Compute the degree of operating leverage

Assignment Help Financial Accounting
Reference no: EM132947312

Question -

Q1. Project X and Y are mutually exclusive, and it is reasonable to assume indefinite life for both projects. X is a four-year project with a net present value of Tk 5,205.63. Project Y is a 6-year project with a net present value of Tk 6,278.84. The NPV estimates are based on a discount rate of 22 percent. Both projects are average risk projects.

a. Determine the equivalent annual annuity of the two projects.

b. Which project should be selected and why? (Must be the right reason).

Q2. Sugarcone corporation currently has a production volume of 500,000 per year which is expected to go up by 15% next year. The addition of volume will increase Fixed Cost by Tk 2,00,000 next year as shown in the chart below. Fill up the blank cells and compute EPS. (Interpretation needed.)

a. Compute the Degree of Operating Leverage.

b. Compute the Degree of Financial Leverage.

c. Compute the Degree of Total Leverage.

Reference no: EM132947312

Questions Cloud

Identify a patient care situation : Identify a patient care situation and describe how nursing care, or approaches to decision-making, differ between the BSN-prepared nurse and the ADN nurse.
Embrace ethical marketing : Identify one or two reasons why a company with a conscience is better than one who supports 'cheap gimmicks' in their advertising?
Why a change such as could be essential to the success : Why a change such as this could be essential to the success of your business plan. What would happen if you do not alter your plan
Examine information technology systems used to identify : Illustrate an interdisciplinary approach to improve health outcomes of the community. Discuss community and public health challenges to improving.
Compute the degree of operating leverage : The addition of volume will increase Fixed Cost by Tk 2,00,000 next year. Compute the Degree of Operating Leverage
Discuss barriers to healthcare and access to care : Discuss barriers to healthcare and access to care. Examine evidence-based practices that improve health outcomes of the vulnerable population.
Explain organisation development plan : In light of the decline in support for the development program, you need to adjust your organisation's development plan.
What is the depreciation for year : If Jimmy Jones Company decided to use straight-line depreciation, what is the depreciation for year 1 and year 2? Provide the journal entry to each year
What is the relationship between markets and discrimination : What is the relationship between markets and discrimination? Are markets inherently discriminatory or do they help eliminate discrimination?

Reviews

Write a Review

Financial Accounting Questions & Answers

  What cash flow from financing activities that will reported

What is the cash flow from financing activities that will be reported during the year ending December 31, Year 1? To determine the appropriate discount factor

  Which can be used to place capital investment proposals

Which can be used to place capital investment proposals involving different amounts of investment on a comparable basis for purposes

  What the effects of changes in foreign exchange rates

Discuss the criteria applied by IAS 21 'The Effects of Changes in Foreign Exchange Rates' to determining the functional currency.

  Qualified small business

In 2000 Ms. Ennis, a head of household, contributed $50,000 in exchange for 500 shares of Sets stock. Seta is a qualified small business. This year Ms. Ennis sold all 500 shares for $117,400.

  Loss is disallowed due to her tax basis or at-risk amount

Sue invested $5,000 in the ABC General Partnership and received a 10 percent interest in the partnership. The partnership had $40,000 of unsecured debt. Sue is allocated a 10 percent share of the debt resulting in a tax basis of $9,000 and at risk am..

  Determine dollar sales volume required to earn target profit

McKee Corporation has annual fixed costs of $12 million. Its variable cost ratio ( VC/P ) is .70. Determine the company’s break-even dollar sales volume. Determine the dollar sales volume required to earn a target profit of $8 million.

  How will that fact show up on statement of cash flows

If Inventory increases from the beginning of the period to the end of the period, how will that fact show up on the statement of cash flows? Can you explain why it shows up the way itdoes?

  Explain what are the pros of the methods of financing

Explain What are the pros and cons of the methods of financing through debt and financing through equity? Which method would raise capital for a business?

  Compute book value and net worth per share

Find What is the ratio of market value per share to book value per share? (Do not round intermediate calculations. Round the final answer to 2 decimal places.)

  Define the financial perspective

The balance score card of the current period provides information in regard to both the past and future events. The diagram provides the information in regard to designing the innovated balance scorecard.

  How much should the price adjustment be

Labor was overpriced by $15,000. Material was underpriced by $10,000. No items have been delivered. How much should the price adjustment be?

  Assume the corporation will redeem five shares

Assume the corporation will redeem five shares each year for the next four years from A, B, and C starting in 19X3. Must D recognize a taxable stock dividend in 19X3? ______ If so, explain how the amount of the dividend is to be determined.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd