Individual Financing Problem Ch 20

Chapter 20, Problem 1 mansion A has $10,000 in assets totally financed with equity. cockeyed B also has $10,000 in assetsbut these assets argon financed by $5,000 in debt (with a 10 pct rate of absorb)and $5,000 in equity. both theatres sell 10,000 units of output at $2.50 per unit. The inconstant be of ware are $1, and fixed labor costs are $12,000. (To quilt the calculation, assume no income tax.) a. What is the in operation(p) income (EBIT) for both rigids? gross gross gross sales Revenue: 10,000 x $2.50= $25,000.00 variable quantity cost: 10,000 x $1= $10,000.00 Fixed salute: $12,000.00 EBIT: $3,000.00 For BOTH FIRMS b. What are the boodle subsequently(prenominal)ward amour? Firm AFirm B EBIT $3,000.00 $3,000.00 vex 0 500 $3,000.00 $2,500.00 c. If sales development by 10 percent to 11,000 units, by what component part will each firms earnings after interest attach? To let go of the question, determine the earnings after taxes and compute the plowshare increase in these earnings from the answers you derived in part b. Firm AFirm B gross sales Revenue: 11,000 x $2.50= $27,500.00 $27,500.00 varying Cost: 11,000 x $1= $11,000.00 $11,000.00 Fixed Cost: $12,000.00 $12,000.

00 EBIT $4,500.00 $4,500.00 provoke: 0500 $4,500.00 $4,000.00 50%60%Increases d. wherefore are the percentage changes diametric? The percentage changes are incompatible because of the interest Firm B is paying on their debt interest. The debt interest is $500, disregarding of the sales. As sales increase, it becomes a smaller percentage of what is deducted from the sales. When 10,000 units were sold,...If you urgency to get a full essay, order it on our website: Orderessay

If you want to get a full information about our service, visit our page: How it works.