Naaz started up a business, and pays £80,000 into her business bank account on 1st July and budgets as follows: Fittings to be purchased on 1st July for £90,000, and this will have to be paid for by the end of the month. Depreciation is £10,000 a year.

Wages: £10,000 per month.

Rent of warehouse will be £84,000 per annum, payable in monthly instalments at the start of each month.

Other costs incurred in the running of the business (excluding purchases) will be £40,000 per month, payable in the month in which the costs are incurred.

Purchases will be supplied on one month’s credit (i. e. purchases in July will

have to be paid for by the end of August).

Half of the sales are expected to be for cash; the remaining half on credit. Naaz is budgeting to allow two months’ credit by her credit customers (i. e. credit sales in July will not be settled until September).

For the

You and your new australian bride matilda, are applying for a loan and are required to submit a balance sheet with your net worth. you own a 2008 toyota camry that you bought last month for $9,995. the kelly blue book value for this car is $13,995. you owe $8,150 on the car loan for the camry. you pay off your visa credit card every month and have not paid any credit card interest this year. the current visa credit card balance is $3,522, and the next statement is due in 15 days. you have a student loan balance of $6,500. you presently have $425 in your checking account and $1,540 in your savings account. you own 100 shares of ibm stock that you purchased for $85.50 per share. one share of ibm is now selling for $158.42. you own computers and other electronics that you purchased for $4,100 but could probably sell today on e-bay for $1,800. your gross income is $80,000 per year. what is your current net worth? (see wb ch. 2 example 2.3)

Carlton industries is considering a new project that they plan to price at $74.00 per unit. the variable costs are estimated at $39.22 per unit and total fixed costs are estimated at $12,085. the initial investment required is $8,000 and the project has an estimated life of 4 years. the firm requires a return of 8 percent. ignore the effect of taxes. what is the degree of operating leverage at the financial break-even level of output?

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