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Question
Gardner Furniture Co. has calculated its degree of operating leverage as 3.5. If Gardner can increase sales revenue by 5%, net operating income should increase by:A) 15%.
B) 17.5%.
C) 1.43%.
D) 3.5%.
Answer
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Related questions
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A new forklift under consideration by Home Warehouse requires an initial investment of $100,000 and produces annual cash flows of $50,000, $40,000, and $30,000. Which of the following will not change if the required rate of return is increased from 10% to 12%.
A) The net present value.
B) The internal rate of return.
C) The profitability index.
D) The modified internal rate of return.
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Initial Outlay Cash Flow in Period
1 2 3 4
-$4,000 $1,546.17 $1,546.17 $1,546.17 $1,546.17
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Year 2 = $3,000
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The equivalent annual cost method is most appropriate in which of the following situations? In each case, assume that several mutually exclusive options are available.
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B) Adding another store to a chain of retail stores
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WSU Inc. has various options for replacing a piece of manufacturing equipment. The present value of costs for option Ell is $84,000. Option Ell has a useful life of 5 years; annual operating costs were discounted at 9%. What is the equivalent annual cost?
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The size of capital investments and the difficulty in reversing them once they are made make capital-budgeting decisions very important to the firm.
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If the ROE on a new investment is less than the firm's required rate of return:
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B) 14.
C) 2.14.
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Draper Company's common stock paid a dividend last year of $3.70. You believe that the long-term growth in the dividends of the firm will be 8% per year. If your required return for Draper is 14%, how much are you willing to pay for the stock?
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The ________ designates the date on which the stock transfer books are closed in regard to a dividend payment.
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C) date of record
D) payment date
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Five years ago, Mr. Martinez purchased 1000 shares of JPM stock at $50 per share. If Mr. Martinez ' tax rate is 25% would he prefer that the company pay a $5.00 per share dividend or offer to repurchase 100 shares at $50 per share?
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