Foundations of Financial Management
16th Edition
ISBN: 9781259277160
Author: Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 3P
Summary Introduction
To calculate: The net income and
Introduction:
Net Income:
The amount earned by a company after paying all its expenses is termed as net income. It is calculated by deducting all the expenses from the gross profit.
Return on Assets:
A profitability ratio that represents the amount of profit a firm makes in relation to its total assets is termed as return on assets. It also provides information about how efficiently a firm uses its assets to earn profit. It is calculated by dividing the net income of the firm by its total assets.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A dry cleaning store is expected to make annual cash flows forever. The cost of capital for the store is 14.01 percent. The next annual cash
flow is expected in one year from today and all subsequent cash flows are expected to grow annually by 3.49 percent. What is the value of
the dry cleaning store if the cash flow in 5 years from today is expected to be $236,000.007
O $1,955,702.16 (plus or minus 10 dollars)
O $1,408,521.54 (plus or minus 10 dollars)
O $1,164,612.73 (plus or minus 10 dollars)
O $2,243,346.01 (plus or minus 10 dollars)
$1.084,511.06 (plus or minus 10 dollars)
What is the rate of return on an investment of $10,606 if the company will receive $2,000 each year for the next 10 years?
Please show work.
A math tee shirt business is expected to generate $19,000 in revenue per year for the next 10 years. If the income is reinvested in
the business at a rate of 1% per year compounded continuously, determine the future value of this income stream at the end of 10
years.
Future value (exact value) =
Future value (rounded to the nearest cent)
=
dollars
dollars
Chapter 3 Solutions
Foundations of Financial Management
Ch. 3 - If we divide users of ratios into short-term...Ch. 3 - Explain how the Du Pont system of analysis breaks...Ch. 3 - If the accounts receivable turnover ratio is...Ch. 3 - Prob. 4DQCh. 3 - Is there any validity in rule-of-thumb ratios for...Ch. 3 - Why is trend analysis helpful in analyzing ratios?...Ch. 3 - Inflation can have significant effects on income...Ch. 3 - What effect will disinflation following a highly...Ch. 3 - Why might disinflation prove favorable to...Ch. 3 - Comparisons of income can be very difficult for...
Ch. 3 - Low Carb Diet Supplement Inc. has two divisions....Ch. 3 - Database Systems is considering expansion into a...Ch. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Dr. Zhivà€go Diagnostics Corp.’s income...Ch. 3 - The Haines Corp. shows the following financial...Ch. 3 - Easter Egg and Poultry Company has $2,000,000 in...Ch. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - Baker Oats had an asset turnover of 1.6 times per...Ch. 3 - AllState Trucking Co. has the following ratios...Ch. 3 - Front Beam Lighting Company has the following...Ch. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Jerry Rice and Grain Stores has $4,780,000 in...Ch. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Jim Short’s Company makes clothing for schools....Ch. 3 - The balance sheet for Stud Clothiers is shown...Ch. 3 - The Lancaster Corporation’s income statement is...Ch. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - The Global Products Corporation has three...Ch. 3 - Prob. 30PCh. 3 - Prob. 31PCh. 3 - Prob. 32PCh. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - The following information is from Harrelson...Ch. 3 - Using the financial statements for the Snider...Ch. 3 - Given the financial statements for Jones...
Knowledge Booster
Similar questions
- Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?arrow_forwardTowson Industries is considering an investment of $256,950 that is expected to generate returns of $90,000 per year for each of the next four years. What Is the Investments internal rate of return?arrow_forwardBest Properties is considering an investment that will pay $1,000.00 at the end of each year for the next 15 years. It expects to earn an annual return of 16% on its investment. How much should the company pay today for its investment? Type your numeric answer and submitarrow_forward
- Suppose you save $2,800 ayear for 43 years into an investment account that earns 8.5% return, how much will you have at the end of the periods? Formula? Excel Function?arrow_forwardBhaarrow_forwardSuppose you have an account that will grow to $253,000.00 in 25 years. It grows at 7.5% annual interest, compounded monthly, under the current investment strategy. The owner of the account, however, wants it to have $368,000.00 after 25 years. How much additional monthly contribution should they make to meet their goal?arrow_forward
- Suppose you own a business and you expect to generate a profit of $50,000 next year. Each year after that you expect your profit to grow by 4%. If you earn profits for 10 years total and the discount rate is 8%, what is your company’s valuation today (present value)? (Show layout in Excel Please)arrow_forwardA business worth $180,000 is expected to grow at 12% per year compounded annually for the next 4 years. (a) Find the expected future value. (b) If funds from the sale of the business today would be placed in an account yielding 8% compounded semiannually, what would be the minimum acceptable price for the business at this time?arrow_forwardAn office building is currently for sale, and you are thinking of purchasing it. From your extensive market research and knowledge, you know the net operating income for this year is $315,000. You expect the net operating income will grow by 7% in the first five years, 5% in the subsequent five years, and 3.5% for every year after. If you are considering an 18-year investment window and desire a 16% rate of return, how much should you pay for the building?arrow_forward
- You invested $2m today in an account that is expected to earn 15% annually for the next five years. As a result of this investment, the account will pay you the same amount $Y per year for the next five years, after which you will have $0 in the account. At the end of year 1, what is the balance in the account after the withdrawal of the first $Y?arrow_forwardYou have just completed the first year of operation for your business andhave the following information: sales, $200,000; cost of goods, $140,000;rent, $18,000; utilities, $8,400; insurance, $2,000; equipment, $3,500;interest, $10,000. Your forecast indicates that your sales will increase by20 percent. Your rental agreement provides for a 3 percent increase peryear. You read an article indicating that utility costs in your area willincrease by 10 percent next year. You just received a notice from yourinsurance company stating that your quarterly premium is increasing to$600 beginning the first quarter of next year. Your equipment expense willnot change, but the amortization schedule on your current loan indicatesthat interest expense for next year should be $9,000.a. Using this data, construct an actual income statement for this year and a proforma income statement for next year.b. By what percentage did your net income change?c. What are your current profit margin and your pro forma…arrow_forwardA business is planning to purchase a piece of equipment that will produce a continuous stream of income for 8 years with rate of flow f(t) = 9,000. If the continuous income stream earns 6.9%, compounded continuously, what single deposit into an account earning the same interest rate will produce the same future value as the continuous income stream? (This deposit is called the present value of the continuous income stream.) What is the future value of the investment? (Round to the nearest dollar as needed.)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College