) for Years 1 and 2? What is the projected FCF for Year 2?
which one is correct please suggest? QUESTION 39 Getrag expects its sales to increase 20% next year from its current level of $4.7 million. Getrag has current assets of $660,000, net fixed assets of $1.5 million, and current liabilities of $462,000. All assets are expected to grow proportionately with sales. If Getrag has a net profit margin of 10%, what additional financing will be needed to support the increase in sales? Getrag does not pay dividends. a. $339,600 b. No financing needed, surplus of $224,400 c. No financing needed, surplus of $524,400 d. $283,200

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If sales increase from $100,000 per year to $150,000 per year, and the operating leverage is 4, then net income should increase by: A. 200% B. 150% C. 300% D. 250%