Introduction: The variability between present value of all
To prepare: The contribution format income statement.
Answer to Problem 8.19P
Income statement is given below:
Explanation of Solution
| S. No. | Particular | Amount $ | Amount $ |
| A | Sales | 300,000 | |
| Less: ingredient 20% of sales | 60,000 | ||
| 240,000 | |||
| B | Fixed expense | ||
| 1 | Operating cost including salaries | 70,000 | |
| 2 | Rent of premises | 42,000 | |
| 3 | Insurance | 3,500 | |
| 4 | Utilities | 27,000 | |
| 5 | Commission | 37,500 | |
| Sum of B | 180,000 | ||
| C | Net operating | 60,000 |
Introduction: The variability between present value of all cash outflow and present value of all cash inflow is known as net present value (NPV). The discount rate at which the net present value is equal to zero is knows as Internal
To compute: The simple rate of return promised by the outlet.
Answer to Problem 8.19P
The simple rate of return promised by the outlet will be 24%
Explanation of Solution
Simple rate of return:
The simple rate of return promised by the outlet will be 24%
Introduction: The variability between present value of all cash outflow and present value of all cash inflow is known as net present value (NPV). The discount rate at which the net present value is equal to zero is knows as Internal rate of return (IRR). The ratio of income and capital gain is known as simple rate of return.
To compute: The payback period for four years or less will be acquired by Mr. S
Answer to Problem 8.19P
Net present value is $101,723.019
Explanation of Solution
The annual net cash inflow because the annual cash inflow is not given, it must be computed before the payback period can be determined
Net annual
The payback period using the annual net cash inflow:
Payback period
Payback periods is 4.2 years
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Chapter 8 Solutions
GEN COMBO MANAGERIAL ACCOUNTING FOR MANAGERS; CONNECT 1S ACCESS CARD
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