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Joe Pie is considering investing in a Heaven Piza franchise that will require an initial outlay of $100,000. He conducted market research and found that after-tax cash flows on this investment should be about $20,000 a year for the next 7 years. The franchiser stated that Herb will generate a 20 percent rate of return. He currently has his money in a mutual fund which has grown at an average annual rate of 10 percent. He tells the franchiser that money has a time value and the actual rate of return according to his calculations is much less than 20 percent.
Question a) Do you agree with the franchiser or with Joe?
Question b) What rate of return is the franchiser using and what method did Heaven Pizza use to calculate it?
Question c) What rate of return is Joe using and what method did he use?
Question d) Should Joe make the investment? Explain your answer.
As a short term investor, identify the company you consider to be better in terms of liquidity and justify your answer. Compute the price-earnings ratio
Vrable Corporation has a defined benefit pension plan. Two alternative possibilities for pension- related data for the current calendar year are shown below: For each independent case, calculate amortization of the net loss or gain that should be inc..
Heritage Gardens provides complete garden design and landscaping services. The company uses a job-order costing system to track the costs of its landscaping projects. Compute the amount of overhead cost that would have been applied to each project du..
How much money would we need in the bank today in order to pay for the second location without having to earn additional money?
On October 15, 2012, the board of directors of Ensor Materials Corporation approved a stock option plan for key executives. On January 1, 2013, 30 million stock options were granted, exercisable for 30 million shares of Ensor's $1 par common stock. D..
illustrate how this new system would work. In this example the allocated base its machine-hours. if the company bases its predetermined overhead rate on capacity, by how much was manufacturing overhead under applied or over applied?
This week’s chapters and videos cover the areas of marketing with which we are most familiar as consumers—advertising and promotion. What marketing communications tools would you use if you were starting a new business? Why?
During the current year, Central Auto Rentals purchased 60 new automobiles at a cost of $21,920 per car. The cars will be sold to a wholesaler at an estimated $4,000 each as soon as they have been driven 56,000 miles
Prepare Topsanahs Income statement for the period ended 31 December 2011 and prepare Topsanah's Balance sheet as at 31 December 2011
Mission Electronics manufactures and sells basic DVD players for sale under various generic store brand names. The cost of one of their models follows: Materials $ 18.70 Labor 12.70 Variable overhead 5.70 Fixed overhead ($3,061,900 per year; 457,000 ..
The top management of a fast-food hamburger chain is considering installing point-of-sale machines that will allow customers to pay for food with an automated teller-machine card. Previously, the restaurant has accepted only cash. What information co..
A comprehensive or overall formal plan for a business that includes specific plans for expected sales, the units of product to be produced, the merchandise or materials to be purchased, the expense to be incurred, the long-term assets to be purchased..
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