Business, 01.07.2019 17:20, meme6229

Afarmer expects irrigation system will increase real operating receipts by $32,000 per year but will also increase real operating expenses by $8,000. suppose that the inflation rate is 5% and the marginal tax rate is 20%.
(i) what is the nominal net return at the end of year 3?
a. $29,172 b. $22,800
c. $27,783 d. $24,000
(ii) calculate the nominal after-tax net return at the end of year 4.
a. $28,800 b. $27,360
c. $34,560 d. $23,338

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Business, 06.07.2019 03:10, helper49

Mr. agirich of aggie farms is thinking about investing in a center pivot irrigation system to irrigate 100 acres of land. the irrigation system costs $70,000. mr. agirich expects that the irrigation system will increase yield and thus operating receipts by $15,000 per year but it will cost $4,000 a year to pay for electricity, maintenance, and additional labor. mr. agirich plans on keeping the irrigation system for 4 years before replacing it with a new one and he thinks he can sell it for $50,000 at the end of 4 years. assume that the mr. agirich expects that the inflation rate will be 4% and that operating receipts, operating expenses, and terminal value will increase at the rate of inflation (i.e., operating receipts, operating expenses and terminal value are stated as real dollars, thus, you must convert them to nominal dollars). the bank has offered to lend mr. agirich $60,000. the loan will be fully amortized at a 10% interest rate over six years (annual payments). mr. agirich anticipates that his marginal tax rate over the next four years will be 20%. the irs will allow aggie farms to depreciate the investment using straight-line over 10 years. mr. agirich requires at least a 13% pre-tax, risk-free return on capital and a 2% risk premium on projects of comparable risk to the irrigation system.1. what is the present value of tax savings from depreciation? $70,000$29,347$4,252$35,077-$1,323none of the above2. what is the annual loan payment? $10,000$13,776$6,000$16,000none of the above3. what is the loan balance at the end of the third year? $43,669$34,259$52,224$23,909none of the above4. what is the tax savings from interest payments in the fourth year? $685$3,426$1,044$873none of the above5. what is the net cash flow after debt flows at the end of the second year? -$2,024$29,888-$1,604$1,813none of the above

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Business, 15.10.2019 18:00, 7obadiah

1. what is the product's cm ratio? 2. use the cm ratio to determine the break-even point in dollar sales. 3. if this year's sales increase by $44,000 and fixed expenses do not change, how much will net operating income increase? 4-a. what is the degree of operating leverage based on last year's sales? 4-b. assume the president expects this year's sales to increase by 14%. using the degree of operating leverage from last year, what percentage increase in net operating income will the company realize this year? 5. the sales manager is convinced that a 15% reduction in the selling price, combined with a $80,000 increase in advertising, would increase this year's unit sales by 25%. a. if the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. if the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? 6. the president does not want to change the selling price. instead, he wants to increase the sales commission by $1.70 per unit. he thinks that this move, combined with some increase in advertising, would increase this year's sales by 25%. how much could the president increase this year's advertising expense and still earn the same $900,000 net operating income as last year?

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Business, 04.11.2019 21:31, SM141372

1. what is the product's cm ratio? 2. use the cm ratio to determine the break-even point in dollar sales. 3. if this year's sales increase by $57,000 and fixed expenses do not change, how much will net operating income increase? 4-a. what is the degree of operating leverage based on last year's sales? 4-b. assume the president expects this year's sales to increase by 19%. using the degree of operating leverage from last year, what percentage increase in net operating income will the company realize this year? 5-a the sales manager is convinced that a 11% reduction in the selling price, combined with a $65,000 increase in advertising, would increase this year's unit sales by 25%. a. if the sales manager is right, what would be this year's net operating income if his ideas are implemented? 5-b. if the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? 6. the president does not want to change the selling price. instead, he wants to increase the sales commission by $1.60 per unit. he thinks that this move, combined with some increase in advertising, would increase this year's sales by 25%. how much could the president increase this year's advertising expense and still earn the same $340,000 net operating income as last year?

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