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1.) A firm has an average investment of $100,000 during the year. During the same period, the firm generates an after-tax income of $16,000. The cost of capital is 15 percent. what is the economic profit?
Required:
a.) Calculate the ROI and calculate the Economic Profit.
Step by step
Solved in 2 steps
- A firm has an average investment of $20,000 during the year. During the same period, the firm generates an after-tax income of $5,000. The cost of capital is 20 percent. Required: a) Calculate the economic value added (EVA) for the firm. b) Calculate the net return on the investment (ROI) for the firm.Jones Corp. had the following results for the period just ended; Sales P 2.0 million Net Income P 0.5 million; Capital Investment P 1.0 million To arrive at the return on investment, the following should be used: a. ROI = (20/20) X (20/5) c. ROI = (10/20) X (20/5) b. ROI = (20/10) X (5/20) d. ROI = (10/20) X (5/20)Please answer all. From a company we get the following:Capital employed 20,000,000 dollarDebt / equity ratio = 3Total income 40,000,000 dollarTotal profit 4,000,000 dollarInterest costs 1,500,000 dollarNet profit 2,500,000 dollara. Calculate the return on capital employed (Rsyss)b. Calculate the return on equity (Re)c. Show the relationship between profit margin and capital turnover rate and return on capital employedd. Demonstrate the relationship between the return on equity (Re) and the return on employed capital (Rsyss) with the help of the financial exchange!
- Answer the following lettered questions on the basis of the information in this table: Amount of R&D, $ Millions Expected Rate of Return on R&D, % $ 10 16 20 14 30 12 40 10 50 8 60 6 Instructions: Enter your answer as a whole number. a. If the interest-rate cost of funds is 8 percent, what is this firm's optimal amount of R&D spending? million %24An A firm has sales of $10 million, variable costs of $4 million, fixed expenses of $1.5 million, interest costs of $2 million, and a 30 percent average tax rate. a) Compute its DOL, DFL, and DCL. b) What will be the expected level of EBIT and net income if next year's sales rise 10 percent? c) What will be the expected level of EBIT and net income if next year's sales fall 20 percent?Calculate the return on investment (as a %) for the given company. (Round your answer to the nearest tenth of a percent.)
- A company wants to invest $619,932 today. The expected returns in years 1, 2, and 3 are $244,539, $175,421, and $341,884, respectively. If the rate of return on investment must be at least 15%, and the probability of commercial and technical success are 0.89 and 0.86, respectively. What is the maximum expenditure justified that the company may spend?Q1 (A). An investment of $100 produces rate of return as followsIn year 1: a gain of 10 percentIn year 2: a loss of 5% percentIn year 3: a loss of 8 percentIn year 4: a gain of 3 percent.Calculate the value of the investment at the end of the fourth year and calculate the mean annual rate of return.Q1 (B). What is more important for a firm–profit maximization or value maximization? What issues or conflict of interest can come up between owners and managers and how can they be solved? Q2 (A). On January 12, 2008 Best buy purchases a lot for $48000. The business made a partial payment of $10000 once every thirty days, beginning February 11. On June 11 it plan to make the last payment plus the interest. If the rate of interest is 8%, what is the amount due?Q2 (B). An instrument having a face value of $1000 is discounted at 6% for three years and two months. Find the proceeds and compound discount.Q2 (C). You have an outstanding loan currently. The bank requires you to pay in three…1 Suppose you have a firm with investor-supplied capital of $30 million. Further suppose that the WACC of the firm is 9%, and you are given the following income statement of the firm. Show work for all parts requiring computation. sales 26 M operating cost 16 m interest expense 3m Taxes (44%) What is the net income of the firm? What is the EVA of the firm? What is the difference between EVA and MVA?
- The value of a firm's invested capital is 300 million. Its return on invested capital is 12%, and its WACC is 10.5%. What is the economic value added/economic profit?Golden Goodness (GG) has an investment center that had the following data: Operating Income $28,000 Sales $350,000 Invested assets $175,000 PMB has set a minimum acceptable rate of return at 14%. Using the information, answer the following questions. You must include what type of number it is (%, $, etc.) Part A: What is the profit margin? Part B: What is the investment turnover? Part C: What is the return on investment? Part D: What is the residual income? Part E: Explain each of the calculations you just performed (a-d).If the net profit of the firm is OMR 280000 and the capital employed is OMR 1400000, then the return on capital employed will be 20%. During inflation with net profit calculated with replacement cost is OMR 150000 and the capital employed is OMR 2000000. Then the return on capital employed will be: a) 14% b) 6.82% c) 7.5% d) 9%
