Question;Problem;15-23 Return on investment;Soto Corporation?s balance sheet indicates;that the company has $300,000 invested in operating assets. During 2011, Soto earned operating income of;$45,000 on $600,000 of sales.;Required;a. Compute Soto?s;profit margin for 2011.;b. Compute Soto?s;turnover for 2011.;c. Compute Soto?s;return on investment for 2011.;d. Recompute;Soto?s ROI under each of the following independent assumptions.;(1) Sales increase for $600,000 to $750,000;thereby resulting in an increase in;operating income for $45,000 to;$60,000.;(2) Sales remain constant, but Soto reduces;expenses resulting in an increase in;operating income from $45,000 to;$48,000.;(3) Soto is able to reduce its invested;capital from $300,000 to $240,000 without;affecting operating income.;Problem 16-23 Postaudit;evaluation;Ernest Jones is reviewing his company?s;investment in a cement plant. The;company paid $15,000,000 five years ago to acquire the plant. Now top management is considering an;opportunity to sell it. The president;wants to know whether the plant has met original expectations before he decides;its fate. The company?s discount rate;for present value computations is 8 percent.;Expected and actual cash flows follow.;Year 1;Year 2;Year 3;Year 4;Year 5;Expected;$3,300,000;$4,920,000;$4,560,000;$4,980,000;$4,200,000;Actual;2,700,000;3,060,000;4,920,000;3,900,000;3,600,000;Required;a. Compute the net present value of the;expected cash flows as of the beginning of the;investment.;b. Compute the net present value of the;actual cash flows as of the beginning of the;investment.;c. What do you conclude from this;postaudit?
Paper#44070 | Written in 18-Jul-2015Price : $27