Effects of cost reduction

Assignment Help Macroeconomics

Reference no: EM1368614

Last year, Urbana Corporation had $197,500 of assets, $307,500 of sales, $19,575 of net income, and a debt-to-total assets ratio of 37.5 percent. The new CFO believes a new computer software application will enable it to reduce costs and thus raise net income to $33,000. Assets, sales, and the debt ratio would not be affected. By how much would the cost reduction improve the ROE?

Reference no: EM1368614

Questions Cloud

Explain some of the differences in the selling process : Explain some of the differences in the selling process that an HP sales rep might face in selling to a long - term established customer verus a prospective customer.

Calculate the cash flows for project : Wheel Industries is planning a 3-year expansion project. The project requires an initial investment of $1.5 million. The project will use straight line depreciation method.

Find terminal nodes in tree nil if pointer is represented : The node's right child. If the nil pointer is represented by 00 and the tree's root pointer contains 53, how many terminal nodes are in tree?

Explain charlie jones a fireman for boulder county : Explain Charlie Jones, a fireman for Boulder County, Colorado, saw an ad for the vacation of his dreams in the local, "Boulder County Gazette."

Effects of cost reduction : Last year, Urbana Corporation had $197,500 of assets, $307,500 of sales, $19,575 of net income, and a debt-to-total assets ratio of 37.5 percent.

Give algorithm-correctness proof-time complexity for tree : Determine the minimum number of nodes in tree to remove so that the tree is separated into subtrees of sizes at most k. Give the algorithm, the correctness proof and the time complexity.

Explain what is the total cost for using air carrier : Explain What is the total cost for using motor carrier transportation and What is the total cost for using air carrier transportation and Which alternative should GasBag use?

Calculating expected dividend payout ratio : Flavortech Corporation expects EBIT of $2,000,000 for the current year. The firm's capital structure consists of 40% debt and 60% equity, and its marginal tax rate is 40%.

Calculate the proportion to get a desired expected return : If the market has an expected return of 10 percent, a standard deviation of 20% and the risk-free rate is 4 percent, what proportion of your money should be invested in the market if you want an expected return of 16%?

User Account

All Pages