Price Corporation is considering selling to a group of new customers and creating new annual sales of $100,000. 3% will be uncollectible. The collectioncost on all accounts is 3% of new sales, the cost of producing and selling is 80% of sales, and the firm is in the 21% tax bracket. What is the profit on newsales?Multiple Choice$11,060$12,188O$13,238$12,347

Step 1: Sales Revenue:New sales = $100,000 Step 2: Uncollectible Accounts:3% of the new sales will…

Answered: Price Corporation is considering…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 1P

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Price Corporation is considering selling to a group of new customers and creating new annual sales of $240,000. 3% will be uncollectible. The collection cost on all accounts is 6% of new sales, the cost of producing and selling is 83% of sales, and the firm is in the 22% tax bracket. What is the profit on new sales?
Nike Enterprises sells widgets for $10 a piece which cost them $6 to make. In a good year (probability 50%), the company sells 150,00 widgets and in a bad year only 100,000. The company faces fixed costs of $200,000. The company can borrow at 8% and the unlevered equity ahs a required rate of return of 12%. The company now has a 30% tax rate. 1. Populate a very basic pro-forma income statement for the bad and the good year for the unlevered firm. 2. Compute the value of the unlevered firm under the perpetuity assumption. 3. Adjust the pro-forma statements under the assumption that the firm takes on $1.25m of perpetual debt. 4. Compute the value of the levered firm and the value of the levered equity.
Question attached below.
Given correct answer general accounting
The company has P3,000,000 sales. The variable costs are equal to fifty cents for every peso of sales. The fixed costs are estimated to be P100,000. The company has P1,000,000 debt outstanding at a before-tax cost of 10%. How much of a percentage increase would you expect in the company's net income if their sales were to increase by 20%? A. 18.33% B. 19.24% C. 21.50% D. 23.08%
Sunrise Company sells 3, 650 frying pans per year. The owner has invested $80, 000 in the business and desires an 8% return on his investment (ROI = Net Income Investments). Product Costs VC $4.5 per pan FC $78,000 per year Selling and Administrative Costs VC $3.00 per pan FC $15,000 per year If Sunrise uses the income statement bottom-up forecasting to estimate revenue and absorption cost-based pricing, what is its selling price and markup percentage? A. 5.32% and $34.73 B. 34.25% and $34.73 C. 27.48% and $32.98 D. 363% and $34.73
2. Company XYZ sells CDs. The price of its new CD is $15. Fixed costs are $1,500,000 per year. Variable costs are $9. The company expects to sell 300,000 units this year. a. How many DVDS will the company need to sell to break even? b. If the forecasts are correct, how much will company XYZ make or lose this year (before taxes)?
Slosh Cleaning Corporation services both residential and commercial customers. Slosh expects the following operating results next year for each type of customer: Residential Commercial Sales P60,000 P140,000Contribution margin ratio 50% 30% Slosh expects to have P50,000 in fixed expenses next year. What would Slosh's peso sales revenues from Commercial customers have to be next year in order to generate a profit of P166,000?
A company is currently offering terms of 1/10 net 45 to its customers. If the average invoice is $200,000, and the company's cost of capital is 8%, would the company be better off if their customers take the discount or not? answer choices: No. The seller is better off by $580 if the buyers pay on Day 45 Yes, because the seller is better off by about $580 if the buyers take the discount. No. The seller is better off by $480 if the buyers pay on Day 45 Yes, because the seller is better off by about $480 if the buyers take the discount.
What are the fixed costs for Rachit corporation?
LPM Corporation sells its product for $10 each. Fixed operating costs equal $100,000, and variable operating costs are 75 percent of the selling price. The firm pays $37,500 in interest, and its marginal tax rate is 35 percent. (a) What are LPM’s operating breakeven point and financial breakeven point? (b) If LPM expects to sell 65,000 units, what are its degree of operating leverage (DOL), degree of financial leverage (DFL), and degree of total leverage (DTL)? The firm has no preferred stock
Choose the correct letter of answer: Company B sells 500,000 bottles of soft drinks a year. Each bottle produced has variable cost of P0.25 and sells for P0.45. Fixed operating costs are P50,000.00. The company has current interest charges of P6,000.00 and preferred dividends of P2,400.00. The corporate tax rate is 40%. Calculate the degree of operating leverage and degree of financial leverage. a. 2 and 1.25b. 2.5 and 1.5c. 3 and 1.75d. 2.5 and 2.0e. 3 and 2.25

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