FINC 330 FINC330 Homework 7 Solution

DOWNLOAD HERE: FINC 330 FINC330 Homework 7 Solution – Online Homework Help

FINC 330 FINC330 Homework 7 Solution

Self-Assessment HW7A (Break-even point, Operating leverage)

Question 1
The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim trunks is $38.43. The variable cost per unit is $18.19, Poseidon Swim has average fixed costs per year of $24,161.
What is the break-even point in units for Poseidon Swim?
Round the Answer to the whole number. Question 2 The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim trunks is $33.03. The variable cost per unit is $21.95, Poseidon Swim has average fixed costs per year of $50,058. What is the break-even point in dollar sales? Round the Answer to two decimals. Question 3 The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim trunks is $77.04. The variable cost per unit is $18.82, Poseidon Swim has average fixed costs per year of $13,222. What would be the operating profit or loss associated with the production and sale of 458 swim trunks? Round the Answer to two decimals. Question 4 The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim trunks is $79.04. The variable cost per unit is $19.73, Poseidon Swim has average fixed costs per year of $8,405. Determine the degree of operating leverage for the level of production and sales 427 swim trunks. Round the Answer to two decimals. Question 5 The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim trunks is $76.87. The variable cost per unit is $27.54, Poseidon Swim has average fixed costs per year of $9,256. Assume that current level of sales is 344 units. What will be the resulting percentage change in EBIT if they expect units sold to changes by 2.4 percent? (You should calculate the degree of operating leverage first). (Write the percentage sign in the “units” box). Round the Answer to two decimal places in percentage form. Self-Assessment HW7B ((Financial leverage) Question 1 Irresistible Chips is reviewing its financial condition. The firm generated an operating profit of $5,995,300. The firm’s interest expense was $2,159,683. What is the firm’s degree of financial leverage? Round the Answer to two decimals Question 2 Irresistible Chips is reviewing its financial condition. The firm generated an operating profit of $5,995,300. The firm’s interest expense was $2,159,683. What will be the resulting percentage change in earnings per share if they expect operating profit to change 3.1 percent? Question 3 Use the following information about Rat Race Home Security, Inc. to Answer the questions: Average selling price per unit $343. Variable cost per unit $182 Units sold 325 Fixed costs $7,466 Interest expense $15,252 Based on the data above, what is the degree of financial leverage of Rat Race Home Security, Inc.? uestion 4 Use the following information about Rat Race Home Security, Inc. to Answer the questions: Average selling price per unit $343. Variable cost per unit $182 Units sold 325 Fixed costs $7,466 Interest expense $15,252 Based on the data above, what will be the resulting percentage change in earnings per share of Rat Race Home Security, Inc. if they expect operating profit to change 6.5 percent? Self-Assessment HW7C (Total (Combined) leverage) Question 1 La Cucaracha Pest Control, Inc. is reviewing its financial condition. The firm’s operating leverage is 2.60. The firm’s financial leverage was of 2.10. What is the firm’s degree of combined (total) leverage of La Cucaracha Pest Control, Inc.? Question 2 Haunted Forest, Inc.is selling fog machines. Use the following information about Haunted Forest, Inc. to Answer the following questions. Average selling price per unit $332. Variable cost per unit $212 Units sold 362 Fixed costs $16,664 Interest expense $3,250 Based on the data above, what is the degree of total (combined) leverage of Haunted Forest, Inc.? Question 3 Haunted Forest, Inc.is selling fog machines. Use the following information about Haunted Forest, Inc. to Answer the following questions. Average selling price per unit $332. Variable cost per unit $212 Units sold 362 Fixed costs $16,664 Interest expense $3,250 Based on the data above, what will be the resulting percentage change in earnings per share if they expect units produced and sold to change 8.8 percent? Question 1 Leaf It To Us Corporation is considering an expansion project. The necessary equipment could be purchased for $13,293,047 and shipping and installation costs are another $21,333. The project will also require an initial $143,091 investment in net working capital. What is the project’s initial investment outlay? Round the Answer to the whole $. Question 2 El Dorado Storage has the following projections for Year 1 of a capital budgeting project. Sales $280,318  Sales  277103 Variable costs $129,501  Var. Cost  116671 Fixed costs and selling, general and administrative expenses $11,648  FCS  14449 Depreciation Expense $29,594  Dep  13303 Tax Rate 35%  Rate  35% Calculate the operating cash flow for Year 1. Round the Answer to two decimals Question 1 Genetic Insights Co. purchases an asset for $15,342. This asset qualifies as a seven-year recovery asset under MACRS. The seven-year fixed depreciation percentages for years 1, 2, 3, 4, 5, and 6 are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, and 8.93%, respectively. Genetic Insights has a tax rate of 30%. The asset is sold at the end of six years for $3,322. Calculate accumulated depreciation over 6 years. Round the Answer to two decimals. Question 2 Genetic Insights Co. purchases an asset for $16,526. This asset qualifies as a seven-year recovery asset under MACRS. The seven-year fixed depreciation percentages for years 1, 2, 3, 4, 5, and 6 are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, and 8.93%, respectively. Genetic Insights has a tax rate of 30%. The asset is sold at the end of six years for $4,349. Calculate book value of an asset. Round the Answer to two decimals. Question 3 Genetic Insights Co. purchases an asset for $14,683. This asset qualifies as a seven-year recovery asset under MACRS. The seven-year fixed depreciation percentages for years 1, 2, 3, 4, 5, and 6 are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, and 8.93%, respectively. Genetic Insights has a tax rate of 30%. The asset is sold at the end of six years for $4,693. Calculate gain or loss on disposal. Gain should be entered as a positive number. Loss should be entered as a negative number. Question 4 Genetic Insights Co. purchases an asset for $14,445. This asset qualifies as a seven-year recovery asset under MACRS. The seven-year fixed depreciation percentages for years 1, 2, 3, 4, 5, and 6 are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, and 8.93%, respectively. Genetic Insights has a tax rate of 30%. The asset is sold at the end of six years for $4,429. Calculate tax paid on gain on disposal. Round the Answer to two decimals. Question 5 Genetic Insights Co. purchases an asset for $15,338. This asset qualifies as a seven-year recovery asset under MACRS. The seven-year fixed depreciation percentages for years 1, 2, 3, 4, 5, and 6 are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, and 8.93%, respectively. Genetic Insights has a tax rate of 30%. The asset is sold at the end of six years for $4,378. Calculate After-Tax Cash Flow at disposal. Round the Answer to two decimals. Question 6 Reversing Rapids Co. purchases an asset for $199,022. This asset qualifies as a five-year recovery asset under MACRS. The five-year expense percentages for years 1, 2, 3, and 4 are 20.00%, 32.00%, 19.20%, and 11.52% respectively. Reversing Rapids has a tax rate of 30%. The asset is sold at the end of year 4 for $13,131. Calculate accumulated depreciation over 4 years. Round the Answer to two decimals. Question 7 Reversing Rapids Co. purchases an asset for $199,022. This asset qualifies as a five-year recovery asset under MACRS. The five-year expense percentages for years 1, 2, 3, and 4 are 20.00%, 32.00%, 19.20%, and 11.52% respectively. Reversing Rapids has a tax rate of 30%. The asset is sold at the end of year 4 for $13,131. Calculate book value of an asset. Round the Answer to two decimals. Question 8 Reversing Rapids Co. purchases an asset for $199,022. This asset qualifies as a five-year recovery asset under MACRS. The five-year expense percentages for years 1, 2, 3, and 4 are 20.00%, 32.00%, 19.20%, and 11.52% respectively. Reversing Rapids has a tax rate of 30%. The asset is sold at the end of year 4 for $13,131. Calculate gain or loss on disposal. Gain should be entered as a positive number. Loss should be entered as a negative number. Question 9 Reversing Rapids Co. purchases an asset for $199,022. This asset qualifies as a five-year recovery asset under MACRS. The five-year expense percentages for years 1, 2, 3, and 4 are 20.00%, 32.00%, 19.20%, and 11.52% respectively. Reversing Rapids has a tax rate of 30%. The asset is sold at the end of year 4 for $13,131. Calculate tax credit on disposal. (The Answer should be entered as positive value). Round the Answer to two decimals. Question 10 Reversing Rapids Co. purchases an asset for $199,022. This asset qualifies as a five-year recovery asset under MACRS. The five-year expense percentages for years 1, 2, 3, and 4 are 20.00%, 32.00%, 19.20%, and 11.52% respectively. Reversing Rapids has a tax rate of 30%. The asset is sold at the end of year 4 for $13,131. Calculate After-Tax Cash Flow at disposal. Round the Answer to two decimals.