The pretax operating cash flow of Sandhill Motors declined so much during the recession of 2008 and 2009 that the company almost defaulted on its debt. The owner of the company wants to change the cost structure of his business so that this does not happen again. He has been able to reduce fixed costs from $489,000 to $304,000 and, in doing so, reduce the Cash Flow DOL for Sandhill Motors from 3.1 to 2.4 with sales of $1,070,000 and pretax operating cash flow of $230,000. If sales declined by 30 percent from this level, how much more pretax operating cash flow would Sandhill Motors have with the new cost structure than under the old? (Round answer to nearest whole dollar, e.g. 5,275.) dhill Motors would have $ more pretax operating cash flow with the new cost structure than under the old

The pretax operating cash flow of Sandhill Motors declined so much during the recession of 2008 and 2009 that the company almost defaulted on its debt. The owner of the company wants to change the cost structure of his business so that this does not happen again. He has been able to reduce fixed costs from $489,000 to $304,000 and, in doing so, reduce the Cash Flow DOL for Sandhill Motors from 3.1 to 2.4 with sales of $1,070,000 and pretax operating cash flow of $230,000. If sales declined by 30 percent from this level, how much more pretax operating cash flow would Sandhill Motors have with the new cost structure than under the old? (Round answer to nearest whole dollar, e.g. 5,275.) dhill Motors would have $ more pretax operating cash flow with the new cost structure than under the old

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

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H11. Account
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1. Assume that $1,000 is to be received 30 years from today. Compare the present values obtained using 0.05 and 0.20 as rates of discount. 2. The ABC Company has opened 10 new stores. It has incurred a great deal of expenses associated with opening the stores, and the stores have not yet built up enough clientele to be profitable. On the other hand, the stores are operating at profit levels exceeding expectations, and there are indications that they will be very profitable in the future. It is obvious that the stock market has not yet digested this latter fact, and the additional 50 stores this year, but to do so will require new stockholder capital acquired from the market (it has borrowed all it feels it is prudent to borrow and cannot obtain more capital from its current stockholders). Without the new capital, the stockholders can expect to earn an equivalent annual return of 0.15 on the current market value of their investment (assume there is $100 million or 1 million shares of…
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Subject: accounting

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