User Account

All Pages

Compute the incremental income before taxes

Assignment Help Finance Basics
Reference no: EM132818348

Question 1

Acton Industries is considering changing its credit policy. The changes are expected to increase sales by $150,000 per year. Uncollected sales are expected to be 10% of sales and the costs of producing these additional products is expected to be 65% of sales. Acton has an A/R turnover ratio of 5 to 1.

REQUIRED:

a) Compute the incremental income before taxes.

b) What will Acton's incremental return on new sales be if these customers are accepted?

c) What will Acton's incremental return on new average investment be if these customers are accepted (there is no build-up of assets other than A/R)?

d) If Acton's management requires a return on investment above 80%, should they accept these new customers?

Reference no: EM132818348

Questions Cloud

How much annual deposit should make : Bank account that will earn an interest of 2.5% compounded annually for fifteen years to have P500,000 by then. How much annual deposit should you make?
What is the real rate of interest : If the nominal interest rate is 15% and the inflation rate is 2%, what is the real rate of interest?
Estimate value of shares of common stock : How can we use the TVM to value shares of common stock? What other methods can be used to estimate value of shares of common stock?
Writing general definition of reading assessment : You will create an informative parent brochure that is appropriate for your educational setting. The brochure must include the following.
Compute the incremental income before taxes : Acton Industries is considering changing its credit policy. The changes are expected to increase sales by $150,000 per year. Uncollected sales are expected to b
What is the cost of failing to take the discount : Sonders Inc needs $50,000 to take a trade discount of 1/15 net 30. Sonders can borrow the funds from Bank A for 15 days at a cost of $400 or issue commercial pa
How you can communicate with families of various backgrounds : How you can communicate with families of various backgrounds and ways you can avoid potential pitfalls when communicating cross-culturally
Calculate depreciation expense using the units of production : Bridgeport Corporation purchased a truck at the beginning of 2020. Calculate depreciation expense for 2020 and 2021 using the units of production method
What is dry beginning cash balance on june 1 : On May 1, D.R.Y. Inc. had a beginning cash balance of $690. April sales were $810, and May sales were $990. Cash expenses of $130 and payments on accounts payab

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculate the effective cost of both proposals

Calculate the effective cost of both proposals, and indicate which proposal should be accepted.

  Compute the one year return from investment

Compute the one year return from this investment if the current NAV of this mutual fund is $10.18.

  Evaluating the prospectus

Write a 2- to 3-page paper in APA format, double spaced, in 12-point font and with a 1" margin evaluating the prospectus. Please make sure to properly cite all sources. Include the following:

  Draft the contract and include all of the terms

Draft the contract and include all of the terms (subject matter, performance, term, consideration, signature blocks, arbitration)

  What is present value of all the future property tax payment

Property taxes in a particular district are 4% of the purchase price of a home every year. If you just purchased a $250 000 home, what is the present value of all the future property tax payments?

  Discuss stocks as asset class

Discuss stocks as asset class in terms of their characteristics, attributes, and risk/return relationship.

  What was the real return on the investment

An investment had a nominal return of 9.5 percent last year. The inflation rate was 2.3 percent. What was the real return on the investment?

  Cumulative voting procedures

The Beasley Corporation has been experiencing declining earning, but has just announced a 50% salary increase for its top executives. A dissident group of stockholders wants to oust the existing board of directors.

  Value consequences of a dividend change

Discuss the effect both on the total return and on the capital gain. Which should be larger?

  Measure of centraltendency

Each of ten taste-testers rated a new brand of barbecue sauce on a 10-point scale where 1 = awful and 10 = excellent. The ten ratings are 8, 7, 9, 6, 8, 10, 9, 9, 5, 7. Which measure of centraltendency would be the most appropriate to use here. Wh..

  What price should the annual payment bond sell

The firm's Class Ann bonds have the same risk, maturity, nominal interest rate, and par value, but these bonds pay interest annually.

  What is the average amount of time a customer

What is the average amount of time a customer spends in the system?

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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