Chapter26homework

Chapter26homework - Laura Stroup Acct II Professor Woodward...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 26 Homework 5/13/2008 E26-8 The Other 5 Div. This would Sales $1,664,200 COGS (978520+20,407)= $998,990 (110,670<1 Gross 665,210 Op. Exp. (527,940+26,600)= $554,540 Net Inc. $110,670 E26-14 Project Internal Rate of Return 22A (240,000/53,300)= 4.503=9% 23A (270,000/51,000)= 5.294=12% 24A (288,000/56,000)= 5.143= 11% B) 23A, 24A E26-15 A) Project A Discout Factor for 5 years 3.79 Present value of net ann. Cash flows (50,000X3.79079)= 189539.50 Captial Investment 200,000 Negative Net Present Value ($10,460.50) Project B Discout Factor for 7 years 4.87 Present value of net ann. Cash flows (65,000X4.86842)=316,447.30 Captial Investment 300,000 Positive Net Present Value $16,447.30 B) Project B because it is profitable
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
Background image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Laura Stroup Acct II Professor Woodward actually not be a smart move because although Ketchum Division is not profitable, it would cause the total net inc 157,740) 140,870-110,670=$30,200 loss Key to income analysis: any time a division has a positive contribution margin, y Payment X Factor = Present Value 13300+(240,000/6)=cash:$53,300 53,000 X ? = 240,000 ? = 240,000/53,000 ? = 4,503 ? = 9% Payback Method: Project A Project B (200,000/50,000)= 4 (300,000/65,000)=4.6 B) Project A because it has a shorter payback method come to decrease. you're better off keeping it. Also, whenever you drop a division, your fixed costs don't go away....
View Full Document

This note was uploaded on 07/14/2008 for the course BUSN 201 taught by Professor Rundle during the Spring '08 term at Biola University.

Page1 / 3

Chapter26homework - Laura Stroup Acct II Professor Woodward...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online