Sally is thinking about starting a new business. The company would require $700,000 of assets,financed with 40% debt and 60% equity. She will go forward only if she thinks the firm can providean ROE of at least 15.9%. Operating at a profit margin of 12%, what is the minimum amount of salesthat must be expected to support starting the business?Your answer should be between 472000 and 595000, rounded to even dollars (although decimal)places are okay), with no special characters.

Operating Profit Margin Profit made in response to sales is known as operating profit. Operating…

Answered: Sally is thinking about starting a new…

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

Problem 1PS

See similar textbooks

Similar questions

Lady Maria is thinking about starting a new business. The company would require $500,000 of assets, and it would be financed entirely with common stock. She will go forward only if she thinks the business can provide a 9.5% return on the invested capital, which means that the company must have an ROE of 9.5%. How much Net Income must be expected to warrant starting the business?
An investor is considering starting a new business. The company would require $500,000 of assets, and it would be financed entirely with common stock. The investor will go forward only if she thinks the firm can provide a 15.0% return on the invested capital, which means that the firm must have an ROE of 15.0%. How much net income must be expected to warrant starting the business?
Your sister is thinking about starting a new business. The company would require $300,000 of assets, and it would be financed entirely with common stock. She will go forward only if she thinks the firm can provide a 13.5% return on the invested capital, which means that the firm must have an ROE of 13.5%. How much net income must be expected to warrant starting the business? a. $44,145 b. $38,475 c. $33,210 d. $40,500 e. $41,310
You are considering an investment in a clothes distributer. The company needs $106,000 today and expects to repay you $124,000 in a year from now. What is the IRR of this investment opportunity? Given the riskiness of the investment opportunity, your cost of capital is 15%. What does the IRR rule say about whether you should invest? What is the IRR of this investment opportunity? The IRR of this investment opportunity is %. (Round to two decimal places.)
An investor is considering starting a new business. The company would require $475,000 of assets, and itwould be financed entirely with common stock. The investor will go forward only if she thinks the firm can provide a 13.5% return on the invested capital, which means that the firm must have an ROE of 13.5%. How much net income must be expected to warrant starting the business? Please show work in excel
You are considering an investment in a clothes distributer. The company needs $104,000 today and expects to repay you $129,000 in a year from now. What is the IRR of this investment opportunity? Given the riskiness of the investment opportunity, your cost of capital is 17%. What does the IRR rule say about whether you should invest?
You are preparing to produce some goods for sale. You will sell them in one year and you will incur costs of $79,000 immediately. If your cost of capital is 7.2%, what is the minimum dollar amount you need to sell the goods for in order for this to be a non-negative NPV? The minimum dollar amount is $ (Round to the nearest dollar) COO
TAMIMA is planning to expand their firm by building a new branch in Dipatiukur. After seeking advice from the expert, it is known that to build a new branch, it would cost $5 million today and yield a payoff of $12 million in 5 years. a. As a financial advisor, what would you recommend to TAMIMA if the interest rate is 10%? Should TAMIMA go for it or forget it? b. What if the interest rate is 20%? Would you recommend the same advice?
You are considering investing in a start up company. The founder asked you for $290,000 today and you expect to get $980,000 in 8 years. Given the riskiness of the investment opportunity, your cost of capital is 25%. What is the NPV of the investment opportunity? Should you undertake the investment opportunity? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.
You are preparing to produce some goods for sale. You will sell them in one year and you will incur costs of $70,000 immediately. If your cost of capital is 6.9%, what is the minimumdollar amount you need to sell the goods for in order for this to be a non-negative NPV?The minimum dollar amount is $(Round to the nearest dollar.)
You are preparing to produce some goods for sale. You will sell them in one year and you will incur costs of $71,000 immediately. If your cost of capital is 7%, what is the minimum dollar amount you need to sell the goods for in order for this to be a non-negative NPV? The minimum dollar amount is $_____ (Round to the nearest dollar)
You are preparing to produce some goods for sale. You will sell them in one year and you will incur costs of $89,000 immediately. If your cost of capital is 6.9%, what is the minimum dollar amount you need to sell the goods for in order for this to be a non-negative NPV? $______________ (Round to the nearest dollar.)

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS