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Juniper Design Ltd. of Manchester, England, provides design services to residential developers. Last year, the company had net operating income of $600,000 on sales of$3,000,000. The company's average operating assets for the year were $2,800,000 and its minimum required rate of return was 18%.
Compute the company's residual income for the year.
Debby’s Dance Studios is considering the purchase of new sound equipment that will enhance the popularity of its aerobics dancing. The equipment will cost . Debby is not sure how many members the new equipment will attract, but she estimates that her increased annual cash flows for each of the next five years will have the following probability distribution. Debby’s cost of capital is 15 percent. What is the expected net present value?
In 1998, Lisa earned $149,461.20. The Social Security maximum taxable income was$68,400, and the Social Security percent was 6.2%. a. What was her monthly gross pay? b. In what month did Lisa hit the maximum taxable Social Security income? c. How much Social Security tax did Lisa pay in May, to the nearest cent? d. How much Social Security tax did Lisa pay in July, to the nearest cent? e. How much Social Security tax did Lisa pay in June, to the nearest cent?
One description of the costs of operating a railroad made the following observation: “The fixed expenses which attach to the operation of railroads are in the nature of a tax upon the business of the road; the smaller the [amount of] business, the larger the tax.” Briefly explain why fixed costs are like a tax. In what sense is this tax smaller when the amount of business is larger?