Compute sales to earn present level of profit

Assignment Help Finance Basics
Reference no: EM1334655

From books of Aggarwal Bors, following information has been extracted:

                                       Rs.

Sales                          2,40,000

Variable costs              1,44,000

Fixed costs                     26,000

Profit before tax              70,000

Rate of tax                         40%

 

Firm is proposing to buy the new plant that could generate extra annual profit of Rs. 10,000. The fixed cost of new plant is expected to Rs. 4000. New plant would increase sales volume by Rs. 40,000. It could be supposed that ratio between sales and variable costs remain same. Compute.

(i) New BEP

(ii) Sales to earn present level of profit

(iii) Sales to earn expected profit on proposed investment

(iv) Maximum profit potential after tax and plant expansion

Reference no: EM1334655

Questions Cloud

Push or pull strategy : Several months ago, I purchased a curling brush at Wal-Mart. Push or pull strategy
Computing income from the partnership : How much will Fred report as his income from the partnership?
Find out what nation would be the most ideal markets : What would like you to do some research and find out what nation would be the most ideal markets for your new product.
Define five properties of controls : Are Integers and Strings considered objects in VB? Elaborate.
Compute sales to earn present level of profit : Compute. (i) New BEP (ii) Sales to earn present level of profit (iii) Sales to earn expected profit on proposed investment (iv) Maximum profit potential after tax and plant expansion
Submit a report - project organisation : Submit a report illustrating how you will apply the following knowledge areas applicable to Project Management
Explain market segmentation and the marketing concept : Explain Market Segmentation and the Marketing Concept and If you could give an example or two with references would be greatly appreciated
Stating the issue of compliance state v. schmid : Briefly overview the State v. Schmid case.
Why enter in a profitable industry : Why would anyone want to enter a profitable industry knowing that profits would eventually be eliminated by competition?

Reviews

Write a Review

 

Finance Basics Questions & Answers

  Estimate of cost of capital with target capital structure

Estimate of Cost of Capital with target capital structure mix of debt and equity - Evaluate your final estimate for rs?

  Relationship between bond price and interest rates

What is the relationship between the price of the bond and interest rates? Why does the price of bond change over its lifetime?

  Computation of security market line

Computation of Security Market Line (SML) of stocks and its analysis and Assume a U.S. Treasury rate of 3% as the risk free rate in your SML

  Explain weighted average cost of capital that is appropriate

Explain Weighted average cost of capital that is appropriate to use in evaluation of expansion program

  Time value of money using given scenario

You get same prize but the choice changes to $5,000 now or $5,500 in three years. What do you do? Describe the time value of money using this scenario as an example.

  Computation of lump sum to invest

You have always dreamed of taking a trip to Machu Pichu. What lump sum do you have to invest today to have the $12,000 needed for the trip in 3 years? Suppose that you can spend the money at 10%.

  Determining amount of costs acquired by firm

Tax rate was= 36.6%. Determine the amount of costs acquired by firm for last year?

  Calculation of net present value

Calculation of Net Present Value and What is the net present value of a project with the following cash flows and a required return of 12%

  Time series analysis of revenues

Find out a company at that your organization might consider a competitor. Show the time series for revenues over as many years as you can find. Based on this time series, how is the company doing?

  Computation of value or price of the stock

Computation of value or price of the stock thus the company will maintain that dividend growth

  Calculation of interest rate using effective interest rate

Calculation of interest rate using effective interest rate method

  Computation the amount interest earned during the sixth year

Future value of today investment at a perticular interest over a period of years? Computation the amount interest earned during the sixth year

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd