This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Don’t switch to level production If int. rates fall to 12% or less, the switch would be feasible 30,000 savings /250,000 inc. inv. = 12% P15 a. 100,000-10,000 90,000-3,000-79,000 >> .79x$100,000 8,000-3,200 4,800 b. Incremental return on sales = incremental income / incremental sales = 4800/100,000 = 4.8% c. rec. turnover = sales/rec. turnover = 6x Sales/rec. turnover = 100,000/6 =16,666.67 Incremental return on new avg. investment = 4,800/16,666.67 = 28.80%...
View Full Document
- Spring '08
- Revenue, incremental return, initial amt deposits, sales/rec. turnover, additional collections