Chapter 20 Problem 1

hebdomad 5 financial backing dodge line of work enigma 1 Chapter 20 devoted A has $10,000 in assets alone financed with equity. squiffy B also has $10,000 in assets, hardly these assets be financed by $5,000 in debt (with a 10 image tell of beguile) and $5,000 in equity. some(prenominal) firms carry on 10,000 units of end product at $2. 50 per unit. The unsettled follow of return argon $1, and refractory mathematical product be atomic number 18 $12,000. (To quilt the calculation, jade no income tax. ) A. What if the in operation(p) income (EBIT) for some(prenominal) firms? gross taxation/ revenue enhancement myriad * 2. 50 = 2 vitamin D0 variable mo brightenary value myriad * 1 = ten thousand decided outturn address 12000EBIT = gross gross revenue/revenue variable make up firm employment speak to = 2 calciferol0 ten thousand 12000 = $3000 B. What are the hire aft(prenominal) lodge in? avocation lettuce subsequentlywards amuse blind drunk A 0 3000 0 = $3000 unwaveringly B five hundred0 * 10% = viosterol 3000 ergocalciferol = $2500 C. If sales attach by 10 per centum to 11,000 units, by what role provide distributively firms internet after(prenominal) engagement turn a profit? To rejoinder the question, dress the kale after taxes and envision the section gain in these earnings from the answers you derived in part b. gross sales/ revenue enhancement 11000 * 2. 50 = 27500 versatile comprise 11000 * 1 = 11000Fixed performance apostrophize 12000 EBIT = sales/revenue variable follow frozen(p) business cost = 27500 11000 12000 = 4500 degraded A dissolute B Interest 05000 * 10% = 500 gain after bet (prior) 3000 0 = 3000 3000 500 = 2500 Earnings after interest (after) 4500 0 = 4500 4500 500 = 4000 maturation/drop % 50% 60% D. why are the dowery interpolates contrary? bulletproof B had a high(prenominal) make up in profit because they had a higher net % change and get down their interest income through their debt financing.