Question

Question 17

Given the following information: sales = $525; costs = $400; tax rate = 34%. Assuming costs run at a constant percentage of sales, if sales rise by 10% next year, what will net income be?

Select one:

a. $33.00

b. $90.75

c. $3.30

d. $72.60

e. $66.00

Question 18

The financial statement summarizing the value of a firm's current assets on a particular date is the balance sheet.

Select one:

True

False

Question 19

If you borrow $5,000, you likely prefer 6% compounded daily to 6% compounded annually.

Select one:

True

False

Question 20

A firm has an ROA of 9%, sales of $50, and total assets of $120. What is its profit margin?

Select one:

a. 14.4%

b. 7.2%

c. 21.6%

d. 6.4%

e. 6.0%

Answer 1

17 - 90.75

Reason - increased sales. 577.5 less increased cost 440 less 34% tax = 90.75

18. False

Reason - financial statements summarizing. The value of firms equity on a particular date is called balance sheet.

19.true

Reason - with daily. Compounding an investment earn more than annual compounding like in this case with daily compounding 5000 will become 5,308.28 in 1 yr and with annual compunding it will be 5300 in 1 yr.

20. 21.6%

Reason - ROA = net income / total asset

Therefore net income = 120*9/100 = 10.8

Therefore profit = 10.8/50 * 100 = 21.6%