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3.1.1 Solutions_Lecture_05_2009

# 3.1.1 Solutions_Lecture_05_2009 - Solution to Problem 1 S...

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Unformatted text preview: Solution to Problem 1: S −VC \$8m− \$1.6m = ( a ) DOL= S − VC −F \$8m−\$1.6m−\$2m \$ 6 .4 m = \$ 4 .4 m =1.455 ( b ) % Δ E B I T = D O L × % Δ S a le s = 1.4 5 5 × 1 0 % = 1 4 .5 5 % 1 Looking at the same problem with an income statement approach Units Sales Rev. F VC E BIT 40 000 8 000 000 2 000 000 1 600 000 4 400 000 44 000 8 800 000 2 000 000 1 7 60 000 5 0 40 000 5 0 40 000 / 4 400 000 = 1.1455 2 Solution to Problem 2: Llama Co’s DOL S −VC \$20m− \$6m = (a ) DOL= S − VC −F \$20m−\$6m−\$4m \$14m = \$10m = 1.4 3 Llama Co continued (a)(ii) Sales \$20m Less VC \$ 6m Less F \$ 4m EBIT \$10m Percentage Δ EBIT = 1.4 × (-20%) EBIT = -28% New EBIT = \$10m(1-0.28) = \$7.2m (b) 4 Llama Co contintued (b)(ii) Sales @ \$20m × (1-0.2) (1 VC @ \$6m × (1-0.2) (1 F remains unchanged \$16.0m \$ 4.8m \$ 4.0m \$ 7.2m EBIT EBIT Check: (7.2m - 10m)/10m = -0.28 5 Solution to Problem 3: EBIT \$4.4 m = ( a ) DFL = EBIT − I \$4.4 m − \$1m = 1.294 (b ) % Δ NPAT = DFL × % Δ EBIT = 1.294 × 10% = 12.94% 6 Current + 10% EBIT EBIT Less I NPBT Less Tax NPAT 4 400 000 3 400 000 2 040 000 4 840 000 3 840 000 2 3 04 000 -1 000 0 00 -1 000 0 00 -1 360 000 -1 536 000 2 304 000 / 2 040 000 = 11294 . 7 Solution to Problem 4: ( a ) D TL = D OL × D FL = 1.455 × 1.294 = 1.882 (b ) % Δ NPAT = DTL × % Δ Sales = 1.882 × 10% = 18.82% 8 Proof (part 1): Units Sales Rev. Less F Less VC EBIT 40 000 8 000 000 -2 000 000 -1 600 000 4 400 000 44 000 8 800 000 -2 000 000 -1 760 000 5 040 000 9 Proof continued: EBIT Less I NPBT Less Tax NPAT 4 400 000 -1 000 000 3 400 000 -1 360 000 2 040 000 5 040 000 -1 000 000 4 040 000 -1 616 000 2 424 000 2 424 000 / 2 040 000 = 1.1882 10 10 ...
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3.1.1 Solutions_Lecture_05_2009 - Solution to Problem 1 S...

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